People's Democracy

Industrial Development in West Bengal:

Achievements and Constraints

Nirupam Sen

THE contemporary reality in West Bengal is that a strange combine of the right reactionary forces and their cohorts, abetted by a section of the media and the degenerated ultra left, are striving to gain ground. Apart from violent physical attacks, these forces have waged a slanderous campaign against the Left Front. However, the slander is not that unique. The pattern and content have undergone some changes.

One of the major campaigns against the Left Front government is that it had failed to develop industries in the state. Integral to this campaign was that the Left Front itself engineered violent trade union movement generating industrial unrest and situation uncongenial to industrial progress. In more recent period, resistance to industries with various excuses has been witnessed. This is understandable because the policies pursued by the Left Front government have earned the confidence of the investors and an ambience of rapid industrial development has been created in the state. The chambers of commerce and industries, big industrial houses, foreign and domestic investors and even the die-hard critics of the Left have been appreciating the role of the state government and its policy framework. 

It needs to be mentioned that the process of industrial development of West Bengal has its own history. From the colonial days to the period prior to the country’s independence, the state occupied a pre-eminent position in the  manufacturing, iron & steel, textile, jute, tea and other sectors. Its growth in the cottage & small scale sector was equally impressive in first decades in the post independence period. However, the development process had to face many problems in the years that followed for a variety of reasons. Among them the policies of the successive central governments like freight equalisation and manifest bias through licensing system were crucial. These, along with lack of policies of the then Congress government in the state, led to the sluggish industrial growth. The socio-political unrest from the 60s also negatively impacted on the investment climate of the state as well as engineered the flight of capital to other regions. The negative perception that had developed among the industrialists also hindered the process of the state’s industrial development. It also needs to be recognised that the western part of Bengal had to bear the brunt of the partition which had a telling effect on its economy. Besides, the benefits of scientific inventions and technological innovations in the post Second World War phase hardly found their place in the National Industrial Policy framework. India’s lack of access to the benefits of scientific and technological revolution, compounded by uneven competition, had regressive effect on the Indian industries. Just before the Left Front was elected to office, the industrial scenario of the state was dismal. The Left Front had to start afresh. While discussing West Bengal’s industrial development, one has to keep in mind this historical perspective. 

NEP: CHALLENGES

BEFORE THE STATE

In the present phase of economic development, India has emerged as one of the principal proponents of market economy. It remains a fact that Liberalisation, Privatisation and Globalisation (LPG) that have propelled the neo liberal economic order seeking to integrate the economies around the world have virtually excluded nations and peoples across the globe from the trajectory of development, deepened inequality among nations, created imbalances among the countries and regions.

Against this vast canvas of inequality and deprivation and the present Constitutional arrangement in a federal structure, the state government has to articulate its policy  of industrialisation  to meet the rising expectations  of the people as well to ensure state’s overall development on a sustainable basis .

With the introduction of New Economic Policy (NEP) by the central government, a new phase of economic activities has set in.  The Left Front government of West Bengal had to put in place situation-specific policy framework to face the emerging challenges. The Policy Resolution on Industry announced by the state government in 1994 thus gave new direction to the industrial development of the state. This Policy Resolution is basically a resolve to accelerate the state’s industrial development relying on its intrinsic strengths and competitive advantages. It also sought to attract private investment in different sectors of the economy to the benefit of the state. The  state’s strategic geographical location, developed industrial  base,  strong agrarian  economy, huge market, educated middle class, rapid urban growth, skilled human resources, social stability, enabling policies, responsible workers’ organisations and political continuity started attracting investors to the state. And eventually it has emerged as one of the leading investment destination of the country.   

