Why Bengal Has Lot Of Catching Up To Do On Industrialisation

Rajiv Kumar
·5-min read

October 3, 2008 will always remain etched as a black chapter in Bengal’s industrial history. Top industrialist Ratan Tata at a press briefing had announced his “regretful decision” of moving away the prestigious Nano small car project out of the State after prolonged violent protests by local farmers in Singur over land acquisition.

Ratan Tata while blaming the then opposition leader Mamata Banerjee had said: “I had hoped that there would be some understanding on the part of the opposition party, headed by Mamata Banerjee, and that we would see some reduction in agitation and we could go ahead with the project.”

With Tata’s decision, West Bengal’s dream of economic revival came crashing down.

Ten days later on October 13, 2008, at a felicitation ceremony in Delhi, the then Gujarat chief minister Narendra Modi had said: “Within five minutes of Tata’s announcement, I sent him an SMS saying swagatam (welcome).”

Modi had further added that, “While leaders of other States were writing letters to Tata, my one-rupee text message did the trick.” Tata moved the Rs 1,500-crore project to Sanand in Gujarat.

The anti-industry image has haunted Banerjee for long in her political career. “Never was I against industry, but such an illusion was created by certain quarters,” Mamata reportedly said in an interaction with industry captains in 2009.

Mamata roped in Amit Mitra from FICCI to set right the image. Beginning 2013, the Bengal government started annual investors’ summit aimed at showcasing the opportunities and possibilities of investment in West Bengal. In the first two years, the event was a pale version of Modi’s ‘Vibrant Gujarat’ summit but it picked some pace in the last couple of years.

Now ten years down the line, available data suggests that Mamata’s efforts have brought a mixed bag of results for West Bengal on both the industrialisation and fiscal front.

The State has improved its ranking in Ease of Doing Business from 11th rank among States/UTs in 2015 to 9th rank in 2019, the latest year for which the ranking is out. These rankings, started in 2015, are done by the Department for Promotion of Industry and Internal Trade (DPIIT) in partnership with the World Bank Group, and weigh on the implementation of the Business Reform Action Plan (BRAP).

The BRAP for 2018-19 included 180 reform points covering 12 business regulatory areas such as Access to Information, Single Window System, Labour, Environment, etc.

In 2003, the West Bengal Assembly under the Left Front rule had enacted the West Bengal Special Economic Zones Act, 2003, much before the Centre’s comprehensive SEZ Act, which was passed by Parliament in May 2005. With more liberal economic policies and simplified governance process, the SEZs have evolved as an exclusive and very important vehicle of economic development.

However, till October 2020, West Bengal had just seven of the 240 operational SEZ in the country. Compared to Bengal, Tamil Nadu had 46 SEZs while Maharashtra and Karnataka had 37 and 34 SEZs, respectively. Of the seven SEZs, five including ones in Rajarhat and New Town are dedicated for Information Technology (IT) & IT enabled services.

In January 2016, Mamata Banerjee government launched the State’s start-up policy. The policy document aimed at creating an enabling environment and supporting eco-system to facilitate 10,000 startups in Bengal in the next ten years. It also earmarked 20% space in industrial estates, SME clusters for the startups and made provisions for access of priority equity funding from WB MSME Venture Capital Fund. In 2018, it shared ‘Aspiring Leaders’ tag along with Haryana, Himachal, Jharkhand and Uttar Pradesh in the Department of Industrial Policy and Promotion (DIPP) States’ Start-up Ranking.

Yet, as of March 1, 2020, Bengal had just 839 recognised startups of the all-India total of 28,979 i.e, just around 2.9% of the total startups existing in the country. In comparison, Maharashtra had 5,477 startups, while Karnataka, Delhi and Uttar Pradesh had 4,206, 3,740 and 2,342 startups, respectively, according to the government’s written reply in the Lok Sabha in March 2020.

According to the Annual Survey of Industries —the most important source of industrial statistics of the registered organised manufacturing sector of the economy — in FY 2012, West Bengal had a total of 8,402 factories of which 7,407 were in operation. By FY 2019, the State added 1,018 units, thereby raising the total number to 9,420 units i.e, a growth rate of 12.12%, slightly above the national growth average of 11.42%.

However, the number of factories in other States like Chhattisgarh, Gujarat, Haryana, Assam and Odisha grew at a much faster pace. Haryana with a growth of 92.69%, in the same period, almost doubled the number of factories inside its borders from 6,142 units in FY12 to 11,835 units in FY19. Lesser developed Assam added 66.28% more number of factories while factories in Chhattisgarh, Gujarat and Karnataka grew by 44.66%, 20.80% and 20.32%, respectively.

West Bengal was among the States that achieved 100% household electrification under the Centre’s ambitious Saubhagya yojana. However, in per capita power consumption, an important barometer for development and overall well-being, the State ranked low amongst the larger States. In 2018-19, at 703 kWh, per capita electricity consumption in the State was much below the national average of 1181 kWh, according to data provided by the Central Electricity Authority.

Compared to Bengal, neighboring Odisha had per capita power consumption of 1,628 kWh, Tamil Nadu 1,866 kWh, Karnataka 1,396 kWh, and Gujarat 2,378 kWh.