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West Bengal Industrial Policy

West Bengal Industrial Policy

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03/18/2014

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POLICY STATEMENT
ON
INDUSTRIAL DEVELOPMENT

Government of West Bengal
23 September 1994
1.0 THE CONTEXT

1.1 The New Economic Policy followed by the changed industrial scenario in the country as also the West Bengal Government\u2019s own proposals for an alternative economic policy call for a statement of policy by the Government of West Bengal on the vital issues of industrial development, rehabilitation of sick units and generation of employment under scoring the strategy addressed to promotion of new investments, creation of employment opportunities and protection of the legitimate interest of the labour.

2.0 PERSPECTIVE

2.1 West Bengal has a well developed communication network encompassing an extensive railway system, domestic and international airports, modern ports, national highway, etc. For industrial exploitation the raw materials available are coal, iron and steel, agri-horticultural produce, plantation crop, agro-waste, marine products, hides and skins etc. Minerals like dolomite, limestone, lead, zinc ores and granite are in abundance. Water is plenty. Indeed, the State\u2019s natural wealth is among the best in the country.

2.2 Till the late forties, West Bengal enjoyed a pre-eminent position in the field of industrial development. Well over six lakhs of people were employed in various industries in the organized sector in 1948 \u2013 a figure being equal to that of the present Maharashtra and Gujarat put together. The partition followed by large influx of refugees placed a major strain on the resources of the State. But this was not adequately taken care of by the Government of India. Nevertheless number of Central Public Sector establishments like the Durgapur Steel Plant (DSP), Alloy Steel Plant (ASP), Mining & Allied Machinery Corporation (MAMC), Chittaranjan Locomotive Works (CLW),

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Hindusthan Fertilizer Corporation, etc. were established during the fifties in the State.
This led to a process of ancillarisation.

2.3 Since industry is in the Union list and financial institutions are under the Central Government, industrialization in any State is crucially dependent on the policies at the national level. Over several years in the past, there has been serious discrimination at the national level against the State (and also the entire eastern region) in the granting of industrial licenses. The deliberate policy of selective freight equalization has also robber the State of its comparative locational advantage in terms of important industrial raw materials, such as steel and coal. Similarly, the credit-deposit ratio of the nationalized commercial banks in West Bengal has been unreasonably kept depressed at around 46.5%, below the national average of 60%. There has also been a palpable discrimination in the direct investment of the Central Government in the State. For instance, while in 1981, the share of West Bengal in total Central investment in the country had been at 8.2% and that of the comparable State Maharashtra at 8.6%, in 1991-92 the share of Maharashtra increased to 16.3% but that of West Bengal came down to 7%. Even this discriminatory policy in the sphere of banking and Central investment persists.

2.4 Thus, the natural advantage that the State had lost leading to flight of capital from the State of areas which were benefited by freight equalization and the licensing policy and in some measure due to location of Headquarters of major financial institutions as in Bombay and elsewhere. The sixties witnessed a countrywide recession and its deleterious effects obviously hit West Bengal. This coupled with the other factors referred to, inevitably resulted in political instability and strained industrial relations. The effect on industrial growth was adverse and this was manifest in the lack of new investments, growing sickness and stagnation.

3.0 APPROACH OF THE LEFT FRONT GOVERNMENT

3.1 After coming to power in 1977, the Left Front Government identified certain thrust areas for the overall development of the State and protection as well as promotion of employment. The conscious policy of land reforms along with the simultaneous support in terms of provision of non-land inputs, such as irrigation facilities, improved seeds, fertilizers etc. as also the process of democratic decentralization through the Panchayati Raj System brought about a major breakthrough in the sphere of agriculture and allied sectors. As a result, the highest rate of growth of food-grains production, as well as the highest rate of growth in per hectare yield of food-grains has now been achieved in West Bengal as compared to all the other States in India. In addition, the position of the State is first in fishery and also in social forestry. Since this approach has begun with land reforms, not only has there been an increase in production, there has also been a corresponding increase in the purchasing power of the vast majority of common people in rural areas. This has created a new market for consumption of industrial products in West Bengal. At the same time, due to the growth of agriculture and allied sectors a potential for industries catering to agricultural inputs (seeds, fertilizers, implements) as well as

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industries related to agro-processing, horticulture, etc. has been significantly increased.
The growth curve for these industrial potentialities is sharply rising.

3.2 Considering the importance of and potential for generating employment and income all over the State by harnessing local resources and skill, a conscious policy for promotion of cottage and small-scale industries on an extensive scale was evolved. Simultaneously, policy initiatives were taken to promote the establishment of electronics industry in the State. Unfortunately, the effects of the State Government in involving the Government of India in this process did not succeed. To facilitate promotion of modern industries and ensure downstream employment, the Petro-chemical project at Haldia was conceived. Our efforts in securing necessary assistance from the Government of India for this prestigious project, however, did not fructify for 11 years. Simultaneously, with the process of promoting new industries in the large, medium and small scale sectors, concerted efforts were made for the rehabilitation of a large number of sick units abandoned by the private sector. It was thus possible to protect productive employment of a very large number of workmen in Jute, Textile, Engineering and Pharmaceutical industries both through the Government of India as well as directly by the State Government.

3.3 The State Government, however, continued to highlight at the national level before the National Development Council (NDC), Planning Commission etc., the adverse impact of the licensing policy and freight equalization in steel and coal that had resulted in regional imbalance.

4.0 THE NEW ECONOMIC POLICY AND THE APPROACH OF THE STATE
GOVERNMENT

4.1 The new Economic Policy of the Government of India brought about mixed reactions in the country. The State\u2019s considered views in respect of this economic package of reforms are well known and an alternative proposal based on self-reliance has been suggested by the State Government without isolating India from the global economy. While continuing to advocate a change in some important aspects of this New Economic Policy, we must take the fullest advantage of the withdrawal of the freight equalization policy on steel and the delicensing in respect of many industries.

4.2 The approach of the State Government towards industrial development is summed up in the following words of the Chief Minister in his recent address to the Bengal Chamber of Commerce & Industry (BCCI).

\u201cWe are all for new technology investments in selective sphere where they help our economy and which are of mutual interest. The goal of self-reliance, however, is as needed today as earlier. We have the State, the private sector and also joint sector. All these have a role to play\u201d.

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