INTRINSIC

STRENGTH

The policies (Bio Technology policy, IT Policy, ITeS Policy, Mines & Mineral Policy, Public Private Partnership Policy, Housing Policy, Tourism Policy, Export Policy and Incentive Policy, 2008) put in place by the state government, have been so tailored as to  respond to the market demand but without compromising the basic interests of the people. Between 1990-1991 and 2000-2001 West Bengal was the second fastest growing state, only slightly behind Karnataka. The compound annual rate of GSDP was a high 6.8 per cent.  The main drivers of the state’s strong performance were   agriculture (5.2 per cent) and  services (9.3 per cent). Growth in agricultural sector in West Bengal was double that of the national average. The land reform measures initiated by the government contributed enormously to the unleashing of the potentials for rapid agricultural growth, which has virtually acted as the prime basis of industrial growth. The change in the rural power structure through Panchayat Raj gave further impetus to the growth of rural economy. It is necessary to note that in our state almost 83 per cent of agricultural land is owned by small and marginal farmers. We have also laid emphasis on the development of allied sectors like Fisheries, Animal Husbandry, and Poultry etc.

Our focus on the micro, small and cottage industries is equally emphatic because they play a major role in the economic development of our state. As per National Sample Survey (62nd Round) there are 27 lakh SME units in the state providing employment to 55 lakh people. The rural artisans and traditional handicraft workers and their families for over the centuries have been sustaining the rural economy through their multifarious economic activities. Their welfare and economic development is, therefore, our main concern. 

It is also important to mention that the wide coverage of the peasants’ families in the education network of the state has come to their benefit. We have, therefore, to think in terms of their aspirations who do not want to confine themselves  in the agricultural sector only. This is where industrial development of the state, essentially characterised by its agrarian nature, assumes importance.            

IMPACT OF STATE

GOVT INITIATIVES

It remains a fact that  during last several years there has been substantial progress in the  investment scenario of the state. In the  sectors like  Iron & Steel, Food Processing, Information Technology, Hospitality and Tourism, the investments are noteworthy. Table 1 shows the Sector wise Projects implemented in West Bengal through 2009.

Table 1

 Sector wise projects implemented in West Bengal in 2009

Table 2 shows the number of projects implemented from 2001-2009. It will appear from the Table that since 2001 there has been steady rise in the investment figures barring the solitary exception in 2008 only. The major reason was global meltdown and  economic downturn.

Table 2

Industrial Projects implemented

As has been stated earlier, Small, Micro and Cottage Industries Sector plays a significant role in the economy of the state. West Bengal along with Uttar Pradesh, Maharashtra, Tamilnadu, Andhra Pradesh and Karnataka account for 55 per cent of the total number of Micro and Small Enterprises (MSEs) of the country. MSE Sector contributes to 8 per cent of the country’s GDP, 45 per cent  of manufactured output and 40 per cent of exports. The basic problems that the sector is facing today are low technology level, absence of skilled manpower, inadequate access to the bank credit and lack of access to capital, besides uneven competition in the global market. While pursuing the inclusive development strategy for sustainable development of this sector, the Left Front government has  taken a number of initiatives to address the problems. These include Entrepreneur Development Programmes (EDP) and Skill Development initiatives, West Bengal Incentive Scheme, 2007 for MSEs, credit facilities through sustained coordination with the Banks and other Financial Institutions. Cluster Development Programme has also been adopted to support this sector continually and ensure its growth. Improvement of technology, skills, quality, market access, and other technologically advanced support system are the integral components of this programme. As consequence of these policy measures, the net Bank credit for the MSE Sector has risen to Rs 16,93,437 crore in 2009 compared to Rs 3,16,427 crore in 2000. The growth thus registered over the last nine years has reached 535 per cent.

