In the last few years Bihar has seen drastic improvement in the areas fiscal management and revenue collection.None other than the Reserve Bank of India (RBI) governor, Y. V. Reddy, lauded Bihar chief minister Nitish Kumar for “accelerating” the pace of development in Bihar and assured the banking sector’s special attention to it.

“Finance minister P. Chidambaram, too, has signalled for special attention to Bihar in view of its government’s interest in accelerating development here,” Reddy told reporters after meeting Nitish Kumar and senior state officials. The RBI governor, who addressed a bankers’ meeting, said: “We are working on to improve the inter-institutional mechanism and develop co-operation between the banking sector and the state agencies.”

Reddy said the improvement in inter-institutional mechanism will open a “new chapter of co-operation” and collaboration between banks and the state agencies. He added that the challenges before Bihar were “daunting”. “But the RBI would help the state in providing relief to the flood-hit people, ensuring education loans to students and promoting medium and small-scale industries.”

Another indicator of Bihar revived financial system is the latest data on Central Excise tax collection. Bihar figures amongst the top 10 states of the country on the front of central excise tax collection. According to the Patna commissione rate of the central excise, revenue amounting to Rs 3,926 crore is likely to be generated as central excise in the current fiscal (2007-08) from the state.

"The department had collected Rs 2,831 crore till December 31, 2007 and we are likely to cross the target of the current fiscal," said central excise commissioner M S Badhan on Wednesday.

This is not for the first time that the state has generated so much of revenue as the collection in the previous fiscal (2006-07) too was quite healthy with the Patna commissione rate contributing Rs 3,400 crore as central excise.