Vision for Bengal’s Future

Dr. Gautam Sen

Dr. Gautam Sen taught international political economy to graduate students for more than two decades at the London School of Economics and Political Science. A prolific writer, he’s the co-author of ‘Analyzing the Global Political Economy, Princeton, 2009 and is currently writing a book for publisher, Simon Schuster, on the evolution of India’s market economy.

West Bengal’s future is important for the whole of India and a new government must take bold and innovative steps to secure it. West Bengal has languished for decades and that must not be allowed to continue any longer. For centuries the region of Bengal was one of the most prosperous in the whole world and certainly within India. Its revenues funded the Mughal empire and enriched the British who conquered it. After partition, West Bengal suffered grievous setback, undergoing massive disruption to its economy, with vital industries like jute losing raw material supplies. The state also experienced an unprecedented and prolonged influx of desperate refugees fleeing terrible persecution in East Pakistan that did not end with the founding of the successor state of Bangladesh.

Yet, rather astonishingly West Bengal remained the most advanced industrial region of independent India after 1947. Sadly, a combination of unfortunate circumstances has made it lose its premier position in India, with its economy declining dramatically from the first position to 23rd on a per capita basis. As the negative economic effects of partition unfolded, they combined with poor policy decisions, like the freight equalisation tax that robbed West Bengal of its inherent economic advantage and the ensuing economic decline prompted decades of industrial strife. The consequence of the economic setbacks provoked a societal backlash in the shape of toxic politics that sought confrontation with its own industrialists and entrepreneurs and with the Union Government itself. It spawned a rejectionist nihilistic intellectual culture that ended with the futile and costly bloodshed of Naxalism.

Alas, this era has not ended and the assembly elections of March and April this year will determine whether or not the people of West Bengal can leave behind the tragic legacy of setback and defeat, compounded manifold by irrational politics of self-destructive turmoil in reaction to them. There is evidently a stir in the air, a desire for West Bengal to join the rapid progress the rest of India has been making over the past decades. The young and the disadvantaged in rural and small- town West Bengal have evidently sensed the winds of change that have spread across India and feel optimistic they too can prosper and enjoy the fruits of economic growth and a better life. There also seems to be an awareness that upholding law and order is important for daily life and a prerequisite for the safety of women.

The first task of a new government in West Bengal will be reform of the police and security services to ensure that impartial justice is enforced. The law-and-order issue in West Bengal is of paramount importance and a perception that a culture of violence is widespread in the state is a major reason for the reluctance of investors to choose it as a destination for locating economic activity in it. The levels of violence during the run up to the current assembly elections give such a conviction credence, to the detriment of the reputation of West Bengal and hamper its future development. This is a not a problem in West Bengal alone, but it seems to have been prevalent in it for longer than elsewhere in India, with associated damage to its reputation. The importance of law order as a prelude to enhanced investment activity and improved growth performance has been demonstrated in the examples of Bihar and UP.

The politicisation of law enforcement over many decades has led to a decline in standards and reforms are an imperative to create public confidence in due process and justice for all. There is an associated need to review the performance of courts to institute conditions for the delivery of fair and speedy outcomes. One particular area that requires unprecedented and thoroughgoing reform is for judicial processes to enforce commercial contracts. Such reforms will require recruitment of judges and appropriate training to facilitate the enforcement of commercial contracts. This climate of legality will make West Bengal an attractive venue to invest in, secure in the knowledge that delays in the resolution of disputes will not constitute an additional and unsustainable cost for business. West Bengal needs to embark boldly on measures to raise its standards of enforcement of commercial contractual obligations in order to international levels to make itself an example that others in India and elsewhere will be inclined to emulate. Such measures to improve the administration and enforcement of legality also need to be extended to the sanctity of property rights. There must be cessation of arbitrary confiscations of private property like real estate and the extraction of bribes to allow economic transactions to be undertaken, through intimidation and manipulation, by the state and political parties.

