Kushwaha, a former Union Minister of State, announced the coalition in the presence of the BSP and JP-S state unit chiefs in Patna.
He said the coalition will contest all the 243 seats in the Assembly.
Kushwaha said that he would welcome other like-minded political parties to come on board, if they wished.
Earlier, Jan Adhikar Party President Rajesh Ranjan alias Pappu Yadav said that Kushwaha should come with him.
Kushwaha formed the new political front after his talks with Chief Minister Nitish Kumar and Leader of Opposition and RLD leader Tejashwi Yadav on seat-sharing failed to bear fruit.
Lashing out at Nitish Kumar, the RLSP chief said: "In the last 15 years, Nitish Kumar has just saved his own chair and nothing else. And to achieve it, he made several compromises. His claims on development in all sectors in Bihar are just false and nothing else. The ground reality is completely different from what he is claiming."
Kushwaha also alleged that the education sector in Bihar was at its lowest whereas the crime graph and corruption was the highest. "Nitish's rule is similar to that of the RJD government's 15 years," he remarked.
Kushwaha also attacked the Rashtriya Janata Dal, alleging that the opposition party was "run by an undermatriculate".
"We have two CMs (Lalu Prasad and Rabri Devi) who failed to ensure matriculation by their sons Tejashwi and Tej Pratap. Now, they have given the party command to one of them," the former MP said.
"I asked top RJD leaders for a change in party leadership but they turned it down. Hence, I decided to part ways with the Grand Alliance," Kushwaha claimed.
"On the other hand, the saffronisation of Nitish Kumar and his Janata Dal-United is complete. I even have doubts that the RJD is also under the influence of BJP and Rashtriya Swayamsevak Sangh," the RLSP chief said.