Define SDP and mention any two official sources of SDP

SDP is the total value of goods and services produced during a financial year within the
geographical boundary of the state. Also called the state income, SDP is always calculated or
estimated in monetary terms and is instrumental in the evaluation of per capita income. While
GDP gives a good estimate of the nation’s output, SDP provides more detailed economic
information about sub-national territories like states.

The Per Capita SDP is very useful measure of a State’s economic health. True, it cannot
accurately capture some vital aspects of human welfare like the health and educational
standards of the society, nor does it take environmental degradation into account, but it is still
believed to be the best single parameter of a region’s generation of income. Step has been
taken to estimate the ‘Green GDP’. In view of that, an accurate estimate about the SDP of the
State is needed and also accurate sectoral data are important to reveal the structural changes
in the economy over time. Another reason why we need to have accurate SDP data is that the
devolution of funds from the Centre to the States depends on SDPto a significant extent.

Central Statistics Office, Bureau of Applied Economics and Statistics and Economic Survey
are some of the major sources of statistics on SDP of West Bengal.

Mention the variables which are taken into account in determining HDI of WB

Variable taken into account in measuring HDI of West Bengal

Health, education and living standard are the three broad variables taken into account to
measure HDI of West Bengal. The health index takes into account the following aspects:
Health Infrastructure, Safe Delivery, Immunization of children, Safe Drinking Water, and
Sanitation facilities. The education index consists of a weighted average of the projected
Census literacy rate (two-thirds weight) and the school enrolment rate for the 5-8 age groups
(one-third weight). For the construction of the standard of living index, achievement of each
household in five dimensions are taken under consideration - (a) food security, (b) housing
(c) clothing (d) livelihood and (e) ownership of consumer durables.

What is the approximate share of tertiary sector in the net state domestic product of
WB?

the tertiary sector of the economy (service industries) was the largest contributor to the gross
domestic product of the state, contributing 57.8% of the state domestic product compared to
24% from primary sector (agriculture, forestry, mining) and 18.2% from secondary
sector (industrial and manufacturing). At a compound annual growth rate of 15.2%, the
tertiary sector has been the fastest growing among the three sectors from 2004–05 to 2009–
10. The growth has been driven by trade, hotels, real estate, finance, insurance, transport,
communications and other services.
What is the general trend of SDP in West Bengal ?

During the 90’s the SDP per capita improved marginally to 4.1% from 3.4% in the 80’s. WB
along with Tamil Nadu, Maharashtra, Karnataka and Himachal Pradesh improved standard of
living by over 5% per annum during the post reform period. WB also managed to push up its
income growth tremendously from 2.93% in 80’s to 5.41% in 90’s. General trends in 80’s
and 90’s reveal that southern states in general performed better than eastern and central
states, however WB is a major exception in this regard.

In the last decade 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. At current prices, Gross State Domestic Product
(GSDP) of West Bengal is estimated at US$ 140.56 billion in 2015-16. The average annual
GSDP growth rate from 2004-05 to 2015-16 was about 10.57 per cent.

What is Rural non-farm sector? Does this sector contribute to the SDP of WB?

Rural-Non-Farm-Sector (RNFS) includes all economic activities viz., household and non-
household manufacturing, handicrafts, processing, repairs, construction, mining and
quarrying, transport, trade, communication, community and personal services etc. in
rural areas.

The rural non-farm sector contributes a significant share to West Bengal’s SDP. The share of
rural non-farm employment in west Bengal has increased from 35.3% in 1999-00 to 37.5% in
2004-2005 to 42.9% in 2009-10. Manufacturing, construction, trade hotels and restaurants are
the prime drivers behind the big share of rural non-farm sector in west Bengal.

What has been the growth of informal sector in WB during the last two decades? How
do you explain this growth?

While it is natural for an economy to move from agricultural activities towards non-
agricultural activities ,particularly towards organised industry and modern tertiary sector, the
case of West Bengal should be interpreted carefully. While post-liberalization agriculture
started to grow unremunerative in the state, the economy of west Bengal started gravitating
towards the informal sector more instead of concentrating in organised sector activities that
provide a decant livelihood to people.

