AMONG the major issues that were debated on the eve of the 2011 assembly elections in West Bengal was the economic performance of the state under the three decade long rule by the Left Front (LF). As is the case with most elections in India, political rhetoric and hyperbole dominated the discourse rather than analysis based on hard facts, with the Trinamool Congress (TMC) led anti-Left combine alleging: ‘Over the last 35 years, the state has gone down in every direction… The steady decay of West Bengal under the Left rule is pathetic – the end result of the deliberate and incompetent policies over the last three and a half decades.’¹ The reality is not only quite different but also more complex.

The first decade and a half of the Left rule in West Bengal was marked by considerable achievements in the sphere of land and tenancy reforms and agriculture. The LF governments of this phase pursued alternative policies, with a strong thrust on redistribution and rural transformation. The structural shift in India’s economic development trajectory post-1991 had a significant impact on West Bengal’s economy, with the LF government gradually adjusting its policies in sync with the market oriented policy changes at the Centre, initially by compulsion but later by choice. The economic outcomes have been mixed.

The purpose of this piece is to examine some critical aspects of the economic performance of West Bengal in the recent period and also assess whether the new government led by the TMC has been able to set any new trends in the last couple of years.

The achievements of the LF government in the sphere of land reforms are well known. Up to November 2010, 4.58 lakh hectares of land had been distributed among 30.22 lakh poor peasants of the state and 15 lakh sharecroppers were assured of tenurial security and limits on rent shares; around 55% of the land reform beneficiaries belonged to the scheduled castes and scheduled tribes.² The scale of this achievement can be gauged from the fact that West Bengal, which only has around 3.5% of the total arable land of India, accounted for 24% of all ceiling surplus land redistributed in the country since independence.³ 

The land redistribution programme had a major impact on agrarian relations and broke the ‘agrarian impasse’ afflicting the state. Between 1949 and 1980, agricultural growth in West Bengal was estimated to be around 1.74% only.⁴ Between 1981-82 and 1991-92, agricultural growth in West Bengal reached 4.2%, which was significantly higher than the all-India agricultural growth of 2.9% registered during this period.⁵ Redistributive land reforms and agricultural growth were at the heart of the rural transformation that was brought about under the first decade and a half of LF rule.

 

Since 1992-93, agricultural growth in West Bengal slowed down to an annual average of around 3%, which was slightly higher than the all-India average. During the tenure of the last LF government, i.e. between 2006-07 and 2010-11, agricultural growth came down to 2.45%. Over the last two years under the TMC government, between 2011-12 and 2012-13, agricultural growth has slowed down further to 2.2%.⁶ It is clear that the momentum of agricultural growth which was created under the initial phase of Left rule has petered out over the last couple of decades. There is a steady slow-down in agriculture experienced in the last few years, which has continued under the TMC-led government.

The recent slowdown in agricultural growth has also been accompanied by signs of growing agrarian distress, with a spate of farmers’ suicides being reported from some districts, particularly Bardhaman.⁷ It is noteworthy that unlike in states like Maharashtra and Andhra Pradesh where farmers’ suicides largely occur among the cultivators of cash crops like cotton which are subject to high price volatility, the distress stricken farmers in West Bengal who have been driven to suicides are mostly cultivators of paddy and potato. The two most obvious reasons behind growing agrarian distress are the rising cost of inputs like fertilizers and the weaknesses in the procurement machinery. The sudden changes to the procurement system brought in by the TMC-led government have been held responsible for the failure to ensure remunerative prices for the farmers.⁸ 

 

The Commission for Agricultural Costs and Prices (CACP) in its report on Price Policy for Kharif Crops, 2012-13 has pointed out that the procurement agencies did not come forward to procure paddy in a timely manner in the eastern states, including West Bengal. As a result, the price of paddy in West Bengal in seven centres fell below the MSP. As per CACP estimates, the return on paddy cultivation in West Bengal based on MSP pricing is (-ve)12.86%, owing to the rise in the cost of cultivation. Thus, rather than a rejuvenation of the agrarian situation, there has been a deterioration under the new government, adversely affecting a large section of the rural population.

