By P.K.Balachandran/Eurasia Review
By a Herculean effort, the All India Trinamool Congress (AITC) has stopped the Bharatiya Janata Party (BJP) Juggernaut in West Bengal in the recent elections. But Chief Minister Mamata Banerjee cannot rest on her oars. Weighty economic issues have to be addressed from the word go, if the AITC is to win the 2024 parliamentary elections and the 2026 State Assembly elections against the BJP.
Despite its miserable performance on the economic front in the last seven years as the ruling party at the Center, the BJP is still identified with progress (Vikas or Asol Poriborton) by a large section of people in West Bengal. It is the second largest party with 77 seats, with the Congress and the Left nowhere in the picture. Modi continues to be an icon of India’s “aspirational classes.”
The task before All India Trinamool Congress (AITC) is truly uphill, as economists Maitreesh Ghatak of the London School of Economics, Ashok Lahiri, a former Chief Economic Advisor to the Indian government, and Prasenjit Bose, point out in their writings. Ghatak and Lahiri say that West Bengal had slid from being a top industrialized State in the 1960s (and even up to the 1990), to becoming an industrially backward State. It is industry which provides employment and social mobility which are sought by the aspirational classes.
Writing in Ideas for India in May 2021, Ghatak says that until the early 1960s, West Bengal’s per capita income was higher than the national average. But by 2011, its rank among States in this sphere had fallen to 11. The State is now the 14 th.
Between 2011-12 and 2019-20, West Bengal’s growth rate fell to 4.2%, when the all-India average growth rate was 5.2%.
However, agriculture had come to West Bengal’s rescue. Thanks to the land reforms brought during Left Front rule, the growth rate in agriculture was 3.3% between 2011-12 and 2019-20, while the figure for India as a whole was 1.6%. The AITC government’s welfare schemes such as the Kanyashree, Krishak Bandhu or Yuvashree, enabled rural consumption to grow. In the last decade, West Bengal’s rural consumption growth rate had shot up to 5%, while the national average was 3%. In the last decade, poverty in West Bengal had fallen to 14% while nationally, poverty went up to 23%.
Decline of Manufacturing
However, West Bengal has lagged behind in manufacturing and services, which provide mass employment and which are capable of big growth. Though the agricultural sector has been doing well, and 72% of West Bengal’s population lives in the rural areas, agriculture cannot support a growing, and an increasingly educated, population, Ashok Lahiri points out. In his 2016 piece in Ideas for India, Lahiri says that agriculture can grow at 5% for a few years, but can never absorb surplus labor in ‘quality’ employment or generate sustained 7-8% overall growth for two or three decades. Only industry and the services can.
Due to inadequate growth, rural folk are compelled to seek employment in the urban industrialized areas. But sadly, urban development in West Bengal has been poor because of a lack of industrial investment due to government apathy as well as rampant and disruptive politically-backed trade unionism, fostered during Left Front rule. Thanks to the infamous “gherao” culture, West Bengal, had slipped to the 10 th.,position in industrial development by 2000-2001. Its share of net value-added in the factory sector fell from more than 14% in 1971 to 4% in 2002. Its share in employment fell from 16% to 7%, Lahiri points out.
Furthermore, the employment that was being created was mostly of the ‘casual’ category, 32% were in the “casual” category, while the national average was 25%, says Prasenjit Bose, in The Wire.
“This reflects the poor quality of the jobs that most persons are employed in. Unemployment is quite high among the educated workforce, especially those with post-graduate and above degrees as well as those with diplomas/certificates,” he adds.
Bose says that the per capita income (NSDP) in West Bengal in 2017-18 was INR.65,978 at constant prices and INR 95,562 at current prices. This was lower than the per capita income for India as a whole in 2017-18, which was INR.86,668 and INR 1,12,835 at constant and current prices, respectively.
Poor Resource Mobilization
West Bengal continues to lag behind many other States in resource mobilization. While the revenue receipts as a proportion of GDP increased from 12.5% in 2012-13 to 15% in 2018-19 for all Indian states, revenue receipts in West Bengal had fallen from 11.3% to 10.5%.
The poor record in revenue mobilization has led to a deficiency in public spending. “While all the Indian states, taken together, witnessed a growth of development expenditure from 9.7% of GDP in 2012-13 to 12.2% in 2018-19, it has fallen to 8.4% of GSDP in 2018-19 in West Bengal,” Bose says.
In his budget speech of 2019, the West Bengal Finance Minister had claimed that US$ 145.93 billion worth of ‘business and investment proposals’ was attracted by the 2018 Bengal Global Business Summit. But such proposals were largely remain on paper, and the employment potential was very limited, Bose points out.
A new initiative promised financial assistance of INR 1 lakh each to 50,000 unemployed youth in the state to create self-employment opportunities. Bose dubs these “ half-baked and grossly inadequate investments”.
Though the BJP has been considerably weakened by the COVID-19 pandemic, and Prime Minister Narendra Modi’s image as a doer is in a shambles, he may still be a credible right wing force in many States including West Bengal in the absence of the Congress and the Left. Therefore, the All India Trinamool Congress government led by Mamata Banerjee will have to pull itself up by the bootstraps and attract investments from outside the State and also abroad to kick-start the languishing industrial sector.
A buoyant agricultural sector, by itself, will not see the AITC through. And to attract entrepreneurs, roads and other infrastructure will have to be vastly improved. West Bengal is lagging behind in road and highway construction. The government’s approach to land acquisition for investment and development would also have to change. By denying land to the Tatas for their motorcar plant in Nandigram, Mamata Banerjee had alienated investors, which was one of the reasons for her defeat at the hands of the BJP in the Nandigram constituency this time.