The unorganised sector refer to enterprises whose activities or collection of data is not
regulated under any legal provision and/or which do not maintain any regular accounts. In
particular, units not registered under the Factories Act, 1948, constitute unorganised
component of manufacturing. West Bengal accounts for the highest number of manufacturing
units in the unorganised sector in India. According to the NNSO 51st (1994-95) and 56th
(2000-01) rounds the estimated number of such units in West Bengal had been 19,09,000 in
1994-95 which was lower than UP with 25,14,800 such units in 1994-95. By 2000-01 West
Bengal surpassed even UP.
In terms of employment also West Bengal surpassed Uttar Pradesh by 2000-01. West Bengal
now accounts for 15.82% of the workforce in India that earns livelihood from employment in
unorganised manufacturing units. In West Bengal, the average daily number of employees in
registered factories had been 8,72,000 in 2000-01. Even if we assume that all the workers in
registered factories are organised sector workers, the number of workers in unorganised
manufacturing units in West Bengal (58,68,300) remains much higher than the organised
workers in manufacturing sector of the state. The manufacturing sector in West Bengal is
largely a sector with unorganised workers and unorganised units.

In the net state domestic product (NSDP) of the state, the contribution of the unregistered
units is persistently higher than the contribution from the registered factories. In 1993-94,
estimated NSDP from registered factories had been Rs 3,550.4 million. The contribution of
the unregistered units in the same year had been Rs 4,111.1 million. By 2003-04, the
contribution from registered units increased to Rs 5,840 million. However the unregistered
units contributed still higher a value (Rs 7,255.8 million). In West Bengal, the unorganised
units thus play a very important role in the manufacturing.

The growth experience of West Bengal is thus such that the continuous decline in organised
sector activities , In which it used to play a leading role in India since the late colonial period,
has been counterbalanced by the growth of enterprises, particularly manufacturing , in the
unorganised sector of the state both in the rural as well as urban areas, the small towns in
particular .

This pattern of growth has come about because of adoption of a different course of
development, a course of development in which the small and marginal farmer- based
agriculture and small enterprise based manufacturing play the leading role. The then
government of West Bengal has carefully promoted the cause of small enterprise based
industry in the state which is labour-intensive in nature and thus took care of the employment
problem and other related problems in the state.This course of development was based on the
principle of “inclusive” growth instead of growth by “exclusion”. An inclusive growth by its
very nature addresses the issue of distributive jus- tice in a better way as compared to that
addressed under alternative dispensation that insists on capital intensive and thus labour
displacing technological progress.

What are the problems faced by the small scale industries in west Bengal? What
incentives have been given to them?

The small and medium industries are presently at a very precarious state as more and more
industrial sick units are either on the verge of closure or falling into the “sick category”. A
recent study has revealed that several small and medium industries in West Bengal are facing
a major crisis of sickness and this situation is deteriorating day by day. The process of
liberalization across the country has bought about a continuous proliferation in the number of
industrial units joining the list of sick and closed industries. The sickness rate in West Bengal
has been found to be 4.14 % whereas it is 2.54 % for the country as a whole and these could
also probably experience an immature closure. Among all the industries, Jute, Steel &
engineering, leather, paper and Industrial belting industries have been found to be affected
most adversely. While there has been a rise in the number of small scale industries over the
past decade, more and more of these units have turned sick over the years. According to a CII
study, West Bengal has a maximum number of sick small scale units (113,000) in the
country. Comparable figures for major states are Uttar Pradesh – 23117 sick units, followed
by Bihar- 16432, Andhra Pradesh- 11841, Kerala – 11144, Tamil Nadu – 9959 and
Maharashtra – 8056. A closer look at the reasons behind the sick industry woes of West
Bengal has revealed the following causes:

1.The level of investment of capital in these industries have been falling substantially in
recent years

2. Severe competition in the market from big companies and imported cheap products
coupled with poor domestic demand for the products,

3. These industries have been of late affiliated with labour related issues such as strikes and
gheraos,

4. The lack of proper market research has resulted in the technological obsolescence of the
manufacturing units,

5. Inadequate managerial expertise, and

6. Higher costs of production and labour costs, the underutilization of available resources
and delayed payment on purchases by both the the government and private sector are the
other reasons that have also been evinced.

