Global research agency Moody's Economy.com on Friday said Bihar's stunning economic performance is an example of how government policies help accelerate growth.
"Recent gains in Bihar, traditionally one of India's poorest states, show how improved economic policy can boost growth," said Nikhilesh Bhattacharyya, economist at the research arm of rating agency Moody's, in a note.
According to the latest Central Statistical Organisation (CSO) data, Bihar clocked an astonishing 11.03 per cent growth per year during 2004-05 and 2008-09 second only to Gujarat at 11.05 per cent, when the country grew at 8.49 per cent.
"Traditionally notorious for corruption, conflict and poverty, Bihar is undergoing a transformation" Bhattacharyya said giving credit to improved economic policies in India's third most populous state.
"Growth has been geographically skewed across India for decades, due to varying state government policies and regional conflict," he said, adding state differences reduced last year as poorer states suffered less from the global recession.
However, as the global recovery gathers steam and foreign funds return, inequalities will re-emerge unless reforms gains momentum in the poorer and most populous regions, he said.
"If Bihar shows how good regulation can accelerate growth, neighbouring West Bengal highlights how bureaucratic roadblocks and firmly entrenched special interests can inhibit it," the global research firm noted.