SINGUR-NANDIGRAM:

CANARD AGAINST LF

While making choice for locating their Industrial units, the investors take into consideration their long term business perspective and profit maximisation. Tata Motors Limited’s choice of Singur is a case in point. Tata Motors Limited (TML) had initially decided to locate the factory of their small car project (Nano) in the district of Pashim Medinipur, but subsequently they had changed their decision and opted for Singur, Hooghly. The state government had also taken into consideration long term interests of the state in the background of rapidly growing automobile sector all over the world. It is important to note that Indian automobile industry, which is rated as one of the significant contributors to India’s economic development, witnessed a growth of 19.35 per cent from April to July 2006, and the market trend also indicated that the sector was poised to register further growth. After the Hindustan Motors factory was set up at Hind Motor in the state long back, the state had received no significant investment proposal in the automobile sector. Therefore, the state government had taken full advantage of the unfolding opportunities and decided to go extra miles to persuade TML to set up their factory at Singur instead of in Himachal Pradesh they were already toying with because they were assured by the Himachal Pradesh government of a good incentive package.

A bogey of criticism was raised against the state government that the interests of the farmers have been compromised by the state government, to the benefit of the TML. Those who had waged this slanderous propaganda campaign against the Left Front and were instrumental in ensuring the flight of TML’s project from Singur to Gujarat were fully aware that for the first time in the history of the country, farmers’ lands were being acquired for setting up the TML’s small car project at the prevailing market price and a comprehensive rehabilitation package was tailored at the instance of the state government with an inclusive approach. This rehabilitation package not only envisaged income generation for the land losers on a sustainable basis but also the skill development of the land losers and their dependents in different trades/ disciplines like catering, tailoring, masonry, software training, gardening, horticulture, poultry, apparel making, driving, hairdressing, beauty therapy, hospitality, electrical hardware maintenance and motor mechanics etc. The process of imparting training on the trades/disciplines and also catering activities had started even before the TML’s small car project finally took off. The entire Singur region was buzzing with economic activities, which, the people had never witnessed before. Training was imparted to over 300 young boys in trades like machinist, welding, two and three wheeler automobile repairing, house wiring and electrical gadget repairing as a step towards strengthening the state’s initiative for ensuring alternative means of livelihood to the land losers and their families. For the first time in the country, not only the land holders, but also sharecroppers and agricultural workers dependent on those lands were given compensation and the rehabilitation benefits.

So far as implementation of the New Kolkata International, Development (NKID) project in the district of Purba Midnapore is concerned, the original project envisaged development of infrastructure, irrigation facilities, setting up of new industrial units in the Micro and Small Scale Sector as a step towards setting up of Petroleum and Petro Chemical Hub in accordance with the policy announced by the Government of India. The implementation of the project covered land in different mouzas under Nandigram. But even before spadework for the project had been completed, hue and cry was raised that the Left Front government was out to rob the farmers of their fertile agricultural land for industrial use. The ferocity and virulence of the anti-Left campaign spread far and wide. Violent agitation took ugly turns, culminating into unfortunate incidents.  It was evident later that it was not a question of land, the entire agitation was politically motivated.

In both Nandigram and Singur, we lost an opportunity to bring about qualitative change in the life of the people of the areas and also to strengthen the state’s industrial base. But, we have to go ahead with our industrial development process learning from our mistakes and shortcomings.

INFRASTRUCTURE:

LAND QUESTION

With sharp increase in the investment proposals, the state is faced with new realities. On the one hand, demand for land for industrial use has been growing rapidly. On the other hand, the urgency for development of existing infrastructure has become more pronounced. In both the cases, land remains the most critical factor. In a land critical state like ours, it is extremely difficult to meet the current demand. The state has only 2.7 per cent of the total land area in the country with more than 8 per cent of the Indian population. Out of the total land area in the state, 61.9 per cent is agricultural land, 13.5 per cent is forest land, 5.0 per cent is fallow or uncultivated land and 19.6 per cent are urban areas. In spite of such land criticality, development of infrastructure in the state has been identified as the basic priority because it is prerequisite to faster industrial growth. West Bengal has to catch up with the rest of the country in terms of developed infrastructure – physical and social – and has to make good the deficiencies of the past. It goes without saying that investors’ choice of place for  investment basically hinges on certain key factors like availability of skilled labour, abundance of raw materials, cheap water and power connections, stable social environment, transport and telecommunication facilities, proximity to market etc. These are the crucial factors for the investors to determine the location of their units. Again, the ‘contentious’ issue of proper usage of land comes to the fore. The quantity of land is determined on the size of the proposed unit or infrastructure development of the region. This apart, which region is suitable for a proposed industry is another factor, which determines the choice of a location. It is, therefore, imperative to strike a balance between the scarcity of land and the increasing demand for land for setting up of industrial units. The state government has been more cautious and took measures to ensure that no unnecessary conflict emerges in case of land acquisition. Project-specific compensation and rehabilitation packages have drawn meticulously and fertile lands are being spared as far as possible. In fact, in last two years more than 6000 acres of land have been provided without any conflict and in a smooth manner. Singur or Nandigram were exceptions, not the main trend.