These administrative reforms in law and order and ensuring respect for contractual arrangements and their speedy enforcement, when disputes arise, are an important first step for making West Bengal attractive for investment. In addition, attention needs to be paid to create superior physical infrastructure that augments the natural advantages of geographical location enjoyed by West Bengal. These pertain to transportation and communication networks and the availability of power at a commercially viable cost, by taking advantage of modern technologies. One particular area that is rarely considered is the paramount importance of human capital, increasingly the source of economic growth and higher productivity to enhance competitiveness. The need to provide trained manpower is not an issue that requires emphasis, but quality dynamic institutions must exist to create them. It is clear that West Bengal has been failing in this area and the ugly politicisation of West Bengal academia has robbed West Bengal of the reputation of excellence it once enjoyed.

It is in higher education that West Bengal must strive to restore lost glory, with purpose and imagination. It is widely accepted that the premier higher education institutions of West Bengal, like the Presidency College, Scottish Church and Jadavpur, once excelled and their products prompted pride in the state and enjoyed international respect. A measure of that historic excellence only endures truly in the IIT Kharagpur and the IIM in Joka. The reason for the precipitous decline in educational attainment and reputation more generally that has occurred over several decades are many. But the main reason for the contemporary parlous condition that has come to prevail is grim politicisation of most aspects of academic life and the primacy of politics and the interests of political parties within academic institutions.

Political parties have effectively subordinated the issue of academic excellence to a desire for control in order to deploy the ready supply of students, easy to mobilise in an organised venue, to project their political aspirations. Like the factories that once provided cannon fodder to enable domination of the streets of Kolkata. Students replaced workers when perennial militant trade union activism decimated their numbers by forcing the closure of innumerable firms that once provided workers to use for party political activities. It is this role the students have been cynically manoeuvred into playing, mostly to their own catastrophic detriment. The first step required is radical depoliticization of academic universities that peremptorily bans party political activism by students inside the campus itself, whatever they may choose to do outside it. Such a measure will be a prerequisite for creating the conditions in which the primacy for teaching and research can be promoted by other policies. Beyond such a basic measure, recruitment of academic staff and their remuneration, to attract high quality personnel, needs careful consideration.

Schooling, especially in the state sector, needs to operate with effectiveness to nurture skill and talent that integrates seamlessly into higher education and vocational training. It is also an essential vehicle for promoting greater equity by ensuring that the disadvantaged are able to develop and advance despite lacking the benefit of having educated parents from privileged backgrounds who impart their own intellectual creativity to offspring. In the particular case of vocational training, provision needs to be created in cooperation with economic enterprises, an admittedly complex task when the scale of existing economic activity is not commensurate with the potential demand for training. Expansion of institutional capacity and higher enrolment levels in schools and more teachers, a feature claimed for higher education in West Bengal today, have not led to improved quality owing to mismanagement and politicisation. In the end, outcomes alone are a legitimate measure of the indices of success rather than an enumeration of enhanced supply of educational facilities.

The West Bengal health care sector is also in deep crisis as a result of politicisation, mismanagement, apathy and demoralisation of the medical staff. Shockingly, medical staff often fear for their personal safety and the failure to address such concerns are a recipe for disaster. The result is evident in indicators of health care outcomes that highlight poor performance on infant mortality, neonatal and maternal mortality ratios, which are below the national average and worse than states like Maharashtra, Kerala, Punjab and Tamil Nadu. Studies by international bodies highlight the need for major improvements in key parameters like nutrition, health care and education and rural West Bengal is the worst affected. According to one recent report: “While on an average India spends Rs 1482 per person annually towards heath care, West Bengal spends only Rs 988 per person, In West Bengal, there are only 0.86 beds available per 1000 patients, which is one of the lowest in India. Primary Health Centres, sanctioned posts are 1326, out of which 516 posts remain vacant. Similarly, Primary Health Centres and Community Health Centres, sanctioned posts for nurses are 7062, out of which 1251 posts remain vacant. On the other hand, male health workers in sub-centres, sanctioned posts are 9171, out of which 7139 posts remain vacant; and in terms of specialists like surgeons, physicians, Paediatricians and others in Community Health Centres out of total sanctioned posts of 574, there are 503 vacant posts.”

