People often say that nostalgia is not a good thing because it prevents one from moving forward in time. But nostalgia is perhaps good for Kolkata because it could learn so much from its past glory which was ruined by successive Left Front and Trinamool Congress (TMC) governments. BJP president Amit Shah, in a speech in West Bengal, had said that the state’s share in the nation’s GDP was 25 percent at the time of independence and now it is at a mere 4 percent. So the question is, who is to be blamed for this destruction of the economy of West Bengal? The prevailing socio-economic policies at the national and international level or the incompetent governments of the state? Unfortunately, both of these contributed in turning one of richest regions in the country to one of the poorest.
If we look at the history of political economy around the world, poverty and Communism often go together. Communism often comes to any country or region and if often followed by poverty, authoritarianism, and restrictions to freedom of speech and one party rule. The curse of Communism reached to Indian state of West Bengal almost four decades back in 1977 and destroyed the social, cultural and economic power of the state. The regime which replaced the Left Front government after 34 years – Mamata Banerjee led AITC – is known to be ‘Left of Left’, ideologically.
During the regime of Left, union strikes, harassment of businessman and industrialists were common phenomenon. The communist leaders defamed the industrialist as ‘bourgeois’ and kept them at bay. The share of West Bengal in total industrial output declined from 9.8 percent in 1980-81 to just 5 percent today. The share of manufacturing in the state GDP declined from 21 percent in 1981-81 to 13 percent. The Bank deposit in the state declined from 11.4 percent of pan India deposit to 7 percent. On the infrastructure front, West Bengal’s index was 110.6 in 1980 which means 10.6 percent better than rest of the country and it declined to 90.8 points. On the other hand, Odisha improved from 81.5 to 98.9 points.
On Health and Education indicators, the state has been one of the poorest performers in last few decades. West Bengal was on eighth place in the list of Indian states by HDI and slipped to 28th in 2018, a massive 20 place decline.
The important point to note here is that despite Calcutta (now Kolkata) being an industrial hub in the pre-independence period and the early years of independence, the industries were largely owned by Marwaris and Gujaratis. Some of these businessmen were operating in Bengal since the Mughal period.
When the communist regime started harassing these Gujarati and Marwari businessmen, most of them migrated to other parts of the country like Delhi and Mumbai. With its main entrepreneurial base gone, because it no longer saw any opportunity in the state, the economic decline of Kolkata started.
The Left turned West Bengal into one city state and expanded the geographical stretch of the Kolkata without proper infrastructural input. The government gave the hawkers free run on pavements which limited the city’s road space. No step was taken to manage Kolkata ‘s bourgeoning slums which number around 5,000.
The state government banned the use of English till class VI in public schools while the children of Communist leaders studied in private English medium schools. The Communist government’s disdain for capital and industry forced many business houses out of Kolkata and restricted the entry of new business.
Today, thousands of middle class Bengali people could be seen working across Information Technology, Media & Entertainment and other corporate sectors as professionals. The state has abundance of ‘good human capital’ due to introduction of modern education very early as compared to other regions of the country. But the modern service industries like Information Technology, Automobile, Banking and Finance firms did not open units in West Bengal due to apathy of Left Front government towards capital. Rigid labor laws, graft, trade unionism were other factors that kept these sectors away from cities of West Bengal, more specifically, Kolkata.
The status of economic and service sector hub enjoyed by cities like Pune and Hyderabad could have been that of Kolkata if a good government has been in power. The status of the economic capital of India enjoyed by Mumbai was with Kolkata almost four decades back. If a government which respects capitalism and rule of law had been elected in the state, Kolkata could have retained the status.
The middle class Bengalis started moving outside the state in search of opportunities. The Bengali professionals with very familiar surnames could be found on tap management positions of almost all large companies. But while Bengalis across the Indian cities thrive, Kolkata remains poor and badly governed.
As one can see in the above picture, Kolkata was India’s largest urban agglomeration in 1950. This was due to economic opportunities the city had to offer, ambitious and talented people from across the country migrated to Kolkata for better living condition. But Kolkata lost its status to Mumbai by 1990 and was displaced to second place. Delhi appeared on 15th place in the list.
Delhi was not even in top 30 at the time of independence. By 2007, the city was further pushed to third place. By 2025, Mumbai and Delhi will be second and third largest cities on the globe by population while Kolkata will be displaced to eighth place. The downfall of Kolkata in comparison to Delhi and Mumbai is due to the fact that it no longer offers economic opportunities to people and therefore people no longer move to the city. In fact, middle-class citizens of the city migrate to other cities to look for better living conditions.
At the time of independence, Kolkata was among the most productive city of the country. As per the report by PwC, Mumbai will be 10th in cities by GDP (Purchasing Power Parity) by 2025 with 594 billion dollars and Delhi will be on 19th place with 482 billion dollars while Kolkata does not even appear on the list.
The state is among the least industrialized states and fares much worse in every socio-economic indicator. The state used to have the highest per capita income at the time of independence, but now its place has slipped to the 19th place. This data alone is enough to tell us how badly the previous governments performed. At the time of independence, it produced a quarter of India’s GDP, and now it is on the sixth position, behind Gujarat whose population is almost half of West Bengal.
Mamata Banerjee talks about the socio-economic welfare of the people but the harsh fact is that the state has one of the worst taxes to GSDP ratio (the debt to GDP ratio) in the country.
The simple question is, if the government does not have money, how it will spend on welfare schemes like health, education and PDS? On the other hand, the state is sitting on huge pile of debt, which is accumulated primarily due to the previous Left front government. Mamata Banerjee has also contributed to this.
The state has one of the lowest capital expenditures. This problem is due to excess revenue expenditure by the government on inefficient welfare schemes. The inability to raise revenues and a tendency to overspend on revenue expenditure has crippled capital expenditure in the state. Lower capital expenditure threatens the sustainability of the state’s growth path, as well as the state’s ability to lower the debt-GDP ratio.
The performance of the Left Front government has been so bad that even left-leaning economists like Amartya Sen criticized the government for being responsible for de-industrialization of the state. “The Left has played a major role in destroying industrialisation in Bengal. We must accept that. Only when they decided that policies must be changed, the people decided to change the government instead. I think there is some problem in the way with which the Left party thinks over an issue,” said Sen in 2016.
The Left front and the TMC have destroyed the economy of the state and a regime change is necessary to put the state back on the path of growth. Now, only a regime change can bring back the golden days of ‘Amar Sonar Bangla’. If Kolkata wants to reclaim the status of ‘economic capital of India’, the state of West Bengal must learn to elect better people and parties to govern the state and the city.