In Bengal, get ready for an epic battle – Part-1

Insight Chandra

Subhash Chandra and Tej Bahadur

In Bengal, an epic battle brews between the Trinamool and the other contenders for the Crown in the Forthcoming election. None of the contenders appear to be fully confident of the outcomes with the Trinamool exploring all possible ways to reach the magic mark, the Left thinking of an alliance with its erstwhile rival the Congress party and the BJP finding ways to atleast repeat its performance of the 2014 election. In a series of articles we explore the various dimensions that may impact the results of the election in 2016. Today, we cover the economic dimension -

Significant Improvement versus National average but marginally lower than when Left was in power: Under Trinamool, West Bengal went from 15th amongst Top 19 States on per capita GDP growth (Current Prices) between 2006 and 2011 to 4th amongst these 19 States between 2011 and 2015 on per capita GDP growth. However, given the overall national slowdown, the per capita GDP Growth rate (CAGR) between 2011-15 at 13.68% is marginally lower than between 2006-2011 growth rate of 13.68% under the Left.  In fact, the GSDP growth hovered at greater than 15% in the final 2 years of the Left tenure. The growth has been sustained on the back of significant increase in overall debt which has increased significantly from 198195 crores in 2011 to Rs 299274 crores in 2015.

Strength outside the big cities, a few weaknesses too: Mamata faces a city vs outside divide. Deposit growth outside the main cities was almost twice  (22.7% vs 12%) that of Top 27 Cities deposit growth in her tenure. The rapid growth is probably due to better agriculture performance under TMC when compared with the Left (Average of 1.97% between 2006-11(Left) versus 3.42% 2011-14 (TMC), Constant Prices). The growth has been sustained by higher expenditure in the rural employment guarantee programme which had gone up by a whopping 107 per cent during the first two years of the Trinamool government, while 10 lakh farmers have been equipped with Kisan Credit Cards to help them access credit facilities. Between 2013-14 itself, the Trinamool Govt again effected significant increases in spends in rural India.

Not everything is hunk dory in rural Bengal though. For the first time, Bengal has reported farmer related suicides . There have also been issues with payments on NREGA as well. The Chit fund scam that may have included over 194 companies is estimated at Rs 60000 crores may have impacted rural Bengal much more than the big cities.

However, the relatively poor performance in the 27 cities that constitute nearly a quarter of the population is a matter of serious concern. The lower growth is probably because both services (down from 8.9% to 8.6%) and manufacturing (down from 5.9% to 5.4%) have seen a slowdown when compared to the performance versus the Left regime.

The slowing pace of Industrial and Services growth Mamata had come to on the back of protests against the industrialisation under the Left regime. This had delivered significant rural vote particularly due to the protests against the land acquisition by the govt in Singur and Nandigram. However, she has not been able to delivering her promise in Singur, where the land is yet to be returned to the farmers nor has it motivated the Tatas to invest in Bengal. The long awaited Jindal steel plant in Bengal is now delayed for unsaid reasons but the fact is that the company is making significant investments in Karnataka and elsewhere. A smaller cement plant has come in its place in Bengal. The business climate in the State has not encouraged companies like Infosys and Wipro either to make additional investments in Bengal.  Other examples include the departure of ABG, a logistics company citing worsening the law and order situation at the port instigated by local stevedoring and shore-handling firms owned by lawmakers belonging to the Trinamool Congress Party (TMC) that rules West Bengal as well as Keppel Megus owing to challenges of dealing with politically-backed cartel of building material suppliers in New Town Rajarhat—locally called syndicates.

All of these have contributed to a slower manufacturing and services growth when compared with the Left Govt in 2006-11.

Slowdown in Investments: While Bengal scores high on investment proposals, conversions are weak. Between 2011 and 2015, the State received Rs 7736 crores as investments versus 8514 crores in Odisha and 110582 crores in Gujarat. The equivalent figure was Rs 36000 crores between 2006-11 (Source: Bengal Government). Further, some of the corruption cases have been linked to senior officials (like Madan Mitra and KD Singh) within the Trinamool Govermment  have further hurt the business environment in the State. Credit growth between Q2 2011-12 vs Q2 2015-16 was a total of 48%, only Jharkhand amongst the 19 States was lower. The overall investment mood has thus remained despondent.

Serious unemployment problem: The marginal slowdown in growth means that the only some of  19 million (2001 census) who were looking for a job in Bengal in the 2011 have been able to find a job. While the employment situation appears to have improved according to recent surveys, those same surveys indicate two crucial points – Bengal’s unemployment rate in 2013-14 was higher than the national unemployment rate (5.2% vs 4.9%) and further that Bengal had a much lower work participation rate (47.2%) versus 49.9% for India on an average.

The sum total of all of this is that the Overall Satisfaction with the Trinamool Government was at re-election borderline of 50% in 2015, the Nitish Govt in Bihar in 2015 was at 66%. Governments operating at this level of satisfaction usually tend to have difficulties in getting themselves re-elected. The Trinamool Congress will need to leverage its performance outside the big cities where bulk of the voters live (70-75%) and translate that to an overall victory. The Left front in turn will need to deliver a credible performance in rural Bengal while ensuring that the urban seats are not won by Trinamool on account of the competition with BJP and the Left. As a strategy, the Left Front will need to have a significant offer to attract many of BJP’s supporters to its fold if it wishes to compete in the next election. The biggest problem is unemployment and parties that are able to offer the best roadmap will be in a comfortable position during the forthcoming election.

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