Revitalizing Bihar’s Economy: A Sectoral Analysis of Agricultural and Allied Investments (1980-2021)

This study employs the decomposition methodology proposed by Jalava and Pohjola (2002) to assess the influence of investment in key sectors—Agriculture and allied, Industry, and Services-on Bihar’s economic growth. The research formulates a series of structural relationships, establishing interconnections between sectoral growth and the role of investment. Stationarity of variables in these relationships is examined using the Augmented Dickey-Fuller test. Ordinary Least Square (OLS) analysis is then applied to estimate the structural relations, focusing on the specific contribution of investment in the agriculture and allied sectors to the overall economic growth rate. Additionally, alternate simulation scenarios are explored to advocate for increased public sector investment in agriculture and allied support for sustainable economic development in Bihar. This comprehensive analysis aims to provide technical insights into the critical role of strategic investment in the agriculture and allied sectors for Bihar’s economic prosperity.