Ranjan Ghosh

Professor Ranjan Ghosh holds a B. Tech in Mechanical Engineering from I.I.T. Kharagpur, an M.S. in Industrial Engineering from Stanford University, and a M.S. and D.Sc. in Operations Research from Columbia University. Dr. Ghosh was on the faculty of IIM Calcutta, IIM Bangalore and IIT Kharagpur for thirty five years. At IIM Calcutta, Dr. Ghosh had held many administrative positions, including Director-In-Charge and Membership of the Board of Governors. He has been the Director of the Goa Institute of Management. While in U.S.A., he worked for three years with IBM and Communication Satellite Corporation. He has been on teaching and research assignments to Columbia University, Cornell University and the University of Iowa in U.S.A. He has been a Visiting Professor at several IIMs, XLRI, XIMB, AIT in Thailand, and at the Dubai and Singapore Campuses of the S P Jain Institute of Management.

During the first few years after the independence of India in 1947, West Bengal was highly industrialized and possibly the most industrialized state in the country. It retained its predominant position till the early 1960s. In the 1950s, Bengal was one of the highest ranking states in terms of per capita income; it is now ranked twenty third among the states. It was also a leader in the field of education and research and development in science. The early part of the 20th century was the golden era of scientific research in India, particularly in West Bengal. Whether it was the discovery, inter alia, of the malaria parasite or wireless or the Raman effect, they all took place in the research laboratories and academic institutions of Calcutta, spearheaded by a galaxy of scientists such as Roland Ross, C V Raman, Jagadish C Bose, Satyendra N Bose, et al. Acharya Prafulla C Ray, an eminent scientist, was a pioneer in India and probably the world in implementing successfully the concept of lab-to-industry, i.e., spawning an industry based on inventions in the laboratory, by establishing the Bengal Chemical and Pharmaceuticals Ltd. In the years just prior to and after independence, premier academic institutes such as the Indian Statistical Institute, the first Indian Institute of Technology and the first Indian Institute of Management were founded in West Bengal. Satyajit Ray played a leading role in bringing global recognition to the Indian movie industry.

The seeds of the decline of West Bengal and a few other states in the eastern India were laid by the freight equalization policy adopted by the government of India in 1952, which was based on the paradoxical premise that the availability of minerals in the states in eastern India provided them an unfair advantage, enabling them to achieve a higher level of industrialisation as compared to the states in other parts of India. The freight equalisation policy made “essential” items such as coal, steel, cement, aluminium, limestone, bauxite, mica among many others available at the same price throughout the country, ostensibly to facilitate the equal growth of industry all over the country. However, this policy did not apply to cotton, which is grown primarily in the western states, and hence there was no incentive for the textile industry to come up in the eastern states. It also did not apply to petrol, diesel and other petroleum products for which a large amount of freight cost was paid by the states in eastern India to gulf countries and refineries in western India. The policy hurt the economic prospects of the mineral-rich states like Bihar (including present-day Jharkhand), West Bengal, Madhya Pradesh (including present-day Chhattisgarh) and Odisha, since it weakened the incentives for private capital to establish production facilities in these areas. A factory could be set up anywhere in the country and the transportation of minerals would be subsidised by the central government. As a result, there was growth of heavy and middle level-industry outside the mineral-rich regions of the country. These states lost their competitive advantage of holding the minerals, as businesses preferred setting up industrial locations closer to the coastal trade hubs and markets in other parts of the country. Even after the removal of the policy in 1993, these states could not catch up with the more industrialised states. In 1996, the Commerce & Industry minister of West Bengal complained that “the removal of the freight equalisation and licensing policies cannot compensate for the ill that has already been done”.

The last nail on the coffin was struck because of policies adopted by the Left Front Government that took over the reins of the state in 1977 and ruled the state for the next thirty four years. The rot had already set in as the Naxalite movement, which originated in Naxalbari in North Bengal in 1969, soon spread to other parts of the state and broke down law and order in the state till it was ruthlessly suppressed by the state government in the mid 1970s. Next to hit the state was the scourge of militant trade unionism, gherao and lack of work culture in industrial undertakings as espoused by the Left Front Government. The corporate sector was alarmed by these developments and decided to flee the state. Quite a few blue chip corporations shifted their Headquarters from Kolkata to other cities and stopped making any further investments in Bengal. A few of them became sick and closed down or, like IISCO, Jessop, Burn and Braithwate, were nationalised. The renowned foundries of Howrah, known as the Sheffield of the East, closed down because of problems in industrial relations and prolonged shutdowns because of lack of electricity. The government of India had set up an integrated steel plant and an alloy steel plant in Durgapur in the 1950s and a port and refinery at Haldia in the early 1970s. Unfortunately, no other investment was made by the central government in West Bengal. The Ordnance Factory Board has set up twenty five plants or defence production units since 1947, but not a single one in Bengal. The Defence Research and Development Organisation (DRDO) have established fifty two Research Laboratories, but not a single one in Bengal; they have only established three Centres of excellence in Kolkata. The eastern and the north eastern regions of the country have been systematically neglected by the Defence Ministry.