In an effort to restructure these ailing units, the State Government has started various
programs. The West Bengal Industrial Renewal Scheme ,2001 has been specifically set up for
this task.Under the supervision of the industrial Reconstruction Department of the State
Government , this scheme would implement the intricate task of reviving and rehabilitating
these sick industrial units. For small scale and tiny scale units West Bengal Finance
Corporation provides assistance for getting loan. The Nationalized banks have also started
providing term loan assistance besides working capital loans. According to www.wbgov.com,
the following are the measures that have been taken for restructuring and reviving these sick
units in the State • Soft loans have been sanctioned for the reschedulement of arrear sales-tax
to sick units . • Approval by the Government for the disposal of vacant land for generation of
funds for revival. • Interest Subsidy amount has been reimbursed to the extent of 50% of the
annual interest liability of eligible units. • Remission of stamp duty and registration fee. •
Capital investment subsidy are being provided for restructuring of closed units. • For the
purpose of revival, sick units have been declared as relief undertakings. • Approval has been
given by the Government for the disposal of vacant land to generate funds for revival. The
Nationalized banks have also started providing Term loan assistance besides Working Capital
loans for generating funds for their revival. Revival of the sick units should be the priority
area for the government so that the sector can contribute to the healthy economic growth and
generate employment.

Poverty alleviation and globalisation

The poverty alleviation programmes as are undertaken in the state of West Bengal are
basically the same ones that are put to use throughout India, with the difference that perhaps
these schemes are some-what better managed in West Bengal than in other states. As a result,
leakages and shortfalls from targets are kept at a minimum in West Bengal. But since most of
these schemes are designed centrally, they often fail to take into account special features
pertaining to local conditions in West Bengal. Moreover, the share of the state government in
financing these schemes is low, and in many cases the state's share is only notionally shown
in the official statistics without corresponding actual release of funds to the zilla parishads
and panchayats. While the overall budget constraint of the state government may be the
reason for actual non-disbursement of state's share (the states share is shown as the value of
the land where the JRY operations are under-taken), the overall poverty of resources
compared to the requirements in the slate is ultimately responsible for the slow process of
poverty alleviation in the state, particularly in urban areas, where the economic growth factor
is considerably weak since the middle of 1980s. The only way out seems to be to make the
rural panchayats much more powerful and accountable so that they are authorised to tax the
beneficiaries of rural development and poverty alleviation expenditure in the state, and raise
resources locally to finance locally designed low-cost and human resource-intensive projects
to provide additional sources of both on-farm and off-farm employment for the poor land-
less workers. This would require a proper identification of the beneficiaries and an
assessment of their resource and assets position, including acquisition of new land. Such a
scheme, if designed, would make the elected panchayats more aligned to the poor rural
people and would ensure decentralisation of power and decision-making at the grass roots
level in the true sense of the term. Large-scale public investment schemes expecting to
generate economics of scale in the long run may be financed with the help of central grants
released under alternative heads of the poverty alleviation schemes.
The Indian economy has been set on the path of globalisation since July 1991, and whatever
be its pace and character over the years, the agricultural sector is likely to be opened up
sooner or later. This would offer higher price signals to farmers to increase and diversify
their production base for exports. No doubt, such a process would increase the prices of
foodgrains and adversely affect the incidence of rural poverty not only in India, but also in
West Bengal. Subsidisation across all rural people in the state is not feasible economically,
and whatever success has been achieved should not be allowed to be washed away through
inflation induced by globalisation. The only alternative seems to be to orient the rural
labourers' organisations in the state to ensure rise in money wages faster than the increment
in food prices, and this seems possible be-cause the scale of agricultural production and
hence demand for labour are likely to increase. There is also likely to be on expansion of
agro-based processing in-dustries in rural areas of the state along with the expansion of
horticulture and floriculture for which the state possesses required technical know-how. The
state government, which has so long concentrated on populist redistribution, has to reorient
its policies and take effective steps to strengthen the growth impulses in the rural areas of the
state with the help of accumulated surplus in the rural areas (which are now being channelled
gradually to trading and service sector activities) and take advantage of the positive aspects
of globalisation towards mitigating the plight of the rural poor and underpriviledged in this
state. Adherence to all-India norms, standards and strategies may not always bring the
optimal results, at the same time, the state government cannot and should not ignore the
possibilities thrown open in the national and international economies. Designing such an
appropriate policy would be the real task of political economy of poverty.
Agriculture in WB

According to Census 2001, cultivators and agricultural labourers still account for 44.15% of
main and marginal workers of the state. Not less than 24.86% of the net SDP originates from
agriculture. West Bengal which accounts for only 3.88% of total agricultural holdings in
India is one of the leading rice producing states in India.The agrarian economy of West
Bengal is basically an economy of small and marginal farmers. In the major agricultural
states in India, such as Punjab, Haryana, Gujarat and Maharashtra, the area under marginal
farms is quite low and that under large-and medium-sized farms is considerably high. In
Punjab, marginal farms account for only 4.07% of the operational area of the state and the
share of medium and large farms in the total operated area is about 67%. In West Bengal, the
scenario is different. The share of the small and marginal farms in total operated area is as
high as 66.44% in West Bengal. The share of the small farms itself is 36.49%, which is much
higher than the all-India average (14.87%).

