Economic Growth:West Bengal & Tamil Nadu

(A project report)

Submitted To: Submitted By:

Dr.Hanumant Yadav Avishek Pathak

(Faculty Economics Dept.) Roll No. – 43

Date of Submission: 16th August’2016

________________________________________________________
Hidayatullah National Law University, Post Uparwara, Abhanpur,
New Raipur – 493661 (Chhattisgarh)
 Declaration

I, Avishek Pathak, hereby declare that, this project report entitled, ‘Economic Growth: West

Bengal & Tamil Nadu’ submitted to Hidayatullah National Law University, Raipur is record

of anoriginal work done by me under the guidance of, Dr.Hanumant Yadav,Faculty Economics

Department,Hidayatullah National Law University, Raipur and that no part of this work has

been plagiarized without citations.

Avishek Pathak

Roll No. - 43

Semester –3rd

B.A.L.L.B. (Hons.)

Section – C
 Acknowledgements

I, Avishek Pathak, would like to humbly present this project to Dr.Hanumant Yadav for his

encouragement and guidance regarding several aspects of this project. I am thankful for being

given the opportunity of doing a project on ‘‘Economic Growth: West Bengal & Tamil

Nadu”

I am thankful to the library staff as well as the IT lab staff for all the conveniences they have

provided me with, which have played a major role in the completion of this project report.

I would like to thank God for keeping me in good health and senses to complete this

project.

Last but definitely not the least, I am thankful to my seniors for all their support, tips and

valuable advice whenever needed. I present this project with a humble heart.

Avishek Pathak

Roll No. - 43

Semester –3rd

B.A.L.L.B. (Hons.)

Section – C
 Objectives

1. To Study the Economic Growth Of The State of West Bengal.

2. To Study the Economic Growth of the State of Tamil Nadu.

3. To Study the importance the importance of the urban and rural contribution in the

development.

Research Methodology
This project is descriptive and analytical in nature. Secondary and electronic resources have been

used to gather information and data about the topic. Books and other reference as guided by the

faculty have been primarily helpful in giving this project a firm structure. Websites, dictionaries,

and articles have also been referred.

Scope of Work
This project has been carried out in an area of manufacturing sector and its relation to Indian

economics. My whole study is limited to Indian context. The basic idea behind this project is to

study about the manufacturing sector in India and its various aspects.

Source of Collection of Data

The whole research work is done by referring to secondary sources. Books and other reference as

guided by the faculty have been primarily helpful in giving this project a firm structure. Websites

dictionaries and articles have also been referred.

 Review of Literature

 Radhicka Kapoor, Creating Jobs in India’s Organised Manufacturing Sector, September

2014

 Santosh Mehrotra , Sharmistha Sinha , Jajati K. Parida and Ankita Gandhi ,Why a Jobs
Turnaround Despite Slowing Growth? , Planning Commission ,2014

 Jessica R. Sincavage , Carl Haub, and O.P. Sharma , Labor costs in India’s organized
manufacturing sector.

 Goutam Das, The wheels are off-The manufacturing sector is dragging down India's
economic growth, March 16, 2014

 The Boston consulting group, Make in India ,Turning vision into Reality ,November
2014

 Crisil Research ,Of growth and missed opportunity ,April 2014

 Indian Budget ,Industrial performance, chapter 9 2014

 Malik singeleton, Indian manufacturing sector shows 2.5% growth in industrial

production, but slow growth rate alarms officials to spur investment a t 4 : 1 1 p m , 0 5
/10/13

 Sudip Chaudhuri , Growth of Manufacturing Sector in Post-Reforms India Some

Disquieting Features

 Indian Manufacturing Industry ,Technology Status and Prospects

 Jayan Jose Thomas, Financial Sector Reforms and Manufacturing Growth in India: A
Preliminary Analysis

 T.P. Bhat, INDIA Structural Changes in the Manufacturing Sector and Growth Prospect,
December 2014
 Rakesh Mohan Muneesh Kapur , Pressing the Indian Growth Accelerator: Policy
Imperatives, IMF Working Paper Office of the Executive Director, March 2015

 Bishwanath Goldar , Sustaining a High Rate of Industrial Growth in India in the Next 10
Years , Institute of Economic Growth, Delhi, and Centre for International Trade and
Development, School of International Studies, Jawaharlal Nehru University, New Delhi
May 2013

 Yingqi Wei and V. N. Balasubramanyam , A Comparative Analysis of China and India’s

Manufacturing Sectors ,The Department of Economics Lancaster University
Management School Lancaster LA1 4YX UK
Introduction:

Hailing Prime Minister Narendra Modi's Make in India campaign and the emphasis on ease of
doing business, India Inc today said the initiative mirrors the country's ambition to sprint ahead
in the global manufacturing race, thereby creating jobs and boosting economic growth.
"The Make in India campaign promises to fast-track India's growth trajectory by making it a
manufacturing hub. Made in India, Made by India but Made for the World, with the vision of
empowering Indians by creating job opportunities, the campaign is the PM's ingenious formula
to position India as the centrepiece of Asia's next growth story. The economic growth has been
driven by the expansion of services that have been growing consistently faster than other sectors.
It is argued that the pattern of Indian development has been a specific one and that the country
may be able to skip the intermediate industrialization led phase in the transformation of its
economic structure. Serious concerns have been raised about the jobless nature of the economic
growth. Favourable macroeconomic performance has been a necessary but not sufficient
condition for the significant reduction of poverty amongst the Indian population. The rate of
poverty decline has not been higher in the post-reform period (since 1991). The improvements in
some other non-economic dimensions of social development have been even less favourable.
The most pronounced example is an exceptionally high and persistent level of child malnutrition

West Bengal, India’s sixth largest economy, had a gross state domestic product (GSDP) of US$
132.86 billion in 2014-15, growing at compound annual growth rate (CAGR) of 11.06 per cent
since 2004-05. West Bengal is the third largest state in India in term of mineral production,
accounting for about one-fifth of total mineral production. Coal accounts for 99 per cent of
extracted minerals. The state is the largest producer of rice and second largest producer of potato
in India. The natural resources, policy incentives and infrastructure in the state support
investments in major sectors such as iron and steel, biotechnology, coal, leather, jute products,
tea, IT, gems and jewellery. The state has 3000 acres of land at its disposal to set up industries.
West Bengal has 12 growth centres for medium and large scale industries, set up by the West
Bengal Industrial Development Corporation (WBIDC). There are exclusive growth centres for
electronics, software technology and export processing. Major industrial areas of West Bengal
are Haldia, Kolkata, Asansol-Durgapur region, and Kharagpur.