 

The decline of manufacturing industries has been a serious long-term problem for West Bengal. The share of the manufacturing sector to GSDP, which was around 18% in 1980-81 steadily fell to around 13% in 1990-91 and then further to around 10% by 2000-01. This had increased marginally to 11.14% by 2011-12 but again fell to 10.39% in 2012-13.⁹ The efforts by the LF government to attract large-scale industrial investments in the private sector in the last decade did lead to some increase in industrial investments since 2005. However, the land acquisition drive launched in order to build large-scale private sector factories and SEZs met with stiff resistance from the small rural landholders and the political opposition. Apprehensions regarding land acquisition and the absence of a credible compensation and rehabilitation policy became a major roadblock for industrialization and the turnaround in the manufacturing sector envisaged by the LF government did not materialize.

What is distinctive about the manufacturing sector in West Bengal is the proliferation of small and micro manufacturing units. West Bengal has been the leading state in India in unorganized manufacturing units (UMUs) accounting for 16% of all UMUs in India and 15% of total employment in UMUs.¹⁰ While the manufacturing sector as a whole grew at 4.75% per annum between 2000-01 and 2008-09, the unregistered manufacturing sector grew at a much faster rate of 6.33% per annum during the same period.¹¹ As a result the unregistered factories have a higher Net State Domestic Product (NSDP) compared to the registered factory sector.¹² 

Overall economic growth in West Bengal has slightly lagged behind the all-India average over the last two plan periods. Besides the discernible slowdown in agriculture during the Tenth Plan which failed to pick up to the level of the all-India average of 3% in the Eleventh Plan, the industrial sector has also lagged behind the all-India average during the Eleventh Plan period (see Table 1). Like the rest of the country, it is the services sector which has led the growth process in the state, particularly during the Eleventh Plan period.

Even as the manufacturing sector has shrunk as a proportion of West Bengal’s GSDP, the sub-sectors that showed the highest growth between 1993-94 and 2008-09 in West Bengal, were construction, finance and real estate, and trade, hotels and communications.¹³ The real estate and construction sectors have consistently grown at faster rates than overall GSDP, and hence have been the prime movers of the growth process in the state. What has been the impact of this construction and real estate led growth process on employment?

As per estimates based on the latest NSS data, the proportion of rural workforce employed in agriculture in West Bengal was 56% in 2009-10, which is considerably lower than the all-India average of 68%.¹⁴ Agricultural employment witnessed negative growth in West Bengal between 2004-05 and 2009-10 (-0.4%), whereas non-agricultural employment has grown by 2.63%. The growth in non-agricultural employment, which is concentrated in sectors like construction, retail and wholesale trade and manufacture of textile and tobacco, has been accompanied by a significant increase in the proportion of casual workers in the rural areas and self-employed workers in the urban areas. The proportion of regular salaried workers has actually declined in the urban areas of West Bengal. The proportion of workers employed in the small unorganized enterprises or the informal sector remains higher in West Bengal than the all-India average. Therefore, the shift of employment that has taken place from agriculture to non-agriculture in West Bengal does not amount to a shift from low wage/low productivity activities to high wage/high productivity activities.

 

The bulk of the workforce continues to remain employed in the unorganized/informal sector earning low wages and without access to any social security. The proportion of workers who did not receive any social security benefit increased in West Bengal from 70.52% in 2004-05 to 74.8% in 2009-10. Over 73% of the workforce in 2009-10 did not have any written job contract. Organized sector employment in the state has fallen from around 25 lakh in 2000 to below 20 lakh in 2010. The real wage rate of rural unskilled workers in West Bengal has remained stagnant between 2000 and 2010, even as it has shown an upward trend at the all-India level since 2007.

