East India Company was headquartered in Calcutta and hence the Britishers chose to run their Indian show from Calcutta till they shifted their capital to New Delhi in 1911. As a result, West Bengal inherited many industries from the colonial era, which could have changed the state’s economic profile, but that did not happen only due to brazen mismanagement of things, first under the Left regime for 30 years and now under the political tutelage of Trinmool Congress leader and Chief Minister Mamata Banerjee. The worst happened in the form of Singur violence, which frustrated the investors so much that they are scared of investing even in dream in West Bengal, where industries are in tatters, though the state is rich in natural resources.
Industrial pursuits related to jute, tea, cotton and steel could not excel over the years due to wrong policy measures and lack of visionary efforts on the part of political leadership. Uncontrolled unionism and promotion of cadres as workforce rang the death knell for most of the state’s industries and those which have been able to survive against all odds are struggling to stay afloat. West Bengal was perhaps the first state in the country to see planned industrialisation India’s one of the first iron and steel plant was set up at Durgapur. India’s first IIT also came up at Kharagpur, and yet the state failed to emerge as a hub of industries. Engineering units at Howrah Industrial Complex are faced with multiple problems, while petrochemicals sector has grown to prominence as the bulk of their demand comes from the government or from other industries. In short, they do not depend directly on final consumer markets for demand, although indirectly they might.
In West Bengal, consumer goods sector includes paper, bicycles, electronic goods and garments, among others. This sector is also not picking up because of sluggish growth in agriculture, which is the people’s mainstay. In other words, the level of purchasing power in the home market is highly likely to be influenced by agricultural growth and incomes. Similarly, leather and leather products have a great potential in West Bengal, which accounts for 13.5 per cent of India’s exports (IBEF 2011). Although the leather industry has really taken off after the period under consideration, the industry has not been able to fully exploit its potential. Thus, we see that adopting the lens of structural demand allows us to emphasise the importance of both local and global demand in West Bengal’s industrial development. It enables us to revisit the link between distribution and growth, with an emphasis on agriculture-industry relations for the growth of consumer goods industries.
The creation of an industrial base through agricultural development was an explicit policy aim of the Left Front (LF) government in West Bengal when it embarked on its land reform programmes in 1978. Instead of focusing on reviving several ‘sick’ industrial units, the LF in its early days resolved to focus on agrarian reform that would improve rural income levels and create the basis for broad-based industrial growth (Das and Mahmood 2015), unfortunately this did not happen. Crucially, the LF’s policy turn towards industrialisation in 1994, ultimately leading to forcible land acquisitions at Singur and Nadigram, but the government erred in gauging the people’s mood. It was, in fact, erroneous on the part of the state government to forcibly acquire the farmers’ fertile agriculture land instead of creating the special purpose vehicle (SPV) where the onus of buying farmers’ land should have been left on the industries and the government should have played the role of facilitator.
It is here worth mentioning that the Central government’s policy of freight equalisation for coal and steel, introduced in 1956, certainly robbed the whole mineral-rich eastern region of India of a comparative advantage. The impact of the Great Depression on West Bengal’s industries was considerable. The drastic fall in demand also led to a slowdown in net investment during 1990s and the state’s jute output grew by 11.7 per cent less than its trend value during the 1930s. Moreover, the possible recovery of the sector after independence was not helped by the fact that immediately after 1947 the Central government imposed a tax on jute exports. Although the exports of tea continued apace during 1950s, it was not enough to make up for the poor condition of the jute industry.
The basic industries such as iron and steel and engineering, were established through public-sector investment during the 1950s. This served to dampen to some extent the burden of unemployment resulting from migration and the poor contributions of the export-oriented industries. It is, finally, not hard to see why one would not expect the consumer goods industries to have grown significantly during this period. The exponential growth rate of agricultural output during 1949-64 was a mere 1.20 per cent. The low level of agricultural incomes was not helped by the fact that West Bengal possessed a very complex and highly unequal structure of land holding relations since the Mughal period, while the land-man ratio was badly affected by the migration.
The decline of the jute industry in particular, seems to have been more a result of mismanagement and asset-stripping rather than low demand. However, the basic industries, dependent as they were to a large extent on public investment and government demand, were affected badly by the lack of government orders. This had a negative impact on output as well as employment in the states, particularly in public sector units. The greatest immediate impact of the slowdown after 1965 was on employment in West Bengal, since the state produced a substantial amount of engineered goods demanded directly by public sector enterprises and the Central government. (To be continued)