Food Processing in Bihar: Industrial Ecosystem

This chapter integrates entrepreneurs with government actors and policy, to understand the industrial ecosystem which supports outcomes in food processing in Bihar. The food processing narrative for the Bihar trajectory hinges heavily on the centrality of the state. While we start with the Industrial Policy (IP) aspect of government intervention and try to evaluate the performance of the food processing policy in Bihar (2008–2016) using different units of account, we also consider the overall support infrastructure for all industries in a policy network framework. The government is a proactive agent in driving industrial growth in states like Bihar, and state policy, particularly the overall IP as well as the sector-specific policy (in this case, food processing) compounded with infrastructure and other environmental parameters are responsible for delivering successful outcomes. We find that the policy for food processing in Bihar did not yield desired outcomes. The development of the sector was narrowly based (with a sharp increase mostly in rice mills). Policy performance was unremarkable relative to other states without the targeted policy in food processing. In particular, it failed to reduce the skewness in the distribution of firm size, which we refer to as the ‘missing middle’ problem in the previous chapter. We conclude that there are some lacunae in the industrial ecosystem that have hindered the leverage of agricultural resources into a thriving processing industry. This study elaborates on the limits to the generalized arbitrage-based argument for developing the industry of food processing, as discussed in Chap. 2 .