The Hindu Business Line : West Bengal must work to catch up

TRADE union, though the voice of workers, is also an institution that nurtures understanding between the labour and the management for a smooth functioning of the organisation.

The recent tour of South-East Asia by the West Bengal Chief Minister, Mr Buddhadeb Bhattacharjee, sparked off a debate on whether it was time for a renaissance of the Indian brand of Marxism.

His call for "reform and perform," and his wondering why Vietnam and China invite American capital raise a thought for his party colleagues — in foreign investment flows, without putting the lid on self-reliance, lies prosperity, especially of West Bengal.

For, on the country's industrial radar, West Bengal hardly makes a blip. Industrial investment in West Bengal is among the lowest in the country.

In the post-liberalisation period — August 1991 to August 2004 — industrial investment through IEM (Industrial Entrepreneur Memorandum) in West Bengal accounted for only 4 per cent against 18 per cent in Maharashtra, 16 per cent in Gujarat, 10 per cent in Andhra Pradesh and 9 per cent in Tamil Nadu. Foreign Direct Investment (FDI) flowed in copiously to Maharashtra, Gujarat, Haryana (Gurgaon), Uttar Pradesh (NOIDA), Tamil Nadu and Andhra Pradesh, but not West Bengal despite its reiteration to change its pro-labour policies.

Between August 1991 and August 2004, West Bengal got only 3 per cent of all the FDI approved compared to Maharashtra (15 per cent), Tamil Nadu (9 per cent), and Gujarat and Andhra Pradesh (5 per cent each). Though Haryana's figure was low, Gurgaon was a big beneficiary of what came to Delhi.

Even the sunrise Information Technology industry, which is not susceptible to labour trouble, has not made it big in West Bengal.

Ironically, the State has some of the best engineering colleges — IIT Kharagpur, Jadavpore Engineering College and Sibpore Engineering College.

Low industrial investment had a profound impact on the structure of an economy and employment opportunities.

For instance, in West Bengal's case, the contribution of the manufacturing sector to the State GDP fell from 23.02 per cent to 21.68 per cent between 1993-94 and 2001-02, when the national average rose from 23.68 per cent to 24.36 per cent. The State also accounted for only 4.67 per cent of the new employment opportunities generated in the country between August 1991 and August 2004.

While West Bengal may be lagging in the manufacturing sector, it can surely make it big in the services sector. Mr Bhattacharjee's new `Look South-East Asia' policy and drive to develop infrastructure for a health city, a modern industrial town and a biotechnological park to attract foreign investments are creditable.

The State would be the automatic choice as the trading hub for the SAARC Free Trade Area due to become operational from January 1, 2006. The total annual official trade with Nepal and Bangladesh exceeds $1 billion. Much of this is border trade and a chunk of it illegal.

With proactive, forward-looking policy-making, West Bengal must quickly shed its image of a State still at the mercy of trade unions, and catch up with other States.

The progress that it has managed on the farm front and for labour, it must achieve in the services sector.

It must demonstrate that it is willing to put as much effort to develop industry and services to silence critics.

What West Bengal needs is Mr Bhattacharjee's new outlook.

The State must take lessons from the experience of China, which has emerged as the world's biggest workshop and the magnet for FDI.

While China lured global investors by offering low wage with high productivity, Indian trade unions bargained for higher wages not necessarily commensurate with increased productivity. Industrial disputes peaked, especially in West Bengal.

It alone accounted for 62 per cent of the total mandays lost in the country in 2001. This led to flight of capital from the State.

Now, Mr Bhattacharjee means business. He has realised that farm sector development must be supported with industrial growth for a balanced growth of the economy.

And that the State needs investments to induce employment-oriented growth to keep pace with other States.

Else, the State could turn into an old-age home as the youth moves to greener pastures.

(The author is a Senior Researcher in a Japanese MNC in New Delhi.)

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