While it isn’t certain how many of the Rs2.19 trillion promised to the state of West Bengal by various heavyweight investors at the recent Bengal Global Business Summit (BGBS) will finally materialize, the surge of confidence it has generated is a small reminder of its halcyon days. It is also a pointer to what is possible with some well-meaning administration shorn of the kind of ideological extremism that brought the state to its knees. Of course, skeptics doubt whether tycoons such as Mukesh Ambani and Lakshmi Mittal will actually bring in their promised investments. Of late, West Bengal’s expectations have been somewhat in excess of its achievements.
But it wasn’t always so.
West Bengal, with Calcutta at the centre, was a major commercial and industrial hub till 1960-61, when it ranked second after the state of Bombay in terms of per-capita income in the country. Home to companies such as Guest Keen Williams, Indian Iron and Steel Co., Andrew Yule, Bird and Co., Braithwaite & Co, Jessop & Co, Burn and Co., its share in all-India stock of capital in the Census of Manufacturing Industries (CMI) sector was 24.6% in 1950.
If the Calcutta-Asansol-Dhanbad belt was at the forefront of industrial activity in the country it was with reason. Engineering talent coming out of the colleges set up by visionary leaders like B.C. Roy, an excellent port, and an entrepreneurial class that seamlessly picked up the slack when the British gradually moved out, were part of a robust commercial ecosystem.
Led by industries like coal, jute, tea, engineering and iron & steel it built upon its pre-independence strengths when it had more factories and factory employees than any other province in India. Its share of the total manufacturing sector in all-India net domestic product (NDP) stood at 13.1% in 1960-61 according to Reserve Bank of India figures, and that of factories, a hefty 15.8%. The first big blow to its fortunes came with the partition of the country which hit two of its main industries, jute and tea. The loss of Chittagong port, was another major blow though even that was mitigated somewhat by the emergence of Calcutta port which was till the 1950s, India’s biggest port. Despite subsequent setbacks, in 1971-72, it was still ranked fourth on the index of infrastructure in the country.
The flight of capital from the state began after the 1967 elections which brought the first United Front government, with Ajoy Mukherjee as chief minister and Jyoti Basu as deputy chief minister, into power. Political expediency meant labour’s excesses were not so much tolerated as they were encouraged by the state government. Inevitably, gheraos, strikes and finally lockouts became the order of the day. Manufacturing slumped and just when the rest of the country looked set to take advantage of the opportunities presented by the liberalization of the economy in 1991, the state found itself bereft of the capital and the entrepreneurial spirit needed. Its share of the industry activity in the country, whether in terms of total number of factories, employment numbers or value addition, already in decline, was delivered a death blow by the competition that liberalization unleashed among the various states.
By the time Buddhadev Bhattacharya, who succeeded Jyoti Basu as chief minister in 2000, launched a re-industrialization plan under the slogan “Krishi amader bhitti, shilpo amader bhobhishot” (agriculture is our foundation, industry our future), West Bengal had missed the bus. Even a joke, they said, isn’t funny for the leftists until everyone has got it. Under left rule, in West Bengal, everyone did get it.
In 1982, the Left Front government scrapped the teaching of English from primary schools in the state. Through the 1990s, information technology was the hottest growth sector in India, one that should have been a heaven sent for the state with its abundance of engineering talent. But IT services needed English language skills as well, something that a generation of young people in the state had missed out on thanks to that 1982 decision. As states like Karnataka, Tamil Nadu, Delhi and even Haryana capitalized on the boom in demand for back office services, West Bengal was left out in the cold. In 2007, the same party realized it had erred and reversed its 25-year-old decision. Many IT companies set up centres in the state after that, which just show up the opportunity loss it had suffered.
Over the years of its isolation, the state also suffered from a flight of capital. Indeed, even as all major metros saw a surge of young people from outside, migration into Kolkata actually slowed considerably. Ironically, Kolkata is now one of India’s most livable metros but it looks like a retirement haven. It is the image that Bengaluru carried before the IT boom transformed it into the vibrant and chaotic metropolis of today.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.
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