Tamil Nadu is the fourth largest state of India and contributed 7.9 per cent to India's overall
gross domestic product (GDP) in 2014-15. It has a diversified manufacturing sector and features
among the leading states in several industries like automobiles, components, engineering,
pharmaceuticals, garments, textile products, leather products, chemicals, plastics, etc. It ranks
first among the states in terms of number of factories and industrial workers.
Tamil Nadu Industrial Development Corporation Ltd (TIDCO), State Industries Promotion
Corporation of Tamil Nadu (SIPCOT), Tamil Nadu Industrial Investment Corporation Limited
(TIIC), and Tamil Nadu Small Industries Development Corporation Limited (TANSIDCO) are
jointly developing industrial infrastructure in the state.
Between 2004-05 and 2014-15, Gross State Domestic Product (GSDP) expanded at a Compound
Annual Growth Rate (CAGR) of 12.67 per cent to US$ 161.2 billion whereas the Net State
Domestic Product (NSDP) expanded at a CAGR of 12.94 per cent to US$ 145.9 billion.
Tamil Nadu Industrial Guidance & Export Promotion Bureau has been set up with the objective
of attracting major investment proposals into Tamil Nadu
West Bengal:

Current Scenario:

 The state government of West Bengal has proposed an investment of US$ 8.2 billion for
the budget 2015-16. It has allocated US$ 99.67 million for constructing Asia Highway 2,
which will connect Nepal Border (Kakarbhita) to Bangladesh Border (Banglabandha).
 The state government has set up an integrated leather complex on the eastern fringe of
Kolkata, spread over 1,100 acres.
 In 2014-15, the state government commissioned a 250 MW thermal power unit in
Durgapur and renovated a 210 MW of Bandel thermal power station. The third and fourth
units of Sagardighi thermal power plant, of 500 MW each, are expected to be operational
in 2015-16.
 A number of road development projects have been taken up under Public-Private
Partnerships (PPP). The Barasat-Krishnanagar section, Palsit-Dankuni road project and
Panagarh-Palsit road project are some of the PPP projects taken up in the state.
 In 2014-15, the state government approved the construction of a 293 MW hydropower
plant in Darjeeling district. The plant is expected to be operational by 2016.
 Three steel parks are expected to be established in Raghunathpur at an investment of
about US$ 5.9 billion.
 The State’s Textile Policy 2013-18 aims to increase the sector’s contribution to 10.0 per
cent of the state GDP by 2022-23 from 6.1 per cent in 2014-15. This would provide
employment to at least 10 million people.
 Under the Smart City Program, the state government has announced plan to build seven
smart cities in West Bengal. The four cities of New Town Kolkata, Bidhannagar,
Durgapur and Haldia, have already been selected under the central government's flagship
Smart Cities project.
 Under Backward Regions Grant Fund Programme (BRGF), 171 projects for widening
and strengthening of 2,087 km of roads, and 18 new bridges are anticipated to be
operational by September 2015.
The Past Isssues

The economic decline of West Bengal is one of the most discussed and debated topics in the
Indian public sphere. Pre-Independence, united Bengal was probably the most advanced region
of the subcontinent. But 1947 changed that.

The partition of Bengal struck the first blow to the region’s economy, killing the massively
profitable jute industry – Bengal accounted for half of the global jute production at the time.
Suddenly, manufacturers in western Bengal and growers in eastern Bengal found themselves in
two separate, sovereign – and hostile – states. In West Bengal, another spell of degeneration
came after the Communists stormed to power in 1977. In 1981, West Bengal accounted for 9.8%
of the industrial output of India. In less than two decades, that figure fell by half, to 5.1%. In
1986, the Kolkata airport was handling about 10% of India’s import-export volume. In 1999, this
had dropped to 4%.

Much of the blame for this precipitous decline is laid on labour troubles – the strikes, gheraos
and lock-outs encouraged by the Communist Party of India (Marxist) – although a paper by
economist Abhijit Banerjee and others points out that there really is no evidence for this
hypothesis. Nevertheless, five years after West Bengal voted out the Communists, ending a
record 34-year spell, the state might be seeing some signs of economic revival – a fact that ruling
Chief Minister Mamata Banerjee made sure to flog before the start of the assembly election on
April
Glimpse Of Growth:

In 2014-’15, the West Bengal economy grew at a faster rate than the national average, as also did
its industrial sector. Long called the sick man of India, even Kolkata appears to have tagged
along with the rest of Bengal in the growth. In a report released in 2015, American think tank
The Brookings Institution ranked Kolkata second on overall economic performance amongst
Indian metros for the year 2013-’14. In GDP per capita growth, Kolkata beat every Indian city,
except Chennai.

More money for the government

Tax revenue in West Bengal has gone up handsomely, doubling in the past five
years.
West Bengal leads many richer states in human development

In the push and pull of public debates, it is often forgotten that economic numbers are only
means to achieve human development. Thankfully, West Bengal’s decline on the human
development front has not been as steep as its economic decline.

For example, the eastern Indian state does relatively well in preventing infant deaths, which is
arguably one of the most basic goals of any government.

The state has also done well on another foundational health parameter, reducing the maternal
mortality rate by more than 19% from 2009 to 2012. This success has meant that West Bengal
beats a number of more industrialised states.
Given the hype around the Gujarat model of development, it bears mentioning that West Bengal
delivers far better standards of healthcare than Gujarat – although this doesn’t get highlighted in
the media as much as news on car manufacturing plants. Somehow, the dominant narrative of
development does not seem to include human development.

In fact, West Bengal has notched up another decidedly unsexy development win – it’s the state
with the second highest number of villages declared free of open defecation. A fifth of all Indian
villages declared free of open defecation are in West Bengal, second only to Himachal Pradesh.
Open defecation is one of India’s most stubborn and damaging public health issues, even as
neighbours such as Bangladesh have achieved near-total toilet use.