NEW POLICY

MEASURES

Since it is the declared policy of the state government to act as facilitator to the process of faster industrial development of the state, it needs to create enabling situation to encourage industries to make investment in the state. To minimise usage of agricultural land for industrial use and to achieve a balanced and sustainable industrial growth, a policy framework has been worked out  which is directed towards  locating new industries in a manner so as to maximise use of uncultivable land, locating industries in the less developed and  backward areas of the state, developing  industrial clusters thereby using common infrastructure and optimising available resources. Detailed field survey on the land vested to the state, available as per records, has been made. Assessment of its viability for industrial use keeping in view its size, location, contiguity and availability of infrastructure has also been done. The question of using the land locked in closed and sick industries, keeping in view the legal aspects and other intricate problems related thereto, has also been considered. Moreover, in order to ensure more balanced and sustainable industrial growth in the state and maximize use of uncultivable land in the state, it has been divided into six industrial growth poles. Factors such as availability of non-agricultural land, tradition of industrial growth and availability of good infrastructure have been taken into account while making this categorisation. This will lead to optimal use of the existing industrial infrastructure, and upgradation of infrastructure where required, and facilitate or create new industrial infrastructure for projects in backward areas. The state government’s decision  to develop  focal areas of industry such as (i) Haldia (ii) Asansol-Durgapur and contiguous areas of Bankura and Purulia across the Damador River (iii) Greater Kolkata which include parts of North & South 24 Parganas along with Howrah and Hooghly (iv) Kharagpur-Jhargram (v) Siliguri- Jalpaiguri and (vi) Kalyani is also a step towards addressing the issue of rapid industrial development without compromising the unhindered growth in the agricultural and allied growth.  

PROTECTION OF

FARMERS’ INTEREST

While stepping up the progress of industrial development of the state, we have to protect the interests of the peasantry. We have to take cautious and planned approach on the rational use of land taking into account the ground realities. Use of fertile agricultural land for industrial use should be avoided. We have also to ensure payment of maximum possible compensation for the sacrifices the farmers make in terms of sparing their land for setting up of industrial units / infrastructure development besides creating opportunities for their alternative livelihood on a sustainable basis. Their participation in the whole development process has also to be ensured. We have to make them really feel that they are not alien to the development process but a part of it. Again, we have to ensure that the people affected due to the industrial development programmes are properly rehabilitated. We have already put in place necessary policy measures in this regard which are being followed all over the state. Self Help Groups (SHGs) are being formed on a massive scale and the group members are being trained in different disciplines for enhancing their employability. Setting up of Training Institutes to meet the specific requirements of the industries is also an integral component of this Rehabilitation Plan.