New infrastructure provision alone without appropriate management practices to ensure actual delivery of services, with personnel on the ground, reflects political priorities of managing perceptions rather than delivering effective health care. Nor have diktats to private health care service providers created superior health outcomes. The Millennium Development Goals of 2015 that have proved elusive so far must now be attained quickly. Decisive political intervention is required to change a culture of indifference, insecurity and neglect to ensure better management of existing resources and effective delivery of appropriate medical services. The failures of responding to the Covid crisis owing to political interference are also a testament to the parlous state of health care in West Bengal.

The economic growth rate of West Bengal, which had languished for a prolonged period, rose above the national economy average in 2017-18, But the average GSDP growth rate of the state between 2012-13 and 2017-18 has been 5.5%, lower than the average GDP growth of 7.1% registered by the Indian economy as a whole during the same period. Overall, the share of West Bengal in all-India GSDP has declined from around 6% in 2011-12 to 5.5% in 2017-18. The inadequate performance of West Bengal’s economy is also reflected in its recorded chronic higher levels of unemployment. Thus, the declining share of the West Bengal in the national economy does not suggest relatively superior growth performance in the contemporary period despite its lower starting point owing to modest earlier growth. No dramatic change in this trend has been evident in the even more recent past. The principal issue is that West Bengal continues to underperform and the growth recorded in it is also occurring in sectors less constrained by political factors. It underlines the reason why even other sectors like IT, less affected by political issues like militant trade unionism, of the state’s economy continue to lag behind the experience of other Indian states despite any growth being experienced.

The crucial feature that highlights the failure of West Bengal’s economy to undergo a necessary transition is the salience of agriculture in its economy and the disproportionate share of the total labour force in it, with approximately three quarters of the entire population residing in rural areas. The inability of West Bengal’s transition towards a labour-intensive and the more remunerative industrial sector, from dependence on agriculture, remains its principal disappointment. The share of industry in West Bengal was only 25%, compared to 21% for agriculture. The 51% share of the tertiary and service sector of GDP in West Bengal is, paradoxically, an indication of overcrowding to accommodate surplus labour from the agricultural sector. What the economic situation highlights is the need for deep transformative change to especially impact the agricultural sector, with its modest size of holdings, underemployment and low productivity that limit the scope for increased per capital incomes. This is the central problem of West Bengal’s economy.

The inevitable solution to the issue of raising per capita agricultural incomes can be addressed by out-migration and that is indeed occurring within the context of India’s integrated national economy. But such migrants experience social and cultural disruption that they cannot welcome and nor do they gain sustained increases in incomes by relocating. It may be surmised that significant numbers enter domestic service, which is a strong indicator of a society failing its own. The sustainable and desirable solution to the problem of surplus agricultural labour remains growth of labour-intensive manufacturing, which is the historic experience of all developing regions of the world. In addition, the corporatisation of agriculture to achieve economies of scale might be attempted on a voluntary, experimental basis, with peasant owners and cultivators retaining their equity. Such an economic transition, impacting agriculture and inducting industry, can indeed occur in West Bengal which has suffered long-term secular industrial decline, often due to political difficulties that are familiar in its unhappy past. The antecedent decline of West Bengal’s industrial sector can be reversed if entrepreneurs find it an attractive destination to locate manufacturing activity. There are several necessary conditions to create such an environment, among which industrial peace, a culture of commitment to work, a trained labour force, exposed to vocational training and improved infrastructure are prerequisites.

Conceptualisation of the economics of change is the same for West Bengal as it is for any other economy. This process involves mobilising existing resources like capital, labour and land to move closer to the production possibility frontier by catalysing greater efficiency in their use while simultaneously pushing that frontier further forward. This is achieved by three-fold policy changes that enhance the efficiency of resource-use while augmenting their quantity and quality through technological advances. It can be achieved with dramatic transformation of the regulatory environment that removes policy and bureaucratic hindrances that impose additional costs on the efficient operation of all entrepreneurial activity. A second dimension is the provision of infrastructure that reduces operational inefficiencies owing to issues like poor transportation and intermittent power supply, among other factors that will include availability of trained manpower and industrial peace. The third aspect is carefully targeted subsidies that kick-start economic activity that is unviable owing to market failures failing to finance it, for example, by aiding initial investment in artificial intelligence research. But subsidies must be deployed with great circumspection because the appropriateness of subsidy policy only becomes known in retrospect and the waste of public resources is an ever-present danger. It might be noted in conclusion that an 8% growth rate will triple the size of the economy in 14 years and that target is entirely feasible for West Bengal with the growth of the rest of the Indian economy a potent facilitator of its own growth target.