How these industrial and human development achievements will help the ruling Trinamool
Congress in the assembly election is anyone’s guess. In spite of efforts by Mamata Banerjee to
sell a narrative of development – the Trinamool has even used the literal Bengali equivalent of
ACCHE DIN in its ads – the disenchantment of a large number of urban, middle-class Bengalis
has meant that West Bengal has been unable to use these successes to effect any sort of
rebranding. Add to that the increasingly daunting prospect of a Left-Congress alliance and it
looks like Banerjee will have to depend on plain vanilla politics, the sort West Bengal has been
used to for decades, rather than any Gujarat-style narrative of development, if she really wants to
win back her chief minister’s seat. In 1971, West Bengal had 24.7 per cent of its population in
urban areas compared to the national figure of 20.2 per cent. By 2011, the national urbanisation
rate of 31.2 per cent was within striking distance of Bengal's 31.9 per cent.

"Slow, messy and hidden" is how a World Bank report describes urbanisation in South Asia. It
applies to urbanisation in Bengal particularly well. West Bengal needs to urbanise fast and
handle urbanisation well to reap significant benefits from urbanisation.

Agriculture cannot gainfully provide employment for much of West Bengal's working age
population from a total of over 91 million.

Land is scarce, and net sown area constitutes 62.89 per cent of the reported area, with area under
non-agricultural use and forests covering 13.48 per cent and 18.52 per cent.

The residual of about 5.5 per cent is accounted by categories such as fallows and waste land.

To assume that urban centres and industrial areas will come up only in fallows and waste land is
an unrealistic expectation.
Change Of Rule And Its Results

Chief Minister Mamata Banerjee today asked the Centre to treat West Bengal "differently" and
sought a debt restructuring plan, saying the state had accumulated a debt burden of almost Rs
two lakh crore due to the Left "misrule".
Terming the Maoist menace in the state as a "major problem", she said Centre should give
"special treatment" in the 12th five year plan to meet the developmental needs of the affected
areas.

After 34 years of misrule, founded on coercion and violence, the economy of the state is in
shambles. Therefore, the 12th Plan must give special attention towards the regeneration of the
great state of West Bengal," Banerjee told the National Development Council meeting here.
The state's debt grew from Rs 41,894 crore to Rs 1,91,835 crore, a jump of 457 per cent, between
2000 and now.

"In view of the financial mess that we have inherited, 12th Plan must look at a debt restructuring
plan for West Bengal," Banerjee said, adding "no state can be compared to the unfortunate
hydra-headed challenges being faced by my state".
Maintaining that Bengal's financial scenario was "unmanageable", she said the situation "can
only be corrected by a large infusion of liquidity particularly for non-plan expenditure in the
form of liquidity-infusing and grant-based financial package".

Observing that three districts of the state "have a major problem of Left Wing extremism", she
said these districts suffered from "severe backwardness" and the Trinamool Congress-led
government had taken several initiatives to develop the Jangal Mahal area and hence it looked
forward to "special treatment" in the 12th Plan".
Industrialisation

With the global trend of premature deindustrialisation, it is not going to be easy. Today's
developed countries typically grew first by industrialising, and then by moving into services.

In 2013, Dani Rodrik pointed out how in recent times, developing countries are not attaining
industrialisation levels reached by the early industrialisers.

Mr Rodrik noted how in Britain, the birthplace of the Industrial Revolution, manufacturing's
share of employment peaked at around 45 per cent before World War I and then only fell to
reach less than 10 per cent. In contrast, in India, manufacturing employment's share peaked at a
meagre 13 per cent in 2002.

Among Indian states, West Bengal led the pack, only behind Bihar, in deindustrialising at a very
low level of income. In this newspaper, on May 9, 2014, Amrit Amirapu and Arvind
Subramanian provided the data.

Except for Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Odisha, and Rajasthan, in
all the others the share of manufacturing in gross domestic product or GDP (old series) peaked
before 2000. In West Bengal, like in Assam, Maharashtra and Kerala, it peaked as early as the
1980s.
In Bengal it peaked in 1982, after five years of communist rule under Jyoti Basu, and the state's
per capita income was only Rs 9,348 at 2005 prices. Only in Bihar did it peak at a lower per
capita income.

Recently, there has been progress in industrialising West Bengal, as illustrated by the
commissioning of the cement plant at Godapiasal and progress on the proposed offshore floating
storage facility for eight million tonnes per annum (mtpa) liquefied natural gas near Digha.

But a policy-related problem that urgently needs to be redressed is the "miniaturisation" of

projects.

Take, for example, the state government's proposal to set up six new theme-based township
projects at Siliguri (education and health), Bolpur (culture), Asansol (industry), Kalyani
(information technology), Howrah (sports) and Baruipur (senior citizen).

They vary from 50 to 127 acres, and miniaturisation is evident when comparison with the 886-
acre Gujarat International Finance Tec-City or GIFT city being built near Ahmedabad and the
337-acre Mysore campus of Infosys.

These are good ideas for their amusement and aesthetic value. But miniaturisation will not work
for industry and infrastructure. Even 20 50-acre townships will not generate benefits equivalent
to a 1,000-acre township.

Miniaturisation of projects, most probably, has resulted from the problems of land acquisition.
All the six theme-based townships are on government land, and such land is limited. Acquiring
land has proved to be the major bottleneck for growth of infrastructure and industry.

The story of Tata's proposed Nano project in Singur is too well-known for repetition. Now, the
state government is trying to promote industry and even infrastructure only in land vested with
the government, such as in West Midnapore. This will not work.

The development of Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC) is proposed to be

taken up in a band of 150-200 km on either side of the Eastern Dedicated Freight Corridor, in a
phased manner.

In the first phase, every state is expected to promote at least one integrated manufacturing cluster
of about 2,470 acres, where 40 per cent area is permanently earmarked for manufacturing and
processing activities.
The AKDIC will pass through the cities of Asansol, Durgapur and Kolkata in Bengal. How will
the state promote an integrated manufacturing cluster of 2,470 acres with only government land?

Bengal has sought Rs 2,000 crore from the central government for improving infrastructure at
Petra pole. bordering Bangladesh.

Questions???

1. Does the government have enough land at Petrapole to develop a world-class

cross-border trade facilitation facility?

2. Similarly, will the path of a national or state highway always pass through
government land alone?

West Bengal suffers from too many people and too little land. With 1,029 people per sq km, it is
the second most densely populated state in India, after Bihar.

Decadal population growth of the state at 17.77 per cent and 13.93 per cent during 1991-2000
and 2001-2011 were below the corresponding all-India total of 21.54 per cent and 17.64 per cent.

