Since the late 1970s, Bihar has lagged far behind other Indian states in terms of social and economic development. Many economists and social scientists claim that this is a direct result of the policies of the central government, such as the Freight equalisation policy, its apathy towards Bihar,lack of Bihari sub-nationalism, and the Permanent Settlement of 1793 by the British East India Company. The state government has, however, made significant strides in developing the state.Improved governance has led to an economic revival in the state through increased investment in infrastructure,better health care facilities, greater emphasis on education, and a reduction in crime and corruption.
The name Bihar is derived from the Sanskrit and Pali word, Vihāra (Devanagari: विहार), meaning "abode". The region roughly encompassing the present state was dotted with Buddhist vihara, the abodes of Buddhist monks in the ancient and medieval periods. Medieval writer Minhaj al-Siraj Juzjani records in the Tabakat-i-Nasiri that in 1198, Bakhtiyar Khalji committed a massacre in a town now known as Bihar Sharif, about 70 km away from Bodh Gaya.