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Bengal poses a high growth puzzle

Bangalore, April 4: Bengal’s growth in the last few years has flummoxed the Confederation of Indian Industry (CII), the country’s premier business lobby.

Making a presentation here today on the Indian economic scenario and the impact of the Iraq war on it, Ashok Soota, CII president, said Bengal was the second fastest-growing state in terms of gross domestic product. But the rating was accompanied by a footnote: “enigma”.

According to CII estimates, Bengal’s compounded average growth rate between 1994-95 and 2000-01 is 7.8 per cent, second only to Karnataka’s 8 per cent and way above the national average of 5.8 per cent.

Asked why the CII found Bengal’s growth an “enigma”, Soota said the remark reflected the contradiction between the numbers and the general impression that the state is not quite an industrial paradise.

“Obviously, despite the general saying that nothing is happening there, things are moving ahead in Bengal,” he said.

Elaborating, Soota said the state is making gains in areas like agriculture-based industries. “Of late, Bengal has made a small but significant beginning in the information technology sector, too.”

Bengal finance minister Asim Dasgupta had said while presenting the 2003-04 budget: “While the rate of growth of GDP of the country has come down to 4.4 per cent, the rate of growth of the state domestic product of Bengal has shown, even in the midst of a financial crisis, a further rise to 7.6 per cent.”

He said agriculture grew by 4.9 per cent, industry 5.8 per cent and services 9.8 per cent in the year ending March 31, 2003.

Experts acknowledge that on paper Bengal’s growth rate looks impressive but are unable to explain how this magical level is being reached.

“A growth rate of 7.6 per cent in state domestic product is indeed an achievement. But there are some physical indicators of growth, like rise in output or employment or investment, which can capture the advances made in real terms. So we must try to address the question whether we have seen such real changes in the state,” said a Calcutta-based economist.

Shorn of politeness what this means is that such high rates of growth are not borne out by ground realities.

An industry observer said as much. “The reality significantly differs from the data. It’s true that we don’t have much idea about what’s happening in the agriculture sector. But the primary sector alone can’t fuel such growth and the state of manufacturing is a known (bitter) story. The growth in the service sector has been remarkable, but we all know that the base has been small. Then how do we justify the data' We must be missing something,” he said.

Haryana is the only state, apart from Karnataka and Bengal, to have a higher growth rate than the national average.

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