The relatively lower growth compared to the national level as well as its deceleration over time
are positive developments overall. But the population is still growing, and so is pressure on land.

Urbanisation concentrates economic activity, enhances productivity and creates jobs in

manufacturing and services.

Reviving Kolkata: The City that Got Left Behind:

Between 2001 and 2011, the population of Kolkata shrunk by 1.9 per cent to 4.48 million.

Kolkata was the capital of the British Indian Empire until 1911. Throughout British Raj, the city
was a major port and commerce center in world economy. The Partition of India in 1947 was a
major blow to the once flourishing economy during the world wars, it removed most of
the hinterland, cutting down the supply of the human resource and a took away a huge portion of
its market. Also the huge inflow of refugee from East Pakistan, Bihar, Jharkhand was a major
drain to the city's infrastructure which was inadequate for the population boom. In the 1970s, the
city saw a predominance of the trade-union movements which led the investors to flow out of the
state to other newly emerging destinations in India. As the investors lacked trust in the newly
formed communist government, the lack of capital destroyed most of its small-scale industries
like foundrys and tool casting.

Since the late 1990s, Kolkata has managed to board the all-India bandwagon of buzzing
economic sectors like information technology (IT) and business process outsourcing (BPO),
along with a good pace of development matching all India average[5] with the liberalization of
the Indian economy. Several industrial estates like Bantala Taratolla, Rajarhat, Durgapur,
Kalyani, Uluberia, Dankuni, Burnpur, Kasba, Howrah, specialized setups like the country's first
Toy Park, and a Gem and Jewellery Park are spread throughout the urban agglomeration. The
establishment of a new harbour at Haldiaand industries like Haldia petrochemicals was one of
the major comebacks of the state of West Bengal, which in turn improved business and industry
in the state capital. In 2009, Kolkata was ranked the hardest Indian city in which to do
business by the World Bank.

A plethora of IT-SEZ and IT parks have come up in the city, attracting software corporations and
Foreign Direct investment in Kolkata. More recent development like a huge leather complex that
has come up at Bantala an export processing zone that has been set up in Falta has set the city's
reputation as an industrial hub in right path once again, paving its way for the new beginning in
the 1990s.

In 2001, around 0.81% of the city's workforce was employed in the primary sector (agriculture,
forestry, mining, etc.); 15.49% worked in the secondary sector (industrial and manufacturing);
and 83.69% worked in the tertiary sector (service industries).[8]:19 As of 2003, the majority of
households in slums were engaged in occupations belonging to the informal sector; 36.5% were
involved in servicing the urban middle class (as maids, drivers, etc.), and 22.2% were casual
labourers. About 34% of the available labour force in Kolkata slums were unemployed.

Most of the slum dwellers and lower economic class mass participate in the informal
economy and work in laundering, housecleaning, sweeping, plumbing, furniture making,
electrical wiring, electronics repairing, masonry, hair cut and beauty saloning, autocab driving,
tailoring, leather work, daily wage labouring, shoe making, food selling, push cart selling,
manual and cycled rickshaw pulling and as workers at local grocery stores. Until recently,
flexible production had always been the norm in Kolkata, and the informal sector has comprised
more than forty percent of the labour force For example, hawkers in Kolkata, numbering 275,000
working from temporary or semi-permanent arrangements along Kolkata's streets generated
business worth Rs. 87.72 billion (around 2 billion U.S. dollars) in 2005. A considerable chunk of
Kolkata's lower middle class and middle-class people are self-employed and own or work in
small businesses like local grocery stores that sell wide array of merchandise items and FMCG
products, retail stores selling clothings, shoes etc. and eateries, small scale industries and other
servicing industries.

GDP
According to a Pricewaterhouse Cooper's report, as of 2009, Kolkata's economic output as
measured by gross domestic product as 104 billion US dollars, and ranks third among South
Asian cities, behind Mumbai and Delhi. However, As of 2010, Kolkata, with an estimated Gross
domestic product (GDP) by purchasing power parity of 150 billion dollars, ranked third among
South Asian cities, after Mumbai and Delhi. Kolkata's nominal GDP is expected to reach
US$169 billion in 2030, with a per capita nominal GDP of US$7,400. In 2015, The Brookings
Institution, a U.S. based think tank in collaboration with JPMorgan ranked Kolkata second
among all Indian metros and 32nd among 300 major metropolitan economies of the world on
overall economic performance for the year 2013-’14. According to this report, With annualised
GDP per capita growth of 4.7% and employment growth of 2.5% Kolkata scored over every
Indian city, except Delhi.

Companies:

With its huge economy and cheap living expenses, it is one of the World's major centers of
business in GDP PPP terms. Many industrial units, of large Indian corporations, whose product
range is varied and includes – engineering products, electronics, electrical equipment, cables,
steel, leather, textiles, jewellery,frigates, automobiles, railway coaches, wagons, tea,
paper, pharmaceuticals, chemicals, tobacco, food products, jute products – are headquartered in
Kolkata. Recently the city has been transformed to a major information technology hub in India.

Some notable companies headquartered in Kolkata include ITC Limited, H R Group, Tata Steel
Processing & Distribution Ltd, Coal India Limited, Haldia Petrochemicals, Exide
Industries, Hindustan Motors, Britannia Industries, Bata India, Birla Corporation, CESC
Limited, IFB Industries, RPG Group, Bengal Ambuja, Linc Pen &
Plastics, Philips India,Eveready Industries, Visa Group, Damodar Valley Corporation, India
Govt. Mint and Peerless Group, Usha Martin, Jai Balaji group, Orient Airways, KKN
Group, Chirag Computers, Bengal Ambuja, Berger Paints India Ltd, SIMOCO (First Wireless
Equipment and Mobile phone manufacturers from East India), Emami Ltd., Eveready
IndustriesIndia Ltd., Stewarts & Lloyds of India, Ltd., and Titagarh Wagons and National
Insurance Company.

