Bihar, India's most densely populated state (12th
largest state but 3rd
in terms of population) is the least urbanized. In 2000, southern Bihar was separated from Bihar to form the new state of Jharkhand.
Bihar remains one of the country's poorest and slowest developing states alongside Odisha, despite recent progress in local governance and economic growth (poverty rate decreased from 54.4% in 2004-05 to 33.7% in 2011-12). Agriculture remains an important economic sector, producing about 22% of the state's GDP, mainly from very small holdings. Nine out of 10 farms are of less than 1 hectare, and farm fragmentation has accelerated in recent years.
Underdevelopment and widespread poverty, especially in remote rural areas is due to marginalization of smallholder agriculture, poor governance and infrastructure, lack of incentives for industrial development (for instance, the freight equalization policy did not encourage private investors to set up manufacturing in this mineral-rich state). Average incomes are low compared to the national average with great disparity between districts. The average per capita income is as low as ₹ 6,209 in Sheohar district.
Despite fertile alluvial soils from the Indo-Gangetic Plain and adequate average rainfall, a majority of Bihar farmers are not climate resilient. About half of them depend on the highly variable Southwest monsoon, leaving them vulnerable to drought or flood every year. With varied soil categories associated with different agro-climatic zones, the farmers grow a variety of crops: cereals (over 85% of sown area) and pulses, oilseeds, sugar, fruits and vegetables, and flowers.
Agricultural productivity has increased in recent years, especially in rice production reaching 2,240 kg/ha paddy, particularly through the SRI technique. Migration of the male labour force in Bihar villages has accelerated in the past two decades and is a major driver of social and economic changes in these villages, such as women's empowerment to better family budget thanks to remittances. The government is investing in promoting sustainable intensification practices like conservation agriculture for marginal and small farmers. For details on Bihar's agricultural development policy, see Agricultural Road map 2012-17.