 

A key developmental challenge in West Bengal today is to reverse this trend towards informalization of the workforce and increase decent work opportunities in the organized and formal sector. The question is whether this can be achieved by aligning with the overall neoliberal growth trajectory of India or by moving towards an alternative development trajectory for the state, within the constraints set by the extant Centre-state relations. The LF government, in its last phase, practically abandoned the pursuit of an alternative trajectory and attempted to aggressively attract private investment by offering myriad concessions and land to big corporates. Not only did that unleash fierce political opposition which finally resulted in the electoral defeat of the LF, but the turnaround in the industrial scenario too did not materialize.

The advent of the TMC-led government has seen much confusion regarding its industrial and land acquisition policy. The TMC government has made it clear that it will not acquire any land from the farmers to set up industry and that those interested in setting up industries will have to purchase land directly from the landowners. Questions regarding the feasibility of direct land purchases by corporates in a landscape dominated by many small landholders owning tiny parcels of land have been raised by many. Overall GSDP growth along with growth in both the agricultural and non-agricultural sectors have slowed down in the last two years, compared to the last five years of the LF government.

The larger problem remains that the TMC-led government does not have any clear alternative agenda for industrial development. Failure to evolve such an agenda will only perpetuate the low wage, low productivity informalized economy of West Bengal.

 

The performance of West Bengal under LF rule in terms of the human development indicators has been mixed. There has been considerable progress in terms of some indicators, but in many areas the state has continued to lag behind. At 13.9%, West Bengal had the fourth lowest population growth rate in the country between 2001 and 2011 among the 17 major Indian states, against the all-India population growth rate of 17.6%. The literacy and female literacy rates in West Bengal in 2011 were the fifth highest among the 17 major states, while the sex ratio was eighth highest. The death rate in West Bengal was the lowest in the country in 2009, while significant progress was achieved in reducing the infant mortality and maternal mortality rates between 1997 and 2009.

 

However, in terms of proportion of households having access to electricity, tapped drinking water and banking services, West Bengal lagged considerably behind the all-India average in 2011 (see Table 2). In terms of health and education too, West Bengal has had a mixed record. While the state had the highest number of government allopathic doctors (8825) and the second highest number of government hospital beds among the 17 major states in 2009, the average population served per government doctor in West Bengal (9953) and the average population served per government hospital bed (1604) were the fourth and fifth highest respectively.¹⁵ West Bengal had the highest number of primary schools/sections per 10 sq. km (8.64) among the 17 major states in 2009 and the dropout rate at the primary level fell to 8.6%, which was below the national average of 9.1%. However, the average pupil teacher ratio of 39 in West Bengal ranked fourth among the 17 major states in 2009 and the proportion of government schools in total primary schools at 87% ranked fifth.¹⁶ 

The major reason behind this average performance in human development under the LF rule has been the precarious fiscal situation faced by the state, which has severely constrained its capacity to undertake development expenditure. West Bengal’s own tax revenues (OTR) as a percentage of GSDP averaged around 4.5% between 2004 and 2008, just ahead of Bihar and Jharkhand among the 17 major states. Most other states had OTR/GSDP ratios between 6 to 10%. In 2010-11 and 2011-12, Bihar and Jharkhand also overtook West Bengal, with the state ranking last among the 17 major states in terms of OTR/GDP ratio. As a result, the revenue receipts as well as development expenditure to GSDP ratios of West Bengal have lagged behind all other states.¹⁷ 

 

The situation has shown some signs of improvement since 2010-11, the last year of LF rule both in terms of revenue receipts as well as development expenditure. This has been made possible not through any substantive increase in OTR/GSDP – which was at 5.4% in 2012-13 – but by a significant increase in central transfers (CT). The CT to GSDP ratio, which averaged around 4.9% between 2004 and 2008, increased to 5% in 2010-11, 5.7% in 2011-12 and was budgeted at 6.7% in 2012-13. While the TMC-led government has been publicly complaining about the Centre’s apathy towards its fiscal plight, the fact is that substantive hikes in central transfers have taken place over the last two years providing some fiscal space for the state government.