Among these three of the Forbes Global 2000 listed companies are headquartered in Kolkata,
which includes ITC Limited, Allahabad Bank and Uco Bank. Kolkata is also the home to the
HQs of the Geological Survey of India Zoological Survey of India, Botanical Survey of
India, Hindustan Copper Ltd., Ordinance Factory Board and the Tea Board of India.
WB's economic growth of 7.6% under TMC not as rosy as projected:

The All India Trinamool Congress booklet, on the occasion of completion of two years of
governance, says that the gross state domestic product (GSDP) growth rate in 2012-13 was at
7.60% compared to the national average of 4.96%. But a closer look suggests that the picture
may not be all that rosy.
The numbers reveal that West Bengal’s GSDP growth is much less than the peak growth in the
last five years, which came in 2010-11, when GSDP grew at 9.22% (at 2004-05 prices),
according to data available with the Planning Commission.
Ironically, 2010-11 was also the last year of the Left Front’s 34 year rule in West Bengal.
In the first year of Mamata Banerjee’s tenure in 2011-12, the GSDP growth fell to 6.58%, data
from Planning Commission suggests. However, West Bengal’s GSDP growth was higher than
the national average of 6.21% in 2011-12.

“The analysis of an economy should be based on a trend, and not on annual growth rates. If we
compare the per capita GSDP of West Bengal with per capita GDP of India between 2004-05
and 2012-13, West Bengal’s growth and per capita number has been lower than that in India,”
says Dipankar Dasgupta, former professor of Economics, Indian Statistical Institute.

According to the last Economic Survey by the government of India, in 2011-12, West Bengal’s
per capita net state domestic product (at current prices) was Rs 54,830, which was greater than
states like Uttar Pradesh, Rajasthan, Madhya Pradesh and Bihar. However, the per capita income
of West Bengal was lower than the all India average of Rs 60,603 (Economic Survey,
government of India, 2012-13). In the year 2011-12, West Bengal saw a 14.88% growth in per
capita income over the last year, which was higher than the all India average of 13.64%.
However, in the year 2010-12, the growth in West Bengal’s per capita income was less than that
in 2010-11 ( 16.31%) and 2009-10 ( 15.66%).

"The GSDP growth rate in West Bengal has always been higher than the national average. Also,
in the last years of Left Front government, the GSDP growth rate was higher than present.
Moreover, in agriculture and industry, the growth has come down. Most importantly, the figures
quoted by the government are provisional, so we cannot draw much inference from it," said
Surya Kanta Mishra, leader of opposition, West Bengal.

The data from Planning Commission also suggests that the growth of industry (as a percentage of
GSDP) fell from 6.90% in 2010-11 to 3.71% in 2011-12. In its presentation to the Planning
Commission for the Annual Plan of 2013-14, West Bengal has stated that the industry grew by
6.24%, which is an improvement of 2.53 percentage points over the previous year.

In agriculture and allied services, West Bengal registered a growth of 2.56% in 2012-13, against
a national average of 1.79%, according to the presentation. However, in 2011-12, the growth in
the sector was 3.53%. In 2010-11, there was a decline in agriculture and allied services growth
rate by 0.75%, after a spurt of 6.93% in 2009-10.

In the manufacturing sector too, the highest growth for West Bengal came in the year 2009-10 at
11.83%, followed by 8.86% in 2010-11. In 2011-12, the first year of Trinamool government in
power, the growth in the sector fell to 2.18%.

In the services sector, which accounts for nearly 60% of the state’s GSDP, West Bengal’s growth
has been consistent. In 2012-13, it grew by 9.48%, against 8.37% in 2011-12, 9.97% in 2010-11
and 7.86% in 2009-10.
Income:
Petrochemicals

The state of West Bengal accounts for almost 4% of India’s production of petroleum products
and 13% of India’s polymer production. The production has almost doubled in the last decade.
Crude throughput at Haldia refinery increased to 5,502 million tones and its capacity utilization
increased to 91.7% during 2005-06.
The total number of HPL downstream industries set up during the period from January 1998 to
December 2005 stands at 773 out of which 705 are in West Bengal.
Of the 705 units set up in the state 674 are small scale units, 94 are medium scale units and 5
are large scale units.
The growth of the Petrochemical sector has been very impressive both in terms of units set up
and investment volume. The main reason for the recent growth of this industry is due to
upstream and downstream industry linkages by the oil refining and petrochemical units set up in
the state. The industry is due to receive a further fillip with the announcement of US$ 1 billion
gas pipeline project to bring natural gas in the state.

Of the 705 units set up in the state 674 are small scale units, 94 are medium scale units and 5 are
large scale units.
The growth of the Petrochemical sector has been very impressive both in terms of units set up
and investment volume. The main reason for the recent growth of this industry is due to
upstream and downstream industry linkages by the oil refining and petrochemical units set up in
the state. The industry is due to receive a further fillip with the announcement of US$ 1 billion
gas pipeline project to bring natural gas in the state.
Some of the light bearers in this sector are:
Haldia Petrochemicals Ltd. is India’s second largest integrated petrochemical complex.
Currently producing 1.5 million tones of polymers and chemicals, the company was set up
with an initial investment of US$ 1.2 billion and has grown significantly to its present
turnover of US$ 1.4 billion.

Mitsubshi Chemicals and Corporation, Japan’s largest chemical firm and one of the world’s
top 10 chemical companies has invested in Purified Terepthalic Acid (PTA) plant at Haldia
at an estimated cost of US$ 355 million. Its capacity is 4,25,000 tones per annum. The
company is going through an expansion costing US$ 370 million which will increase
capacity by 800,000 tonnes of PTA per annum.

South Asian Petrochem Ltd. (SAPL) is a subsidiary of Kolkata’s Dhunseri Group. It has set
up a 140000 TPA of Polyethylene Terephthalate (PET) resin plant with an investment of
over US$ 100 million at Haldia.

Policies & Plans

Petroleum industries are gradually gaining importance in the state with a number of petroleum &
downstream industries coming up in the state. Realising the potential of this sector, West Bengal
Government has undertaken a number of policy measures for the sector.

The major thrust areas of the policy are :

Encourage public sector companies & nationalized banks to enter the capital market to raise
resources & offer new investment avenues.

Invite & encourage private sector investment in these industries in order to accelerate
growth.

Set up Petroleum, Chemical & Petroleum Investment Regions (PCPIR) in the state to
promote investment on a global scale.

Foreign Technology investments will be invited in the petrochemical industries.

Encourage Foreign Equity participation in the petrochemical industries.

 Potential

Why West Bengal?

Excellent port facilities with comprehensive cargo handling facilities including liquid cargo.

Availability of skilled human resources.

Easy availability of industrial water.

Excellent track record of Haldia Petrochemicals ad other downstream industries.

Availability of land, particularly at Haldia.