 Land Reforms:
The preponderance of small farms in West Bengal is basically the consequence of land
reforms that enabled the state to acquire the ceiling surplus land from the land-rich
households and distribute such holdings among a large number of landless and land-poor
households in rural areas, so that the distribution of landholdings in West Bengal could tilt in
favour of the small and marginal farmers. This becomes apparent as one considers the fact
that West Bengal, which is a small state that possesses about 3.88% of total agricultural
holdings in India, accounts for as high as 16.94% of total ceiling surplus land in the country.
In West Bengal the land reforms covered 7.92% of the net cropped area of the state; the
comparable all-India percentage is only 1.79%.
The basic objective of land reforms was to redistribute the holdings in favour of the landless
and land-poor families by imposing a ceiling on ownership holding. The reforms also
addressed the issue of security of tenure for the sharecroppers. The Estate Acquisition Act
(1953) and the subsequent Land Reforms Act (1955) enacted by the then Congress
government initiated the process of land reforms in West Bengal. The success of the Con-
gress government on this score was rather poor. Estates under zamindari were of course
acquired by the state and the direct relation between the ryots and the state was established.
But landlords still ruled the roost in rural West Bengal. Acquiring the surplus land and getting
them redistributed among the landless and land-poor households did not make much progress
up to the end of late 1960s. This was basically due to the lack of political will on the part of
the ruling party that did not desire to disturb the rural power structure that developed after the
abolition of the zamindari system. For all practical purposes, the effective land reforms
measures were taken up first by the United Front governments of late 1960s which mobilised
the landless and the land-poor families for forcefully occupying the illegally transferred
(benami) lands of the land-rich families.
The next Congress government which came to power in 1971 did not try to reverse the
process. On the other hand, the Land Reforms Act was amended in 1973 so as to bring down
the ceiling of agricultural holdings to 17.29 acres for a family in the irrigated areas of the
state. It also made a legal provision for a fair share of the produce (75:25 for lessee: lessor)
for the tenant farmers who are known as bargadars (sharecropper) in West Bengal. All these
were done because of the political compulsion that developed during this period. But again,
since this was done because of compulsion and not due to any genuine political will, like the
previous Congress governments of 1950s and 1960s, this government also did not try to
mobilise the potential beneficiaries for realising the goal. Land reforms again turned to a
bureaucracy-led reform programme and like the previous one, this also failed. The first LF
government that came to power in 1977 implemented basically the provisions of 1973 Act.7
However, they had the political will to mobilise the potential beneficiaries, first through the
peasant organisations and subsequently through the institution of elected panchayats. This
made a sea change in the rural scenario and to a large extent the programme attained success.
By mid-1990s the amount of ceiling surplus land that was distributed among the landless
and land-poor families was about 1.04 million acres. The total number of beneficiaries was
about 2.5 million households. Over 55% of the beneficiaries belonged to the scheduled caste
and scheduled tribe. Security of tenure was extended to 1.6 million bargadars who were given
permanent and heritable rights to cultivate the sharecropped land. Registered sharecroppers
now cultivate a total of 1.1 million acres of land which is 8.2% of the cultivable land of the
state.
Admittedly, there are weaknesses in the land reforms programme of the LF government. It
may be argued that the LF did not take any legislative measure to lower the ceiling of agri-
cultural holding so that more land could be declared as surplus. The ceiling remains the same
as it was fixed by the Congress government. It has also been argued that contrary to what has
been claimed by the ruling party, a sizeable section of the sharecroppers of West Bengal is
yet to get security of tenure. Again, the security of tenure has remained confined to only one
crop and the tenants are not getting legally stipulated crop share in large number of cases for
which the contracts have been legalised.
But then, the achievement of the state on land reforms is never small. The old kind of
landlords and intermediaries has been disempowered. The distribution of holdings has
definitely tilted in favour of small and marginal farmers. In 1971-72, when the reforms were
yet to take place, the owners of marginal and small holdings accounted for 52.77% of total
landholdings of the state. By 1982, their share increased to 59.1%. In 1992, when the land
reforms were almost over, the owners of the small and marginal holdings were accounting for
69.4% of the agricultural holdings of the state. Share of the medium and large farms, the
target of land reforms, declined sharply during this period.
According to the National Sample Survey Organisation (NSSO) (61st round, 2004-05), in
rural West Bengal, 8% of the households still remain landless. 84.3% of the households
possess less than one hectare land per household. Small farmers (land size 1-2 hectare)
account for 6% of rural households in West Bengal. The rest, 1.7% to be exact, constitute the
families with the semi-medium and large holdings. West Bengal agriculture is now basically
an economy of marginal farmers and as we discuss below, this economy performed very well
following the land reforms.
 Performance of West Bengal Agriculture
West Bengal is basically a rice producing state. Among other cereals, the state produces
wheat, barley, jowar, maize and even small millets. But the contribution of these crops is
quite insignificant both in terms of area and the volume of production. According to the Crop
Statistics, Government of West Bengal (2000-01), the cropped area under cereals had been
5,918.6 thousand hectares in this state. Non-rice cereals accounted for only 8.17% of this
area.
Monsoon-fed aman is still the major rice crop of the state. In 2000-01, the area under aman
was about 67% of the total area under rice production. The contribution of aman in the total
output of rice was about 58%. The state, however, registered tremendous progress in the
production of irrigation-fed winter crop (boro) which now covers 25.79% of the gross-
cropped area under rice. The productivity of boro being much higher that that of aman, it
contributes to a higher percentage (33.35) to the volume of output, compared to its relative
share in the gross-cropped area under rice production in this state.
Among other crops, West Bengal produces oilseeds (cropped area being 594.92 thousand
hectare) and jute (612.994 thousand hectare), both of which have registered impressive
progress in production during the LF rule. The other important point to be noted is that the
vegetables and fruits are now being produced in the state at a noteworthy level. West Bengal
now produces vegetables (excluding potato) in 850 thousand hectares of land and the volume
of production of vegetables as recorded in Crop Statistics, 2000-01 is 10,625 thousand
tonnes. Fruits are being produced in 150 thousand hectares of lands in the state and the
volume of production is 1,800 thousand tonnes.

