Behind the politics battle, West Bengal’s slowdown economics

AS West Bengal Chief Minister Mamata Banerjee fights perhaps her most significant electoral battle, framing her contest is not just BJP vs Trinamool politics — but the state’s economics as well.

The anti-incumbency Banerjee faces is as much about local-level corruption and competing ideologies as it is about stalled industrialisation, weak credit growth, a near-freeze in new jobs, low infrastructure development and agriculture spend.

In 2019-20, West Bengal’s GSDP growth at 7.26 per cent was higher than the 4.0 per cent national GDP recorded the same year but for four of the five years between 2015-16 to 2019-20, West Bengal’s GSDP growth has been lower than the national figure.

RBI data shows that West Bengal is one of the poorest performers on bank credit growth.

Between the fourth quarters of 2018 and 2020, while aggregate credit of scheduled commercial banks grew by 20 per cent for the whole of India, West Bengal saw just about half of that — a weak 10.6 per cent growth. Only Goa and Punjab registered a lower growth than West Bengal.

Not only on bank credit, West Bengal had one of the slowest growth rates for bank deposits during this two-year period, too. While deposits expanded by 19.8 per cent across the country in this period, that for West Bengal grew 14.1 per cent.

Said Trinamool’s leader in the Rajya Sabha Derek O’Brien: “Modi-Shah and their Tourist Gang can’t compete with us on real parameters of good governance and genuine development…So what do they do? The usual desperate distractions pre-elections: Pakistan, polarisation and puffy promises that will never be fulfilled.”

But for a state fourth largest by population, high unemployment rates can be an issue. CMIE data for February 2021 shows West Bengal had an unemployment rate of 6.2 per cent, which though better than the national 6.9 per cent, was higher than that in many states — the state was at 17th spot among 27 states.

The state also records low daily wage and per capita income. While the national average daily wage for non-agriculture labour for FY 2020 was Rs 294, a report by Care Rating points out that the wage rate in West Bengal was lower by almost 8.5 per cent. For Kerala and Tamil Nadu, also poll-bound states, it stood at Rs 670 and Rs 438 respectively.

On per capita income, too, West Bengal’s figure of Rs 1.16 lakh was 16% lower than the national average.

On MSMEs, a vital indicator of local industry and employment, there are glaring gaps in West Bengal. As per the NSS 73rd round survey, the state had 88.67 lakh MSMEs as of 2015-16, second only to Uttar Pradesh. These MSMEs employed around 1.35 crore individuals.

But according to analysis of the 13.47 lakh enterprises that have completed the MSME Udyam registration process – under the Ministry of MSME – until December 31, 2020, West Bengal does not appear anywhere in the list of top 10 states. The top five in the list include Maharashtra, Tamil Nadu, Gujarat, Rajasthan and Uttar Pradesh. West Bengal had just 27,776 Udyam-registered MSMEs and they employed an average of 5.84 individuals.

On social and development indicators, the state offers a mixed bag. Official data shows that while the state’s spending on education and rural/urban development areas in 2019-20 is above the national average, allocation towards roads, health and agriculture sector lags behind.

Spending in the social services sector — which includes education, health, sports, art and culture, housing, water supply, labour welfare and others — as a share of total spending has been rising steadily from 16.34 per cent in 2016-17 to 19.42 per cent in 2018-19. However, it declined marginally to 18.83 per cent in 2019-20.

Agriculture witnessed a sharp decline in its share in 2019-20. In fact, the share of agriculture spending in total expenditure was the lowest in six years ending March 2020.

Even expenditure on physical infrastructure witnessed a decline in 2019-20 and was only 3.33 per cent of total expenditure in 2019-20 – the lowest in last five years.

The state’s spending on the health sector at 5.1 per cent of its expenditure in 2019-20 (Budget Estimates) is marginally lower than the national average of 5.3 per cent during the same period.

West Bengal has allocated 5.1 per cent of its expenditure towards agriculture and allied activities in 2019-20, significantly lower than the average allocation of 7.1 per cent by all states put together.

As per 2019-20 BE, the state allocated 16.8 per cent of its expenditure for education sector, higher than the average of 15.9 per cent for average of 29 states in 2019-20 BE.

It’s on the rural development front, that the state’s spending exceeds national average by a significant margin. West Bengal allocated 10.1 per cent of its expenditure for rural development in 2019-20 BE, significantly higher than the average allocation for rural development by states at 6.2 per cent.

On urban development, West Bengal allocated 5 per cent of its expenditure for 2019-20 BE, higher than the average allocation for urban development by states at 3.4 per cent.

The state’s spending on roads and bridges at 2.3 per cent for 2019-20 BE is significantly behind the average for all states at 4.2 per cent in the same year, according to PRS Legislative Research and West Bengal budget documents.

Between 2016-17 and 2018-19, capital expenditure as a percentage of total expenditure rose steadily in the state from 7.96 per cent in 2016-17, to 12.18 per cent in 2018-19. However, it fell sharply to 8.43 per cent in 2019-20.

The state government has been accused of not implementing Central schemes including PM Svanidhi Yojana, Ayushman Bharat and PM KISAN Samman Nidhi Scheme.

According to the PM Svanidhi portal, while a total of Rs 1,978 crore has been disbursed to 19.99 lakh applicants under the scheme, banks in West Bengal have disbursed only Rs 2.07 crore to 2,093 individuals. This scheme was launched in June 2020 to help vendors amid the pandemic. The scheme is a micro-credit facility that provides street vendors a collateral-free loan of Rs 10,000 at concessional rates. (with Karishma Mehrotra).