Good forward and backward linkages.

A wide market for polyester products.

Textiles
India has a long tradition in Textiles and at one time the country’s manually operated textile
machines were amongst the best in the world. Budgetary concessions, rationalization of duty
structure and assistance under the Technology Up gradation Fund Scheme (TUFS) have paid rich
dividends in the past. During 2004-05, production of fabric touched a peak of 45,378 million square
meters. In the year 2005-06 up to November, production registered a further growth of 9% over the
corresponding period of the previous year. In case of export of textiles, after near stagnation in
2004-05, when total export of textile was US$ 13,038.64 million, better prospects seems to be
emerging in the current year. During April-November 2005 textile exports were US$ 9,309.81
million, up 8.21% during the corresponding period of the previous year.

Jute textile manufacturing is the most prominent industry in West Bengal due to availability of raw
jute in the state. At present there are 59 Jute mills in West Bengal. Main jute products are Hessian,
sacking, jute bags, and other items produced by jute. Most of the jute mills are located on the banks
of river Hooghly near Kolkata. West Bengal is the leader and pioneer in the country for the
manufacturing of Jute textiles. West Bengal’s provisional data for the production of Jute in 2005-06
(April to September), as produced by the West Bengal Economic Review, is 6,24,000 tonnes.
Indian jute industry at a glance
Number of jute mills in India 73
Number of jute mills in West Bengal 59
Number of looms 39,733
Number of spindles 5,07,960

But not only jute textile, West Bengal has traditionally been a major producer of cotton textile as
well in the country. If we look at the production of cotton textile in the state we will see a
continuously rising trend as shown in the following chart :

Ballyfabs (Kankaria group) is one of the largest manufacturer of jute goods has an annual
turnover of US$ 5 billion. The company offers a wide variety of designer jute products like Bags,
Purses, Backs, Wine bottle bags, rugs, floor coverings etc.

Policies & Plans

The West Bengal Government is undertaking a number of policies to develop a strong & vibrant
textile industry that can produce good quality cloth at reasonable prices to meet the growing needs
of the people & to contribute to the provision of sustainable employment along with economic
growth of the state. The Government will encourage the industry to increase its share in the global
market.
The major thrust areas of the policy are :
Technological up gradation
Enhancement of productivity
Quality consciousness
Strengthening of raw material base
Product diversification
Increase in exports & innovative marketing strategies
Financing arrangements
Maximizing employment opportunities
Integrated Human Resource Development.

Private sector will be encouraged to set up world-class, environment-friendly, integrated textile

complexes & textile processing units in the state. The State is also planning to set up a couple of
Jute Park in the state to promote jute textiles. Government will also promote revitalization of the
working of Textile Research Associations (TRA) to focus research on the industry needs.
Potential
Why West Bengal?
With the withdrawal of restrictive quotas by the World Trade Organization (WTO), (Uruguay
round 1994, where it is decided that no import quota will be levied on textile among others, on
member counties), the government of West Bengal has drafted a comprehensive strategy to tap the
opportunities that has emerged out of it. The government has identified Bardhaman, Bankura,
Birbhum and South 24 Parganas for the cultivation of cotton and has already completed the soil
testing in the respective areas. The main strengths of the State in this sector is due to the following
attributes:
The soil is very conducive to jute and also cotton cultivation.
Easy export facility due to presence of ports and airports.
Workers traditionally trained in jute cultivation.
Suitable weather condition.
Huge market, not only in India but different parts of the world.

Toursim

Banglar mati, banglar jol”…..West Bengal is one of the most culturally and ethnically diverse
states of India. The people of West Bengal inherit their identity and aspiration from the larger
Indian mosaic. One can still recapture the colonial era in its relics which survived the state’s
progressive development. The land of West Bengal has in it intricately woven stories of many
bright mornings and dark nights; stories of many civilisations have left their footprints here. Awash
in the memory of that rich history and heritage West Bengal boasts of different ethnicities, cultures,
religions, people and languages which add to this beautiful landscape. And that is why Deshbandhu
Chittaranjan once said – “There is an eternal truth in the soil of Bengal. ….It is that eternal truth
that has been expressed through innumerable changes, evolution and revolutions in Bengal. It is
that truth which has proclaimed itself in literature, philosophy, poetry, war, revolution, religion and
karma, in ignorance, in unrighteousness, in freedom and in subjection. That is Bengal’s life –
Bengal’s soil and Bengal’s water are the external forms of that life.”

West Bengal aims to become a preferred tourism and tourism-related investment destination by
leveraging its unique geographical setting along with its various tourism-related assets. It will
develop necessary infrastructure and promote tourism in an integrated manner which will not only
bring in more investment and further the socio-economic goals of the Government, but also ensure
that all these are in conformity with the relevant acts, rules and regulations relating to
environmental protection.

West Bengal has the widest variety of attractions in terms of tourist spots from the bustling
Kolkata megapolis with its historical and modern charms, to the zones of tranquility like the
Himalayan terrain in the north to the Sunderbans in the south. The state is endowed with all the
diversities of nature that is a tourist’s dream. From the arid Chhotanagpur plateau region in the
west, forests in the north and south, mountains in the north, sea beaches in the south and rivers
crisscrossing the whole of the state the varied panorama offers the discerning traveler a very wide
choice and caters to the requirements of varied travel segments. More specifically, the snow
capped peaks of the Himalayas, Darjeeling, referred by many as the Queen of the Hill Stations,
the Darjeeling Himalayan Railway declared as a World Heritage Site, the vast tea
estates of the Dooars, the famed Royal Bengal Tiger of Sunderbans, the innumerable historical
landmarks of India’s and Bengal’s glorious history are all wonders for the prospective tourists.

The Government of West Bengal has realized the huge potential of tourism industry in this part and
hence has formulated an appropriate policy framework to attract more tourists as well as investors
in this industry. In the year 2004, 0.76 million foreign tourists and 12.38 million domestic tourists
visited the state.

The Government of West Bengal has allocated Rs. 25 million in their state budget this year to boost
tourism in the state.

Policies & Plans

To promote West Bengal as a desirable tourist destination, the State Government has formulated
certain plans & policies.

The major thrust areas of the policy are :

Promote sustainable development of tourism in the State.

Preservation and promotion of local art, tradition , heritage, culture & environment.

Promotion of Sports tourism, Adventure tourism, River tourism, Rural tourism, Eco-tourism,,
 Forest & wildlife tourism.

