The Telegraph
Since 1st March, 1999
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The recent remarks of the prime minister, Atal Bihari Vajpayee, on West Bengal’s economic decline, and the strong counter-attack by the chief minister, Buddhadeb Bhattacharjee, have stirred up an old debate. A heated controversy was triggered by the remark of the former prime minister, Rajiv Gandhi, when he proclaimed that Calcutta is a dying city. The response, in true Bengali fashion, was that Calcutta was the cradle of the 19th century Indian renaissance and hence, such a remark was unwarranted from anyone, least of all the prime minister. What many did not realize was that harping only on past achievements actually strengthens the perception that Calcutta was once a great and vibrant city but has lost, or is losing, its glory. In any case, few would doubt the fact of Bengal’s and Calcutta’s economic decline, if not a cultural one. So, the question remains: who or what are responsible for Bengal’s economic slide down over the years'

Many factors have contributed to the decline in a cumulative way. The first was the shifting of India’s capital from Calcutta to Delhi in 1912. Immediately, Calcutta and Bengal lost its proximity to the centre of political power and decision-making in India. Since then, no new infrastructure development project was undertaken in Calcutta as long as the British ruled.

The next major setback was the Partition of India. Bengal and Punjab were the two worst sufferers. The jute mills were in West Bengal, but the jute growing areas fell mostly in East Bengal (then East Pakistan). Many of Bengal’s gentry lost their landed property in East Bengal. This brought about an economic decline for those families. Most importantly, Partition led to a huge influx of refugees to Calcutta and its neighbourhood. This put stress on Calcutta’s infrastructure, causing unemployment to skyrocket and forced many state enterprises like the Calcutta State Transport Corporation to absorb them almost as a part of the refugee rehabilitation programme.

The refugees became easy political cannon-fodder which made Calcutta “the city of processions” and bandhs — a nightmare for industrial capital. The overpopulation problem led to the growth of slums all over the city and its suburbs. Unlike Punjab where the population flows were both ways, the influx of refugees into West Bengal far outweighed migration to East Pakistan.

Another landmark was the demise of a visionary leader like B.C. Roy. Both Durgapur and Salt Lake — the two most significant post-independence industrial-urban developments in Bengal — are the fruits of Roy’s vision and initiative.

The left-dominated United Front coalition government, which came to power in the Sixties, was mostly composed of trade union leaders who considered industrial capital and management as enemies of labour. This led to a period of gheraos and physical intimidation of company officials, often openly supported by the parties in power. Investment and capital began to flee from Bengal. This was further accelerated by the growth of the Naxalite movement.

On top of all these came the freight price equalization policy. The freight rates by Indian railways were adjusted in a way that there would be no locational advantage for any state. This policy neutralized the traditional advantage that the Bengal-Bihar industrial belt enjoyed due to the local availability of coal and iron ore.

The Jyoti Basu-led Left Front-coalition government which ruled the state for more than 25 years could not arrest the decline. No doubt Bengal suffered in terms of allocation of resources by the Central government as most of the time, political parties which were at loggerheads with the left ruled at the Centre. But, that is not the full explanation of why the left failed. Basu (and his colleagues) could not forsake the mindset of a trade union leader or of the leader of the opposition, until towards the fag end of his political career. But the damage to the image of Bengal for investors has already been done. Some progress was made in the rural economy in terms of land reforms and the panchayati raj which incidentally helped the left stay in power for such a long time. But no such bold initiatives were forthcoming to improve the investment climate of the state. State-sponsored bandhs became part of the state’s culture. The administration became highly politicized, work culture and discipline continued their downhill journey, and the urban infrastructure (despite the Metro Rail, the Vidyasagar Setu and of late, a few flyovers) in Calcutta and the suburbs failed to boost investment.

A lot of prime land around the Eastern Metropolitan Bypass was sold or leased out to people (often non-resident Indians) for setting up industries, but only a few of them materialized. It seems that the “investors” were primarily interested in acquiring prime land at throw-away government prices and later transfer them at higher prices. The left’s proud claims of the climate of communal harmony in the state does not cut much ice among potential investors. The power situation is better in Bengal compared to many other states. But the main reason for this this is the relatively low demand for power here, with hardly any new factories coming up. While the per capita annual consumption of electricity in West Bengal is around 200 kilowatt hour, the same is above 900 in Punjab, 800 in Gujarat and 500 in Tamil Nadu.

The economic decline of Calcutta has also affected the quality of its prime institutions. These days, only Bengalis or people with strong roots in Bengal decide to stay in Calcutta. A prime instance of this is the fact that less than 20 per cent of the faculty of the Indian Institute of Management, Calcutta, an all-India institute, are from outside the state. The same would be broadly true of the Indian Statistical Institute, Calcutta, which once drew faculty from all over the world. This sets off a vicious cycle. Bengal is getting distanced from the rest of India and the world. Some of the best minds of Bengal have left the state and few from other places are coming to the state. This can only breed a narrow outlook and an insular feeling of being content with the little we have. This is how villages decline.

Is there no hope for Bengal’s economic future' There are only two bright spots in the prevailing gloom. One, the new chief minister, who seems sincere in his efforts. Second, the success of the Chinese experiment. Our local leftists find it easier to follow whatever the Chinese (earlier the Russians) are doing, even if the path is a market-oriented capitalist one. Hopefully, the pragmatism of Chinese communists will rub off on our local comrades.

I recently attended an international conference in China. As part of the programme, we were taken to visit an industrial plant. We were told that the plant, which manufactured lifts and escalators, started with 20 per cent foreign and 80 per cent domestic capital. But now, the foreign ownership has been increased to 80 per cent. I asked whether the socialist government took kindly to the drastic increase in foreign ownership. The manager looked surprised and replied that it was an arrangement between two private owners. Both the local and the foreign partners found it advantageous. Why should the government object' As long as it is getting the taxes' Does this have a few lessons for the communist leaders of West Bengal'

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