A new paper co-authored by Nishith Prakash, Dean's Professor of Economics and Public Policy at Northeastern and CEM Faculty Fellow, drew national attention in India within a week of its release in early August 2026.
The paper, “Macro Perspective of Bihar's Development: Achievements, Unfinished Agenda, and the Way Forward,” examines the role of Bihar, India's poorest state and second most populous, in achieving Viksit Bharat, the government's goal of making India a developed nation by 2047. In it, Prakash and his co-authors explore three main questions: what has gone right in the past 20 years, what has not, and what would it cost to fix the rest?
The state of Bihar in eastern India has roughly 132 million people, more than all but ten countries in the world, and is currently India's poorest state by income per capita. Since 2005, growth in Bihar accelerated and poverty fell sharply. Per capital income grew above the national average from 2006 to 2023, multidimensional poverty fell from 52 to 34 percent from 2015-16 to 2019-2021, and the state made strides in education, public health, and electricity infrastructure. Still, Gross State Domestic Product (GSDP) per capita is not converging, districts are lopsided, growth is volatile, and private manufacturing is virtually absent.
The authors call for a “big push,” arguing that further progress requires simultaneous reform across six areas: education, health, governance, flood mitigation, private-sector growth, and women's empowerment. Unlike many papers, they propose a path forward for the government to pay for such a plan, raising capital spending from 5 to 7–8 percent of GSDP, without breaching debt sustainability. Notably, they recommend lifting Bihar's 2016 alcohol ban and restoring the liquor excise tax, which supplied roughly 14 percent of state revenue before the ban took effect.
That recommendation became the story. Coverage on the recommendation ran across dozens of Indian outlets in English and Hindi, plus television and social media, and reached international press through The Independent in the UK. Three senior officials responded on the record, including two Union Cabinet ministers and the Bihar state minister who oversees prohibition policy. Bihar's Chief Secretary, the state's senior-most civil servant, has since called a meeting with the paper's authors to discuss its findings.
The paper was co-authored with Ratna Sahay and Aakash Dev of the National Council of Applied Economic Research (NCAER) and Santosh Gautam of the University of Notre Dame and was presented at NCAER's India Policy Forum 2026, a leading annual conference for Indian economic policy research.
Read more:
- The Independent: “Study recommends ending alcohol ban in one of India's last dry states”
- Business Standard: “NCAER paper calls for scrapping Bihar liquor ban, cites revenue losses”
- Mint: “Bihar liquor ban study flags revenue loss, illicit trade, drug use, but politics may prevent lifting of prohibition”
