It seems de rigeur these days at “probashi” (emigre) Bengali gatherings to debate Jyoti Basu’s legacy. There are two camps. One consists of those who left West Bengal either before or soon after the Left Front came to power in 1977. They have fond memories of the state and prefer to remember Basu as the only Bengali statesman of his generation who had national presence. The other camp has of people like me who left the state much later and remember only the rot that had set into the state in Basu’s regime.
These are wildly subjective assessments. The truth about Basu’s record as Bengal’s chief minister for 23 years must lie somewhere in between. The finest analysis of Bengal’s recent economic history was perhaps done by nine internationally-acclaimed Bengali economists writing in the Economic and Political Weekly in 2002 (Strategy for Economic Reform for Bengal, October 2002). For the sake of brevity, I will refer to the article as Banerjee et al, or BEA, and will rely heavily on it to understand what exactly went wrong or, for that matter, right in Basu’s Bengal.
Let’s get one thing out of the way first. The Left Front under Basu did bring about dramatic change in rural Bengal. Agriculture that had stagnated in the 1970s recovered dramatically by the 1980s. West Bengal recorded one of the fastest growth rates in foodgrain production across states in that decade. This happened against the backdrop of a radical institutional change — land reform and the introduction of a three-tier system of “panchayati raj”, a good 15 years before constitutional amendments made it mandatory across the country. These changes paid off in terms of a sharp decline in poverty in the 80s and the 90s. The percentage of the poor in West Bengal went down from 73 per cent in 1993-94 to 32 per cent in 1999-2000. Those who attribute the Left’s sustained spectacular electoral success in rural Bengal merely to organised terror by the Left cadres might want to reconsider their view.
The problem, as is well known, was that while agriculture prospered, industry in Bengal declined. Apologists for the Left Front like to point out that it was really extraneous factors — the freight equalisation policy of 1948 or the rise of alternatives to jute as packing material — that were responsible for Bengal’s plight. One cannot deny their role but their effect should have played out by the 1970s. What BEA shows is that there was a fresh wave of industrial decline that coincided with the Left’s ascent to power. In 1980-81, Bengal produced 9.8 per cent of national industrial output. By 1995-96, its share had dropped to 4.7 per cent.
The standard Kolkata bhadralok explanation of industrial decline in this period was that “labour trouble” did the state in. This again is a trifle misleading. There was certainly a rash of strikes in the early 80s but by the end of the decade, they had dwindled considerably. In fact, the number of man-days lost due to strikes in the 90s was low and possibly lower than other states that have a much better track record in industry. In fact, Bengal-based entrepreneurs, surveyed by the World Bank and the Confederation of Indian Industry as part of an investment climate survey, pointed out that their problems with Bengal’s labour were significantly less than that in many other states.
However, in this period, Bengal led other states by a mile in the number of “lockouts”. The average number of lockouts in the 90s averaged over 120 compared to a median of 20 in other states. Thus the picture of industrial Bengal in the 90s that emerges is of a state from which industry appears desperate to flee. If it wasn’t labour militancy relations, what could explain this? BEA finds that exodus of capital could be explained best by the poor profitability of doing business in Bengal that stemmed, in turn, from a dismal investment climate. Bengal suffered from all the problems of doing business in any Indian state — excessive regulation by local authorities, the shortage of skilled labour, poor infrastructure etc. On most of these parameters, it fared significantly worse than the national average. An index of infrastructure put West Bengal in the fourth place in 1971-72 on a list of 14 states; by 1996-97, it had slipped to the bottom of the list. Power was a major bottleneck and nothing captures this better than a comparison of plant-load factors (capacity utilisation of power plants). In the late 1990s, the average plant-load factor in power plants in the state was a little over 30, compared to an average of 60 for other states.
The shortage of skilled labour is somewhat puzzling, given the state’s large educational infrastructure. The claim that the Left systematically destroyed the state’s academic environment and that affected the quality of its workforce is a tad exaggerated. Until at least the end of the millennium, Bengal (particularly Kolkata) continued to have better teaching standards and institutions than a number of other states, including those states that fared much better. The problem was that most graduates preferred to leave the state than seek opportunities within. Thus in the Basu years, the rate of immigration into Kolkata declined sharply while the rate of emigration picked up.
This brings us to the link between Kolkata’s decline as a city and the decline of industry in Bengal. Investments, skills and resources ultimately gravitate to regions where people choose to live. One could argue that India’s ability to attract FDI is ultimately constrained by the poor quality of life that Indian cities offer. A similar thing happened to Kolkata at the sub-national level. At a time when cities like Bangalore and Hyderabad were aggressively soliciting investments by offering better urban infrastructure and middle-class amenities, Kolkata continued to regress. The rot was not confined to civic amenities alone; the attempt at moral policing by the government in the name of protecting local culture was perhaps the last nail in the coffin of this city that was proud of its liberal tradition.
Bengalis like to believe that there is something unique about Bengal and even its problems have a somewhat unique character. One could argue that there is nothing unique or specific to Bengal’s industrial decline. It was not the struggle for workers’ rights or the radical ideology of a left-wing government that dragged Bengal down. Instead, like all other industrial laggards, it suffered from the rather banal problem of poor governance and lack of even a semblance of an industrial policy. Surely, we cannot overlook this aspect of Basu’s legacy to the state.
The author is Chief Economist, HDFC Bank. The views expressed are personal