Notification of Special Tourism Areas in the State.

Public Private Participation in creation of tourism infrastructure.

West Bengal Government is also taking special steps to encourage & promote Tea-tourism in the
State. The state government has already chalked up plans to upgrade accommodation, construct log
cabins, renovate heritage bung lows, and undertake landscaping to boost this sector. Tourist can
visit the villagers and tea factories and go horse riding and bird watching. They can also take a ride
on the famous “Toy Train” of Darjeeling.

Potential

Why West Bengal?

Vast unexplored potential and diversity.

Distinguished Tourist stops internationally know

Gateway to North-Eastern India.

Relative low costs of accommodation and travel.

Wide literacy levels and English speaking population.

Government welcomes Public Private Partnerships in designated areas.

Agriculture
The agriculture in West Bengal is one of the most significant means to earn livelihood especially
in the rural sectors. This has been enabled by various schemes of the Green Revolution and the
land reforms. West Bengal comprises of 8 percent of India's population and the majority of them
are engaged in farming and other agricultural activities. The principal food crop cultivated in
West Bengal agriculture is rice. Other food crops of West Bengal include maize, pulses, oil
seeds, wheat, barley, potatoes, and vegetables. The most vital cash crop of West Bengal is Tea
and it is also exported every year. Darjeeling tea is most well-known all over India. West Bengal
agriculture supplies about 66 percent of the jute requirements of India. The soil and heavy
rainfall witnessed by India are absolutely perfect for jute cultivation. The two other crops that are
cultivated highly in the agricultural sector in West Bengal are tobacco and sugarcane.

The chances of increasing the area of cultivation are so less that the agricultural department of
West Bengal decided to increase the fecundity of various crops cultivated over there by using
superior quality seeds, fertilizers, various plant protection schemes as well as improved packages
of practice. The department of agriculture in West Bengal also decided to distribute extra and
vested land area to the actual agricultural laborers with the help of land reforms. This will act an
added advantage to the productivity of the crops in West Bengal.

There has been a significant rise in the cropping of West Bengal from 131 percent to 162 percent
during the last 2 decades. West Bengal agriculture has been sustaining its consistency in
attaining a track record in food grains production. The state also ranks first in producing rice
among all other states in India. The agriculture in West Bengal also witnessed a remarkable rise
from 0.24 million tones to 0.55 million tones in the last decade in its production of oil seeds.
West Bengal agriculture also ranks second in potato production in India as it produces about 28
percent of the total potatoes cultivated in India. Apart from these food crops, West Bengal
agriculture produces more than 60 percent of India's raw jute fiber.

West Bengal agriculture has been flourishing heavily and it has become one of the most essential
part in West Bengal's economy as it has been fueling it with its high productivity as well as
export trade in some sectors.
Tamil Nadu

Going by the logic that whoever has the larger alliance wins the election, the advantage was
clearly with the AIADMK in the 2009 Lok Sabha election. Major allies of the DMK in the 2004
election – the Pattali Makkal Katchi (PMK), the Marumalarchi Dravida Munnetra Kazhagam
(MDMK), the Communist Party of India (CPI) and the Communist Party of India (Marxist)
(CPI(M)) – had left the DMK-led alliance and joined hands with the AIADMK this time.
Fissures developed between the DMK and the MDMK after the 2004 election. The MDMK left
the DMK to join with the AIADMK in the 2006 assembly election itself. The left parties broke
with the DMK-led alliance after they withdrew support to the United Progressive Alliance
(UPA) coalition in the centre, of which the DMK was a part, over the Indo-US nuclear deal
issue. The PMK also switched sides before the Lok Sabha elections. Interestingly, there was
much speculation about the possible alliance of the AIADMK with the Congress, or the
Bharatiya Janata Party (BJP) or the Left Front. The AIADMK, which was at the losing end in
both the 2004 Lok Sabha election as well the 2006 assembly election, was desperate to stitch a
winning alliance in the state. The party finally settled for a non-Congress, non-BJP alliance that
included all those parties that got estranged with the DMK over the years during which it was in
power.

Current Scenario:

