Why Nitish Kumar has stepped up solar pitch ahead of Bihar polls

In a populist move just a few months before the Bihar Assembly elections, Chief Minister and JD(U) president Nitish Kumar Thursday announced free electricity up to 125 units for all domestic consumers in the state, numbering 1.67 crore families.
Nitish’s announcement in an X post also proposed the installation of solar power plants on rooftops of public places as well as people’s houses with their consent, indicating how a power-starved and financially-constrained state like Bihar could benefit by scaling up its renewable energy production.
Earlier this month, the Nitish-led NDA government announced its Renewable Energy Policy 2025 that has set an ambitious target for alternative energy production in Bihar, while also aiming to attract large investments to boost the state’s industrial growth.
Currently, Bihar meets its peak demand of over 8,500 MW power almost entirely from thermal plants and electricity imported from other states, which often command higher prices. Bihar also spends heavily to keep power affordable. In 2024-25, the state provided about Rs 15,343 crore in subsidies, delivering electricity to farmers at just Rs 0.55 per unit and offering significant tariff relief for domestic users.
These factors have led to the Nitish Kumar government’s decision to seek cheaper power through renewable energy production. However, despite having the potential, Bihar has remained a laggard in this sector. As of early 2025, the state’s installed renewable energy capacity amounted to just 539 MW, which mostly comprises smaller projects. The state’s installed solar capacity stands at only 328.3 MW, making it one of the least solarised big states in India, whose cumulative solar installations have surpassed 116 GW.
The Nitish Kumar government hopes to turn this around with its renewable energy policy, aiming to reach 23 GW by 2030. The policy offers investors a bouquet of incentives, including 100% SGST reimbursement, exemption from electricity duty for 15 years, guaranteed feed-in tariffs, carbon credit eligibility and a single-window clearance. The government has also proposed to earmark 5% of the renewable energy budget for R&D in a bid to spur “long-term innovation”.
“Come and invest,” says state Energy Department secretary Manoj Kumar Singh. “Our renewable energy demand is 23 GW by 2029-30. The investments in Bihar are going to fetch maximum returns.”
JD(U) national spokesperson Rajiv Ranjan Prasad also sought to link free power with renewable energy. “The announcement of the renewable energy policy is a revolutionary step. It is a roadmap that will not only ease the life of common man through cheap power but also give the country green energy. It is evidence that Nitish Kumar never makes any announcement without budgetary planning,” Prasad told The Indian Express.

Roadmap for industrial growth

The Nitish Kumar government is looking to dovetail this push with its roadmap for the state’s industrial growth, which would get a boost from abundant cheap power. In 2016, the state rolled out its industrial policy, providing various incentives to attract investments. The state has received investment proposals worth over Rs 1.81 lakh crore so far, of which projects worth Rs 84,000 crore have been committed. Government sources said the renewable energy sector is expected to contribute significantly to the investment growth in the state.
“One pumped storage project awaiting approval alone is worth over Rs 36,000 crore. The new renewable energy policy will expedite the project,” an official in the state Industry Department said.
According to Mihir Kumar Singh, additional chief secretary of the Industry Department, textiles, leather, and food processing are among the fastest-growing sectors in Bihar, aided in part by the shifting global trade dynamics.
“Whatever is happening in the world in terms of trade tariffs is benefiting industry here. This is an opportune moment for India to bring business back, especially in ready-made garments,” Singh said, noting that India’s main competitors in this area remain Indonesia, Bangladesh and China.
He claimed how Bihar’s “cost-effective and trained” labour pool, mainly comprising returned migrant workers, gives it an edge. “Migrant labour is willing to come back to Bihar. Water is plentiful, land is fertile, and labour is cheap,” he said.
Singh noted that the industrial investments in the textile sector have increased in districts like Muzaffarpur, Patna, Begusarai and Madhubani, where major companies are either setting up their units or expanding their presence.
Bihar’s industrial policy, particularly in sectors like textiles and food processing, has played a “catalytic role”, he said, listing “100% GST subvention, stamp duty waivers, and infrastructure support for large investments” among its key incentives.
Singh pointed out that while Bihar is rising agriculturally, especially in the production of food grains and pulses, it has been lagging in the establishment of the food processing infrastructure. “Even in the green bowls of Bihar like the old Shahabad region, raw produce is procured by middlemen and processed in western UP. This is what we are trying to change,” he said.
The additional chief secretary cited animal feed manufacturing as having “tremendous potential”, referring to Bihar’s high maize production and low prices. “We are the maize bowl of India. It is the cheapest here at Rs 22 per kg. Only soya comes from outside. All big companies are now coming here,” he claimed.
Singh said the MSME sector is also investing in makhana (fox nut) processing, with several projects getting underway in the state.
On the ethanol front, Bihar is said to enjoy an advantage over traditional sugar-producing states. “All sugar factories in the South and Maharashtra are water-stressed. That gives us an advantage. Our only real competition is from UP,” Singh said. He however flagged a bottleneck in this regard – that the ethanol production quota is set by the Centre. “We are quickly exhausting our quota. We have written to the Centre to raise it, but things haven’t moved. If India has to reach 25% ethanol blending, Bihar’s quota has to be increased.”
Beyond these priority areas, Singh pointed to a broader momentum in general manufacturing, buoyed by global headwinds. “In a recent buyer-seller meet in Patna, we hosted 85 buyers from 20 countries. For the first time, we exported 15 tonnes of litchi to the Lulu Group,” he said.