West Bengal: The sun rises in the east

West Bengal: The sun rises in the east
Saumitra Mohan

At a time when the Indian economy is zooming and its stock markets are booming, the kind of economic growth clocked lately by West Bengal has not only made it a leader in economic reforms but has also made it a bell-weather of the Indian economy, minor pin-pricks from a Singur notwithstanding.

Home to 80 million people spread over 88,752 sq km, the state constitutes 10 per cent of the Indian market and has an annual consumption expenditure of about US$ 26.37 billion. With its rich natural resources, integrated infrastructure, superior connectivity, a steadily maturing industrial base, huge market potential, top-rated social and civic amenities, presence of diverse and dynamic industries and a stable political environment, West Bengal, today, has the most favourable environment for domestic and foreign industrial investment.

Stable political situation and a much better law and order situation provide the necessary climate, strength and confidence for investment in the state. The state government has also been pursuing a well-tailored policy to utilize its varied competitive advantages and intrinsic strengths to forge greater cooperation with the private sector thereby fusing indigenous knowledge with the advanced scientific and technological development. Notification of a detailed Incentive Scheme for the industrialists and West Bengal Industrial Development Corporation (WBIDC) acting as a one-stop investment window, potential investors could not have asked for more. With a creditable banking performance, there is also ample scope for substantial flow of funds for investments.

Country’s most rapidly growing industrial region, West Bengal, today, is the third largest economy in the country with a Gross State Domestic Product (GSDP) of US$ 23 billion at current price. It is second only to Karnataka in per capita growth (5.4 per cent), well above the national average (4.2 per cent) and is next to Maharashtra in terms of companies established (72,437), with a paid up capital of US$ 8,834 million. Even more interesting is the fact that the per capita incomes of West Bengal and Maharashtra, after excluding the two metros of Mumbai and Kolkata, have come fairly close. West Bengal's per capita income, after excluding Kolkata, is Rs 12,671 while that of Maharashtra's without Mumbai is Rs 13, 897. It has the second highest Compounded Average Growth Rate in the country i.e. 5.49 per cent against a national average of 4.4 per cent. The Compounded Average Growth Rate of West Bengal’s real NSDP stood at 8 per cent between 1994 and 2004, thereby outperforming the national GDP growth. Today, the state has an industrial growth rate which is 1.1 per cent higher than the national average.

Between 1984 and 2001, industrial capital investment in West Bengal increased only fourfold when it grew by more than seven times in the rest of India. But from a level of Rs. 450 crore (US$ 103 million) of industrial investment in 1992-93, the state has grossed more than Rs. 2000 (US$ 458 million) crore of new investments in the past few years and in the steel sector alone it has attracted an investment of over Rs. 7000 crore (US$ 1.6 billion) from 1991 to 2003. More than US$ 2 billion of new projects have been commissioned in the last four years. In the year 2004 alone, 196 projects involving an investment of US$ 522 million have been implemented in the state. During 2005, 227 projects involving an investment of Rs. 2515.58 crore have been implemented. Moreover, nearly 100 major projects, involving investment of Rs. 7985 crore are under different stages of implementation. It is also important to note that from 1991 to December, 2005, a total of 1218 industrial projects involving investment of Rs. 29,195.72 crore have been implemented in the state. The growth trajectory is, indeed, brilliant by any standard.

The only state touching the mighty Himalayas on the one end and the roaring oceans on the other, West Bengal has a major locational advantage with ports at Kolkata and Haldia, a network of railways and road communication, stable power situation and an improved telecommunication system.

A very well-networked state, it boasts of one of the best road infrastructures. Its road density is 103.69 km per 100 sq km, considerably higher than the national average of 74.7 km and ranks fourth in route density of the railways. Further infrastructural strengthening by way of construction of a number of bridges and flyovers, widening and improving roads, construction of new townships and minor ports, augmentation of flight and port services directly and through public private partnerships are already underway. Efforts are, thus, on to create new infrastructure and upgrade the existing infrastructural, both physical and social, facilities in the areas of roads and communication, education and healthcare system, supply of water and electricity, housing and transports.

A pioneer in power development, NASSCOM-Gartner has found West Bengal’s power infrastructure to be the best in the country. With an installed capacity of 7616 MW, West Bengal is today a power surplus state. An additional 2400 MW is under implementation and of this 1570 MW is expected to be added by 2007 only. This is the largest single capacity addition programme undertaken by any state during the 10th plan. An additional capacity of 5000 MW in the public, joint and private sectors over the next 10 years is also on the anvil.

The state has a very large pool of skilled and qualified technical persons locally available at different levels. And why not? The state today boasts of many centres of excellence including Indian Institute of Technology, Kharagpur, Indian Institute of Management, Calcutta, Indian Statistical Institute, Kolkata, many national research bodies of repute and many regional institutes, academies and centres of quality education in such fields as management, technology, medical science and humanities. It is not just a coincidence that all the five Nobel laureates have worked here at one or the other point of time.

