Includes bibliographical references.

Madhubani and Biharsharif, two low-urbanized and low-industrialized towns, have seen a decline in their limited industrial activity over the past few decades, primarily attributed to lack of public infrastructure and severe electricity supply bottlenecks (including high T&D losses and theft). This decline is exacerbated by perceived political neglect and lack of a coherent industrial vision. Biharsharif is relatively better off with some agro-based activity (like cold storage and sawmills), better connectivity, and a larger market, while Madhubani faces constraints on both supply (infrastructure) and demand (limited local market for its products like makhana and fish), leading to severe farmer indebtedness and greater reliance on outward migration. The main source of urban output in both towns is trade, with manufacturing and services being distant followers. Enterprise structure is dominated by small, informal units (Non-Directory and Own Account Enterprises), reflecting limited growth impulse transmission, depressed wages (especially for unskilled workers), and very poor provision of social benefits and basic amenities like sanitation. The labor market is characterized by long hours, low wages, a hiring preference for adult male and rural workers through social connections, and significant seasonal migration from Madhubani. While trading units show recent business expansion, manufacturing has mostly contracted. The most critical problem cited by entrepreneurs across the board is electricity. Strong rural-urban linkages exist, mainly through the hiring of rural workers (especially by manufacturing and trade units) and daily commutation, though the pull factor is stronger in Biharsharif. Poverty is notably higher in Madhubani, where half of the surveyed households are below the estimated poverty line, and formal financial inclusion, such as bank account ownership, remains critically low in both towns, particularly in Madhubani.

Indian Council of Social Science Research

English.