The impressive growth rate in foodgrains in 1980s was mainly due to a high growth rate of
rice which increased by 8.4% per year. The growth rate of total cereals was lower (7.3%)
than that of rice. This was due to a poor growth of wheat (0.1%) during this decade. Wheat,
which registered a poor growth rate in 1980s had contributed much to the growth of both total
cereals and total foodgrains in 1960s when the growth rate of rice had been lower than the
growth rate of total cereals and that of foodgrains as well. In sum, the unprecedented growth
in foodgrains in 1980s was essentially due to a high rate of growth of rice. In 1960s, the
growth was partly due to wheat also.
In 1990s, wheat was growing at the rate of 4.4% per year. Even then, the growth rate of total
cereal (2.5%) and foodgrains (2.4%) plummeted. This was due to the fact that the acreage
under wheat has declined over last 30 years. Boro, the winter rice crop was replacing wheat
and the growth rate of every variety of rice crop including boro was declining in the 1990s.

1980s had indeed been the decade of high growth for every crop except wheat and pulses.
During this decade potato registered a growth of 9.3% per year. The average growth rate of
oilseeds had been as high as 18.8%. Even the production of jute increased by 6.3% per year,
on an average, during this decade.
The growth rate did decelerate during the next decade. But if we take 1979-80 as the
beginning of a new political rule in the state, and consider the trend growth for the entire
period of 1979-99 and compare it with the trend growth in pre-1979 period, we get an
interesting result. the underlying growth rate in every crop except pulses had been positive
and often they were quite high during the post-1979 period. In case of most of the major
crops, the underlying growth rates had been higher than those of pre-LF period. This endorses
the view that the situation changed for the better in the 1980s.