Endowed with six agro-climatic zones, abundant water and fertile soil, the state has a very strong agricultural base and it exports agricultural produce throughout the world. The state is high in production in inland fisheries and marine products. It is the largest producer of rice, pineapple, vegetables and fruits, second largest producer of potato, lichee, tea and paper, largest producer of meat (including poultry) in the country, third largest producer in floriculture products, a significant producer of mango, mandarin, orange and sapota, grows 145 different varieties of medicinal plants and herbs, a substantial producer of spices, coconut, cashew nut, areca nut, betel vine and ten per cent of country’s total oilseeds among others. With its strong rural economy supported by a broad-based land reforms and a vibrant panchayat system, West Bengal, today, also has the highest agricultural growth rate in India. Agricultural growth in the state has averaged 4.5 per cent over the last ten years, considerably higher than the national average.

This performance is quite extraordinary when one factors in the dominant reality of rural West Bengal in that it ranks third from the bottom in terms of irrigated acreage with only 28.1 per cent of its agricultural land being irrigated. This is when it is the third most densely agricultural state in India with almost 77 per cent of its land area being under the plough. If like Punjab or Haryana, with their 89.72 per cent and 65.0 per cent respectively of agricultural acreage being irrigated, West Bengal too were to benefit from centrally financed irrigation and centrally subsidized procurement, it would be fair to assume that its economic performance would have been even higher.

West Bengal has also fast caught up with such IT upstarts as Bangalore, Hyderabad and Chennai giving them a good run for their money. Today, it has 235 companies employing 31,000 IT professionals and is home to some of the biggest names in the IT business including TCS, IBM, PWC, Cognizant, Computer Associates, Wipro, HSBC, Reliance Infocom, NIIT, AIG, GE Capital and Atos Origin. 12 new IT parks spread over 13,305,000 sq ft are soon coming up. It has also the India’s largest IT Park being built by DLF, heralding the IT boom in the state. The Far Eastern Economic Review has termed Kolkata as ‘Asia’s surprising new Tech-hub’.

West Bengal is one of the first states to formulate an Act on Special Economic Zone (SEZ) thereby clearing the path for setting up of sector-specific parks like Food Park, Modern Foundry Park, Tea Park, Chemical Park, Rubber Park, Modern Industrial Park, Bio-technology Park and Garment Park among others. West Bengal has built India’s first Greenfield sector specific SEZ- Manikanchan, a Gem and Jewellery Park that has already made its presence felt in the global market in respect of export of jewelleries.

Today, almost all large Indian industrial houses and a good number off multi-national corporations (MNCs) of repute have their presence in the state. These, inter alia, include PepsiCo through Frito-Lay India, Hindustan Motors, Dabur Foods Limited, Nestle, Japanese firms like Mitsubishi Chemical Corporation, Marubeni, Sumitomo and Itochu Corporation, Vesuvius, Philips, GEC, Hindustan Lever, ICI, Siemens, Bata and Petronas from Malaysia. Several mega projects are on the verge of completion and a good number of projects are in the pipeline. Some of these include the Calcutta Leather Complex, Hooghly Met Coke, Tata Motors’ Small Car Manufacturing Project at Singur, Earth Moving Vehicles unit in Kharagpur, Russian Heavy Vehicle manufacturing company and a mega project by the Salim Group of Indonesia. A Permanent Trade Fair Complex at Kolkata is also coming up on a plot of land measuring 18.41 acres at the Park Circus Connector.

During the last one year, the state has witnessed 110 per cent growth in car sales, 81 per cent increase in sales of two wheelers, 652 per cent rise in mobile phone connections, 651 per cent rise in sales of personal computers, 386 per cent growth in sales of air conditioners, and 482 per cent growth in sales of microwave ovens. The state is also witnessing a retail boom. In fact, 16 per cent of India’s retail trade is transacted in or through Kolkata.

Being India’s principal gateway to the economy of the Asia-Pacific, the opening of Nathu-La trade route promises to open new trading opportunities for its economy. Its enviable location in terms of river and sea ports and proximity to huge markets not only in the Eastern Region of India but also in the booming South and South-East Asian Region (with a population of over half a billion) including Bangladesh, Nepal, Bhutan, Myanmar and Thailand, Vietnam, Laos, Cambodia, Singapore and China, West Bengal occupies a strategic position and, as such, figures very prominently in India’s ‘Look East’ policy.

Now it is quite evident that West Bengal has done stupendously well in bringing its economy in sync with the global realities thereby unleashing the so-far caged but intractable Royal Bengal Tiger. Basking in the glory of its new-found success, West Bengal can ill afford to rest on its laurels, more so when other states of Indian Federation are vying with each other to woo the investors. So apart from further strengthening of its physical and social infrastructure, the state needs to do some thinking about reforming its labour laws and restraining the not-so-healthy trade union activities without compromising the interest of the labour. There is also an urgent need for a broader political consensus among all the political parties over the economic reforms and economic policy so as not to jeopardize the gains already made as well as to consolidate the same by way of pushing the reforms to their logical conclusion. But for the moment, who can deny that ‘the sun rises only in the east’ and this time it has risen on the West Bengal horizon.
*Saumitra Mohan is an IAS officer presently working as an Additional District Magistrate, Hooghly in West Bengal.
(The views expressed here are author’s personal views and does not reflect those of the Government.)
Address for correspondence:
Saumitra Mohan, IAS, Additional District Magistrate, Office of the District Magistrate, Hooghly-712101.
E-mail: saumitra_mohan@hotmail.com.
Phone: 033-26806456/26802043(O)/26802041(R).
Fax: 033-26802043.
Mobile: 91-9831388803/9434242283.