STATE’S DRIVE FOR

STEADY GROWTH

West Bengal is now on a steady integration mode of a vibrant agricultural economy with the emergent sectors of the modern industrial economy. This has become possible because of the policies pursued by the state government over the last 34 years. The rate of growth of Gross State Domestic Product (GSDP) from Agriculture in the year 2009-10 has reached 4.2 per cent,  which is much above the rate of growth of GDP  from Agriculture (-0.2 per cent) for the country as a whole. Thus, growth in the agricultural sector beginning with the land reforms and surplus generated in the economy has created a conducive environment in the state for faster industrial development. Despite global recession, entrepreneurs have come forward to set up new industries in the state. This is evident from the number of IEMs filed by the entrepreneurs with the Government of India for setting up of new industries in West Bengal. During the calendar year 2009, West Bengal received 206 IEMs with a proposed investment of Rs 44,390 crore. During last five years (2005-2009) West Bengal received 1362 IEMs involving investment proposal of Rs 2,37,000 crore which accounted for 5.47 per cent  of the total investment involved in the IEMs issued for the country as a whole. The total investment during the calendar year 2009 was as high as Rs 8493.43 crore. As per the latest report of ASSOCHAM, West Bengal is next only to Gujarat and Maharashtra in the matter of implementation of IEMs during the period from August 1991 to March, 2009. As far as Foreign Direct Investment (FDI) is concerned, West Bengal received 7 FDI approvals during the year 2009 (January to November) involving an investment of Rs 313.8 crore. Moreover, FDI inflows through RBI’s Kolkata Regional Office during 2009 (January to November) stood at Rs 219.14 crore. This does unmistakably establish the fact that West Bengal is moving forward to regain its pride of place and pre-eminence in the industrial map of the country.      

IMPEDIMENTS

It needs to be recognised that in the existing Constitutional arrangements, a state government has to depend on the central government both for financial resources and necessary policy support. Now, with the withdrawal of earlier restrictions on the flow of capital and predominance of market forces, the only choice before the Left Front is to make the most of the available opportunities for rapid industrial development of the state in the interest of the common people. It has to be kept in mind that it is not possible in the present capitalist economic structure to usher in a non-capitalist way of development at the instance of the state government. The compulsions of the Left Front government in the capitalist structure are presently far more pronounced. It would undeniably have been most ideal if the state government could itself have been able to make necessary investment in the industrial sector for the overall development of the state but the lack of resources at its disposal have always stood in the way. The central government practically tends to usurp all its revenue earning avenues; the Constitutional arrangements are heavily tilted towards the centre. Though our Constitution advocates federalism, it is basically unitary in content which fetters the powers of the states.

It also remains a hard reality that in the new policy regime the state governments are being pushed to a position where they virtually have no role in the economic activity. Rather, in the IMF-World Bank dictated policy regime, the omnipotent market forces determine what the governments of the day will actually do and need to do. The national sovereignty is being surrendered at the altar of the neo-imperialists.  With the present UPA-II government representing the interests of the monopoly capital and multinationals, it is becoming  increasingly difficult for the state government to pursue its development initiatives. A few examples will suffice to illustrate the point.

The state government’s repeated requests for allocation of nine coal blocks situated in West Bengal for the upcoming projects in the state, particularly in the Steel and Power Sectors, have not yet yielded positive results. The Government of India has not been taking pro-active steps to address the problem of declining draft of the navigable depth in Haldia Channel which is essential for saving Haldia Port. A number of PSUs have been closed in our state due to the policies of the central government affecting employment of  a very large number of workers. It needs to be remembered that the policies pursued by the ruling class are dictated by their own class interests. The Left Front government’s ability to dictate the policies in the present political formation is extremely difficult.

Another major constraint now being faced by the state government in taking industrial development to the optimal level is the disruptive activities in some parts of the state, particularly in the districts of Bankura, Purulia, Paschim Medinipur and some parts of North Bengal. The post- Singur- Nandigram scenario apart, the activities of these destabilising forces have a regressive effect on the image of West Bengal as an industrial destination  but they have not been able to deter West Bengal’s industrial progress in any significant way.

The Left Front government in West Bengal has the vision for a resurgent, vibrant and industrially advanced state, while strongly defending the interests of the working people. The support of the people is the most important element in striving forward. There is no denying the fact that whatever successes we have achieved over the last 34 years is because of the support and cooperation of the people. As it is true in respect of implementation of land reforms, agricultural development, literacy programme, decentralisation of power, development of Self Help Groups, it is of great importance in relation to industrialisation also.