In this context, the role of the state must remain circumscribed but it will nevertheless be crucial. West Bengal already possesses a land bank and increments to it must occur with the adoption of a vigorous acquisition policy that is reasonable and fair to vendors. But, as with this and other policies, West Bengal needs to fund them. Unfortunately, West Bengal has a debt ratio in the region of 34% though it had managed to reduce the state budget deficit recently. Searching evaluation of state-owned assets for sale is one way of raising investment funds and also highly likely to improve their rate of return in private hands, as the experience across India has indicated from disinvested PSUs. Imaginative mechanisms must be fashioned as well to tie further debt incurred to future growth rather than a coupon though that will likely turn out to be slightly costlier owing to uncertainty associated with future growth projections. At a more general level, private-public partnerships that allow a dominant share to private participants in infrastructure projects might be a feasible solution to the paucity of state funds to finance them as fully-owned public assets. The success of infrastructure projects can be anticipated to create additional revenue for the state when they enhance its overall growth performance. On a broader note, infrastructure development in West Bengal needs to take a long-term visionary view that leverages its regional locational advantages (e.g., ports) to become a major hub for the Northeast and Eastern region of India and also attract transit trade from abroad.

In addition, the economic development of West Bengal and the entire region can assume a futuristic vision. Policies need to ensure West Bengal participates in the most advanced sectors of emerging modern economic activity by anticipating their evolving growth. Instead of merely bidding to make its urban conurbations ‘smart cities’, in accordance with recent policy announcements, West Bengal should aspire to give its citizens the option of becoming digital entrepreneurs and citizens, wherever they happen to be physically located. Spreading investment in a super highway fibre network and training a quality work force, through specially designated centres of learning and online education, would be essential initial steps. A major centre for artificial intelligence research and application, with international and national participation, would be a significant innovation to accelerate West Bengal’s participation in the most exciting and critical area of economic activity, which will come to dominate most productive activities and all other human endeavour everywhere. Instead of West Bengal being consigned to catch-up as lower-end employees, offering cheap inputs for routine activity owned and controlled elsewhere, the state should seek to become a world leader in the field of artificial intelligence. Thoughtful preliminary steps and the skills of its educated millions, available at competitive cost, have every prospect of pioneering the software and hardware revolution for West Bengal necessary to become a world leader.

One underestimated area of change that will play a vital role in the transformation of the economy and society of West Bengal is urban renewal. The cities of the state must be turned into attractive and desirable places to live in because change in the state will be catalysed by the talent of human capital. People wish to live in cities that avoid choking in pollution, intolerable congestion, the absence of reliable power and water supplies or schools of indifferent quality for their children. Poor urban planning has turned many cities into a nightmare to live in, but some of them are now demonstrating that sustained change for the better is possible. Many Indian cities, from Indore to Surat, have shown the way with efficient garbage disposal and cleaner air to breathe. West Bengal can follow suit, with a new incumbent government making a start at the very outset. It can retrofit cities to remedy the legacies of planning lapses, improve traffic management, restore to the city’s citizens streets and pavements illegally usurped and remedy the absence of a green environment and spaces. Cities like Kolkata suffer particular difficulties and a whole check-list can be prepared that can be patiently and systematically addressed on the basis of imaginative plans drawn by urbans planners in conjunction with a consultative process that engages the citizenry.

The problems faced by the economy, society and culture of West Bengal are multifaceted and require an entire portfolio of policy initiatives to address. The main requirement is political will, followed by resourceful modes of financing to fund goals. A political dispensation with popular support might be in a position to overcome the constraint of being held hostage by circumstances and past choices. It will require immense intelligence, imagination, patience and popular mobilisation by a government that daily demonstrates its probity and determination to change course. Such change is feasible and has been happening elsewhere in India and there is every prospect that West Bengal is poised to turn the corner. The one surprise that awaits the people of West Bengal is the rapidity with which dramatic transformation can and will be achieved.

Dr. Gautam Sen,
London 15th April 2021.