Successive governments in the state and at the centre have neglected the development of physical infrastructure in the state, rendering it less than competitive with respect to most other states for attracting investment in manufacturing or for boosting tourism. The development of highways has been inadequate, considering the size of its population. The draft of the Hooghly River has come down drastically because of excessive consumption of water upstream resulting in a siltation where only very small ships can avail of the services of Kolkata Port or the Haldia Dock. Supertankers are no long able to navigate to Haldia Dock, and are compelled to discharge crude oil from the Middle East at Paradip Port, from where they are transported by pipeline to Haldia and Barauni refineries. Of all the coastal states in India, Bengal is the only one that has practically no port for large and medium sized ships, and is therefore unable to provide cost-effective logistical support to the manufacturing sector. No wonder that in recent years, Bengal has performed well in the IT and BPO services sector, but very poorly in manufacturing.

After taking over the reins of the government in 1977, the Left Front Government adopted a policy of downgrading English in school education. They decided that English would be taught only from the sixth class onwards in government schools. A large section of students in Bengal were affected adversely, as they were less conversant in English than their counterparts from other states and found it difficult to compete with them in job interviews and in entrance exams for admission to reputed academic institutions of higher learning, be it Medical, Engineering, Law, Science, Art or Commerce. After decades, only after many bouts of protests by academicians and the general public, the Left Front Government reversed this policy, but the damage was done as an entire generation of students was made to suffer for inadequacy in their school education.

The reforms introduced by the New Economic Policy of 1991 have led to a socio-economic environment in which competitiveness at the national and international levels has become the sine qua non for survival. This applies to an individual as well as to any organisation, be it a corporation or an educational institute or an agency of the government. The implication for Bengal is that it would have to compete with other states in the country as well as with other nations for attracting investment.

But all hope is not lost and we have to take comfort in the saying that it is better late than never. The performance of the agricultural and services sectors in Bengal has been fairly good. It is the manufacturing sector, once a showcase for the rest of the country, which has fared miserably. However, it has the potential for an accelerated rate of growth and development as it has an abundance of highly educated and trained manpower. What is required is a roadmap for achieving this objective. It would necessitate a change in our mindset and we should be willing to pay the price that comes with the remedial measures, which have become imperative under the circumstances. They involve adopting a few long-term measures and in abandoning some of the short-term populist policies. Certain investments, which have long gestation periods, would have to be made for enhancing the rate of growth.

The physical Infrastructure needs to be revamped. Tracts of land, which are available with the state, would have to be utilised for setting up micro, small and medium scale (MSME) enterprises. Investments will have to be made by the government so that availability of water and electricity is ensured. Logistical support will have to be provided in terms of road connectivity; metalled roads might have to be built so that trucks can ply to and from other parts of the country. These are prerequisites for attracting investment.

Highest priority will have to be accorded for building a deep-sea port at Tajpur or somewhere in that vicinity. The infrastructure for a large industrial estate should be set up close to the port, preferably on a Public Private Partnership (PPP) basis, on the lines of the SRI city SEZ in the Chittoor district of Andhra Pradesh, not far from Chennai Port. The estate should be of approx. 2,000 acres; it would have commercial, educational and residential zones. The objective would be to become a thriving industrial hub and a business destination for global and domestic as also export oriented companies to establish manufacturing, services and trading operations. The industries in this estate would cater to the domestic demand and also export, particularly to countries in South East Asia. Hence they can be from the traditional sectors such as textiles & garments, gems & jewellery, engineering, automobile & automotive components and sunrise sectors such as IT hardware & software, consumer electronic products, Research & Development centres, artificial intelligence and quantum computing. Start-ups should also be welcome. The proximity to the port would ensure that the logistics cost is minimised, thereby increasing the competitiveness of the products that are manufactured. The land in this area is highly fertile and farmers are dependent on the land for their livelihood. To ensure fair play to the farmers and to prevent any opposition, land would have to be acquired on a lease rental basis so that farmers retain the ownership of the land. As jobs cannot be guaranteed except for a miniscule few, farmers would have no option other than to survive on the rental income. Hence the lease rental would have to be at highly remunerative rates with a provision for escalation every two or three years. The state can achieve a much higher rate of growth if the government spends for this purpose a small fraction of the huge expenditure incurred on a plethora of give-aways. A similar industrial estate, but of smaller size and with a focus on domestic demand, can be established in North Bengal.

Tourism has considerable potential and can generate many jobs. It can be given a boost by improving the infrastructure and facilities for travel and accommodation. More budget and luxury hotels are required in all tourist spots to take care of the peak demand. Catamarans with comfortable accommodation facilities can be introduced in the Sunderbans; they would attract more tourists, while taking care of the ecology by doing away with the need for building more hotels. Ropeways can be constructed in tourist destinations in the Himalayas for better viewing by tourists.

Let these measures restore the glorious days of the 1950s and ‘60s to West Bengal.

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