Whether this enhancement in central transfers will sustain and whether the central government will address the long-standing demand of the state of providing some debt relief to the state government straddled with a huge outstanding debt burden, which has reached Rs 2.26 lakh crore in March 2013, will largely depend on how the TMC-led government works out its relations with the Centre. In other words, such fiscal relief is discretionary and the Congress-led government at the Centre will not oblige the state government unless the political dividends are clear to them.

 

The availability of more funds, however, need not necessarily lead to better developmental outcomes. West Bengal’s record in the implementation of the centrally sponsored schemes for instance has been below average. The average persondays of work generated per household under the MNREGA peaked at 44 days in West Bengal in 2009-10 and has since fallen to 31 days in 2010-11, 27 days in 2011-12 and 25 days in 2012-13.¹⁸ West Bengal has also been a laggard state with regard to the implementation of the tribals’ Forest Rights Act. In terms of percentage of titles distributed over number of claims received in each state till December 2012, West Bengal has been able to distribute only 21.5% of titles, which is far below the national average of 39.5%, ranking twelfth among 18 Indian states. It is noteworthy that Tripura and Kerala have attained above 60% of title distribution, and rank first and second in the country.¹⁹ 

As far as the public distribution system (PDS) is concerned, only 25.6% of the rural households of West Bengal accessed the PDS to purchase rice in 2009-10 in contrast to the national average of 56.2%.²⁰ The performance indicators vis-à-vis these welfare programmes, which remained unimpressive for West Bengal under the Left rule, also do not show any sign of improvement under the last two years of the TMC-led government.

 

The allegation that West Bengal has faced a steady economic decline over the three decade long rule of the LF is invalid and grossly exaggerated. In fact, the achievements of the first three LF governments in the areas of land reforms and agricultural growth were remarkable. Since the 1990s, however, the economic performance of the state has been average, with the state surpassing the national average in some spheres but lagging behind it in many others. While there is no factual basis for the TMC’s strident claims, neither is there any evidence that an alternative development trajectory was being pursued in West Bengal under the later phase of the Left rule, which could produce relatively better developmental outcomes. It is too early to judge the TMC-led government, but the indications are that the ‘change’ if it is indeed occuring, may well be for the worse.

 

Footnotes:

1. Vision Document, Trinamool Congress, 21 March 2011.

2. Statistical Appendix, Economic Review, Government of West Bengal, 2010-11.

3. Report of the Committee on State Agrarian Relations and the Unfinished Task in Land Reforms, MoRD, GoI, 2009.

4. James K. Boyce, Agricultural Impasse in West Bengal: Institutional Constraints to Technological Change. Oxford University Press, Delhi, 1987.

5. Calculated from CSO data.

6. Medium Term Fiscal Policy Statement for 2013-14, Government of West Bengal.

7. Malini Bhattacharya et al., ‘Farmer Suicides in West Bengal: Eight Case-studies from Burdwan’, Punarnaba (a human rights forum), April 2012: http://rightwatch.info/node/7

8. Uddalak Mukherjee, ‘A Few More Deaths in the Granary that Feeds Bengal’, The Telegraph, 22 March 2012.

9. Economic Review, Government of West Bengal, various issues.

10. NSSO 62nd round (2005-06).

11. 3rd SSI Census (2001-02); 4th MSME Census (2006-07); Statistical Appendix, Economic Review, Government of West Bengal, 2010-11.

12. R. Khasnabis, ‘The Economy of West Bengal’, Economic and Political Weekly, 27 December 2008.

13. Economic Review, Government of West Bengal, various issues.

14. Data in this section is based on Subhanil Chowdhury and Gorky Chakraborty, ‘Employment in West Bengal: Insights from the Latest Data’, 2013 (mimeo).

15. National Health Profile of India: 2009, Central Bureau of Health Intelligence, DGHS, GoI.

16. DISE 2009, Flash Statistics, NUEPA.

17. State Finances: A Study of Budgets, 2012-13, RBI.

18. Annual Report, MoRD, GoI, various issues.

19. Status Report on Implementation of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 (for the period ending 31 December 2012), Ministry of Tribal Affairs, GoI.

20. NSSO Report on Household Consumption of Various Goods and Services in India, 2009-10.