Bengal’s dismal economy
… HIGH INDEBTEDNESS
According to the latest estimates of the RBI, West Bengal has a total debt of Rs 1.47 lakh crore, including small savings loan of Rs 61,000 crore and market loan of Rs 31,579 crore. It means, 8.5 crore of the state’s people have a per capita debt of more than Rs 17,000. Among the states, only Uttar Pradesh and Maharashtra have larger indebtedness, although both have larger areas and population than West Bengal.
In order to reduce the states’ indebtedness and their fiscal imbalance, the Central government introduced the FRBM Act three years back. It provided opportunity to the states to be relieved of Central loan to the extent they would reduce their fiscal deficit. But unlike other states, West Bengal could not utilise this benefit. On the other hand, the state has indulged in gradual rise in its non-developmental expenditure, particularly in escalating its salary and pension bills.
Around 2001, the state government’s expenditure on this account was 155 per cent of its own tax collection. It has, however, managed to bring it down to 90 per cent, first by ceasing and then minimising government recruitment. In the comparable other states, this ratio varies between 55 and 70 per cent. Such a massive unproductive expenditure naturally leaves a paltry sum for the state’s economic development.
Dr Dasgupta, in his budget speeches, never mentions such huge indebtedness of the state nor ways to reduce it. Rather he always speaks high of the state’s economic growth, which, according to him, is more than that achieved by the country as a whole. The question then arises, what benefit has it brought to the state. A state’s high rate of economic progression should be reflected in its growing tax effort. But this is only 4.5 per cent in West Bengal, when the same is 8 to 10 per cent in other big states. Even in Orissa, it is 6.67 per cent.
This lowly mobilisation of its own tax resources not only points out its backwardness in industrial and commercial activities, but also makes the state dependent on external sources of finance, creating uncertainties in its economic planning.
LOW INDUSTRIALISATION
In the election time, Dr Dasgupta and his party comrades are lamenting the shifting of the Tata Motors’ Nano car plant from Singur to Sanand in Gujarat, pulling up the Opposition for its “irresponsible” protests.
But what about the 2,126 big and medium industrial units which have been shut down in the state during resistance and opposition less 32-year rule of the Left Front government? The number of closed small-scale industrial units is about 55,000. Is not the irresponsible and destructive trade unionism of Citu responsible for most of these closures? Besides, why are 80 collieries and 32 tea gardens closed?
Presently, West Bengal contributes only 4 per cent of the total industrial output of the country, which was 18 per cent in 1965 when the state achieved industrial supremacy. Since then, even in its own income, contribution of industry fell drastically from 36 per cent to only 11 per cent.
Moreover, whatever industrialisation the state has achieved, it is mostly concentrated in and around Kolkata. To be specific, 87 per cent of the industrial units in the state are localised in the five districts of Howrah, Hooghly, Burdwan and North and South 24-Parganas, apart from Kolkata. As commercial activities evolve around industries, most of the districts have poor growth of business and commerce as of industries.
It has resulted in a low rate of urbanisation in the districts away from Kolkata. In fact, in nine such districts, rural people constitute 90 per cent or more of the total population. This could be described as some sort of “ruralisation” that the state has achieved instead of urbanisation over time. It has created enormous pressure on agriculture for livelihood making it almost a subsistence work to many farm dependent people. Non-viable agriculture has compelled many to leave farming and become wage labourers.
Failure of the state to provide public irrigation and rural electrification, the two vital ingredients of Dr Dasgupta’s “alternative way” of development, keeps village people jobless over a larger part of the year.
UNEMPLOYMENT
The state government has failed to consolidate the gains from land reform measures of its initial years through setting up industries, particularly of the small scale type, by ensuring infrastructural development.
As compared to similar other states, West Bengal lags behind in road and electricity. Its per capita use of electricity, 380 kwh, is only above Bihar while the national average in this respect is 81 times higher. Similarly, Gujarat and Karnataka, with population being less than 39 per cent and 34 per cent, respectively, have more than 49 per cent and 135 per cent surfaced road, respectively, than West Bengal. Likewise, Maharashtra, with only 16 per cent more population, has 544 per cent more surfaced road than West Bengal. Thirty-two per cent of its villages still do not have all-weather roads.
The infrastructural deficiency has constrained economic development in West Bengal only to generate huge unemployment, the official estimate being 70 lakh. In relative sense, it has 26.6 per cent of rural unemployment and 24.0 per cent of urban unemployment. These are the second and the fifth highest among the comparable sixteen states when the respective national average is 11 per cent and 15.4 per cent.
It is surprising that rural unemployment of 31.27 lakh in West Bengal, unlike most of the other states, is higher than its urban unemployment. Moreover, its educated unemployment, amounting to 33.50 lakh and comprising 11 per cent of the total of the country, is also relatively high among the states. Among all the states, West Bengal, with an average unemployment rate of 4.93 per cent a year, is only behind Kerala which has 5.56 per cent of such rate.
Dr Dasgupta has the only option of self-help groups to provide jobs. He speaks of lakhs of such jobs each year, but never mentions how many of such groups can repay bank loans or stay viable for long. Joblessness brings in poverty which is almost one-third in the rural and one-fourth in the urban areas of the state with the proportion of population remaining starved or half-starved in a year reaching the maximum of 13 per cent among the states.
In fact, one important reason of closing down of so many of small scale industrial units in the state could be lack of demand in the villages plagued by a high rate of poverty and unemployment.
… (The writer is Reader of Economics, Durgapur Government College)
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