 In 2015, the state government announced plans to set up four mega food parks in the
state. The state government of Tamil Nadu has released an amount of US$ 5 million for
this project.
 In the 2015-16 budget, the state government announced plans to invest US$ 2,253.82
million for the development of power infrastructure in the state.
 In the 2015-16 budget, US$ 13.76 million was allocated for the Information Technology
Department.
 Tamil Nadu Vision 2023 envisages an investment of US$ 27.7 billion for improving
highways. Chennai is slated to get 17 new projects worth US$ 334.8 million.
 The Government of Tamil Nadu has unveiled an automobile policy which would focus
on future development and consolidation of the automobile and components industry,
where the state enjoys a comparative advantage.
 TIDCO has proposed to set up a sector-specific SEZ for the engineering sector on about
280 acres of land, at an estimated cost of around US$ 219.0 million in Phase-1 of the
project.
 TIDCO has proposed the development of solar power parks for setting up 1,000-MW
solar power projects in association with public and private organisations.
 SIPCOT has planned a new industrial park spread across 1,127 acres for the development
of an industrial complex at Thervoy Kandigai. Land development work has started for the
same. SIPCOT has taken possession of 125 acres of land in Thiruvallur district for
creation of a new complex.
 Upgradation of ~145 km road to 4 lanes has been planned to be undertaken under PPP
(Public-Private-Partnership) mode. In 2015-16 budget, an amount US$ 209.35 million
has been allocated for this work.
 Tamil Nadu Government has signed Memorandums of Understanding (MoUs) with five
auto companies – Daimler India Commercial Vehicles, India Yamaha Motor, Ashok
Leyland-Nissan, Eicher Motors and Philips Carbon Black – for an investment of up to
US$ 1.7 billion in the state.
In order to attract more investment in hardware manufacturing, the state has set up an
expert committee with representatives from the industry to evaluate the potential and
advise the government on the way forward.
They have emptied state coffers and gifted Tamil Nadu a debt of Rs 1 lakh crore,” she
thundered at massive public rallies across the state in 2011. “This is an insult to Tamil
Nadu. A fiscal deficit of Rs 17,607.71 crore is the biggest achievement of five years of M
Karunanidhi’s goverment,” she said.
That was J Jayalalithaa, then Opposition leader, head of the powerful All
India Anna Dravida Munnetra Kazhagam (AIADMK) party, and she swept to power with
a massive mandate in that election.
Jayalalithaa had reason to make such confident statements thanks to her earlier track
record. When she came to power in 2001, she inherited a bleeding economy with a
revenue deficit of Rs 2,739 crore. When she demitted office in 2006, the exchequer had a
revenue surplus of Rs 1,951 crores.
But in 2016, as chief minister, the kajana (coffers in Tamil) continues to be kaali (empty
in Tamil), despite the poll promises of 2011. Under the watch of Jaya, the usually intrepid
administrator, Tamil Nadu’s debt has ballooned to Rs 2.11 lakh crore, around 19 percent
of the state’s Gross Domestic Product (GSDP). Fiscal deficit too is hovering dangerously
close to the allowed three percent mark — at Rs 36,740.11 crore, the state’s fiscal deficit
is currently at 2.92 percent of GSDP. Tamil Nadu has also posted a revenue deficit for the
third year in a row — a worrying Rs 9,154.78 crore or 0.7 percent of GSDP.
As per the Fiscal Responsibility and Budget Management Act adopted in the early 2000s,
the Tamil Nadu government is committed to keep fiscal deficit within three percent of
GSDP, revenue deficit at zero and debt within 25 percent of GSDP. Finance Minister O
Panneerselvam admitted in the Assembly that the revenue deficit was high but reasoned
that it was due to the fall in global crude oil prices which meant a loss of Rs 4,000 crore
in sales tax on petroleum products.
“When the state is implementing many unique schemes such as green houses scheme,
free mixer, fan, grinder and laptops scheme, special public distribution scheme, special
pension scheme, such a revenue deficit is unavoidable,” said Panneerselvam.
 State Finance Secretary K Shanmugam too was at pains to explain that the state’s
finances were doing just fine. “The decrease in revenue is because of the downtrend in
taxes — particularly sales tax, transport, stamp and registration, and because of the global
depression,” said Shanmugam. “Overall there has been a downtrend in economy and even
manufacturing states like Gujarat and Maharashtra felt the impact of global economic
slowdown,” he stated.
Analysts say that on paper, all is seemingly well. “Upto one percent revenue deficit is
acceptable, even though as per the Act it should be zero,” said KR Shanmugam, Director
of the Madras School of Economics, an expert in public finance. “Overall everything is
okay. Economic growth of nine percent is possible because the average growth in the past
11 years is 9.2 percent. Usually within the first two years of the Plan period growth will
be low and after that it will grow much faster. Tamil Nadu’s sales tax and VAT on petro
products is among the highest in the country, they simply cannot raise it any further,” he
added.

Challenges though lie ahead for the state Government:

The problems are simple —

Two departments, one, a cash cow and the other, a massive drain on the exchequer. Tamil Nadu
earns Rs 30,000 crore in revenue from the sale of liquor through the Tamil Nadu State Marketing
Corporation (Tasmac). This amounts to one-third of the state’s total revenue. On the other hand,
the state power utility Tangedco (Tamil Nadu Generation and Distribution Corporation) is
bleeding, thanks to arbitrary decision-making, unnecessary purchase of expensive power from
private producers and lack of generation of additional power by the state.

Tangedco is weighed down with Rs 80,000-crore worth of borrowings and the state bears the
burden.

With elections looming, every party except the ruling AIADMK has promised to usher in
Prohibition in the state. “If Prohibition is an election issue, any govt that comes to power will
have to do something about it,” said R Srinivasan, associate professor at the Department of
Econometrics, Madras University. “Straightaway, the state loses Rs 30,000 crore in revenue.
Fiscal deficit will double. Total debt burden will increase. Even if Prohibition is introduced in
phases, with a well regulated liquor market, the state loses a substantial amount of tax revenue. A
minimum of Rs 10,000 crore will be lost whichever way you go. This will again increase
deficit,” he said.

Other factors loom large, keeping the state economy on shaky ground. Implementation of the Pay
Commission in 2017-18 and appointments of teachers in new schools and colleges across the
state would add to the payouts of salaries and pensions. The Goods and Services Tax (GST) too
is a worry. “Another issue here is we do not know what the loss would be if GST is
implemented,” continued Srinivasan. “GST is stalled only for a political reason — the technical
issues raised by Congress can always be addressed. The state government claims there will be Rs
9,000-10,000 crore loss in tax revenue if GST is introduced,” he added. Srinivasan also points
out that the state government is yet to pass the Food Security Bill in the state Assembly, which
would enable it to get funds from the Centre. But this would mean shifting from universal PDS
(Public Distribution System) to targeted PDS, a move that could backfire politically.
The opposition though points to growth figures to criticise the AIADMK government. In 2014,
the Central Statistics Office pegged Tamil Nadu at a growth rate of 3.39 percent, the worst
performing state in 2012-13, slower than the national average of 4.5 percent, below states like
Bihar and Jharkhand.
Growth, on the ground, means jobs and prosperity. Tamil Nadu is teetering on the brink of a
collapse, unless serious fiscal measures are put in place to bolster revenues and cut expenditure.
A hard and heavy hand of an uncompromising administrator is the need of the hour. Whether this
cat will be belled in the midst of populist politics is the two lakh crore rupee question.
Conclusion
 References

ARTICLES
 Malik Singleton, Indian manufacturing sector shows 2.5% growth in industrial
production, but slow growth rate alarms officials to spur investment a t 4 : 1 1 p m , 0 5
/10/13

 Goutam Das, The wheels are off-The manufacturing sector is dragging down India's
economic growth, India Today ,March 16, 2014

WEBSITES

 Ministry of finance ,Government of India

 Department of Commerce ,Government of India

 India in Business –Official website for Investment and Trade in India

 Union Budget & Economy Survey

 Income Tax Department of India

 Central Board of Excise and Customs

 Reserve Bank of India’s database on the Indian Economy

JOURNALS, PAPERS AND REPORTS

 T.P. Bhat, Structural Changes in the Manufacturing Sector and Growth Prospect, 15-17,

2014.

 Santosh Mehrotra, Sharmistha Sinha, Jajati K. Parida and Ankita Gandhi, Why a Jobs
Turnaround Despite Slowing Growth? , Planning Commission ,2014

 “Economic reforms in India : Task force report ”. University of Chicago

 “Economic survey 2009-10”.Ministry of Finance , Government of India .p.294.