 Agrarian Impasse in 1990s

As we have already observed, the agricultural growth rate in West Bengal has decelerated in
the 1990s. The growth rate of foodgrains in West Bengal, calculated on point-to-point basis
declined from 6.9% per year in the 1980s to 2.4% per year in the 1990s. Rice, the most
important crop of the state that came under the green revolution technology in 1980s was
now growing only at the rate of 2.5% per year. This rate was higher than the average growth
rate of rice in 1970s. But, as Table 5 indicates, the average growth rate of rice in West Bengal
in 1990s was lower than the growth rate that it had recorded during 1960s, i.e, during the
period when the rice crop of the state was yet to switch over to the green revolution
technology.
Production of pulses declined at the rate of 3% per year during 1990s. Oilseeds recorded a
growth, but the growth rate was as low as 0.03% per year. Rapeseed and mustard recorded a
negative growth rate during this period. Only crops in which the performance was somewhat
presentable were potato, sugar cane and jute in which the average growth rates were 6.4%,
14.2% (with much fluctuation) and 5% per year, respectively. The performance in rice
production was generally poor in 1990s. Further, it appears that the performance was worse
in the last five years of the decade. The official data indicate that the growth rate of rice
during the last five years of 1990s was lower than the average growth rate of the decade
(2.5%); it was then increasing only at a rate of 2.4% per year. The growth rate of wheat was
also lower in the late 1990s compared to the decadal average. Consequently, the growth rate
of total foodgrains recorded a performance of 2.3% per year during 1995-96 – 1999-2000
which was lower than the decadal average growth rate of 2.4% per year. There was thus an
indication that the deceleration in the production of major food crop in the state was yet to be
arrested. The small peasant economy of the state might be facing some problem which is not
transitory in nature. The severity of the problem can be appreciated if one considers the fact
that technological revolution notwithstanding, the rice producing economy of the state now
fails to attain even a modest growth rate, not to speak of attaining a growth rate that it
recorded during 1960s, when there was neither reform nor the new technology for rice
production.
The problem is rooted in the economics of farm production. A major component of the paid-
out cost is the material cost, particularly the irrigation cost and the fertiliser cost which
increased heavily during this period. Irrigation and fertiliser (also insecticides, the cost of
which increased by 78.01% between 1991-92 and 1996-97) being the basic ingredients of the
new technology that has been adopted by the farmers, the peasants have hardly any choice in
reducing these items of paid-out cost. The market determined costs of these inputs have to be
borne by the peasants. The increase in the cost of these inputs could be neutralised if the
value of the output would increase by the same proportion. However, the output value did not
increase equi-proportionally.
The elements of paid-out cost particularly the irrigation cost and the fertiliser cost depend on
such forces of the market on which the peasants hardly have any control. Getting a higher
price for the output that the peasants produce also depends on the market forces, both national
and of late international, thanks to the opening up of the economy to the global market. An
intervention on the part of the state might have helped the peasants tide over this crisis. But
the state, under the new dispensation of economic liberalisation is not in the mood of making
any intervention in favour of the peasants. Intervention in the form of offering support prices
is still there. But then the role of such a support programme is gradually declining in the
economy. Given such a scenario, the peasants can hardly absorb the price shocks in the
output and the input market. Consequently, the crisis is mounting and the agrarian economy
is facing a deceleration. It is unlikely that such a deceleration can be arrested by a state
government which can seldom play a role in shaping the policy at the national level. With the
economy opening up for the global market, the crisis is likely to deepen and the economy of
the small peasants is likely to lose viability. This is a major threat to the agriculture of West
Bengal and agriculture is the sector from which 44.15% of the workforce directly earns their
livelihoods. Many of the livelihood-related problems that the state faces is due to the crisis in
its agricultural sector.

 Operation Barga

Operation Barga movement was not only an attempt for a legal record of rights to the actual
tillers or bargardars but also a movement for enforcement of all the provisions under the
previous acts. This includes the distribution of share of produce between the bargardar and
the landowner.

The idea behind this movement was not only to prevent the exploitation of the tenant
cultivators by the landowners. It aimed at (i) assuring them of their legal rights on the land
they cultivate and at the same time (ii) to raise the level of agricultural production and their
standard of living and income.

Presently WB is known for its progressive land reform measures. The left front government
enacted series of land reform laws in order to modify and improve the land tenure system.
These acts sought to regulate terms and conditions of tenancy, impose ceiling on land
holdings, acquire and distribution of land declared surplus under the land ceiling act to the
landless and marginal farm families. By contrary to the general expectation, even those
reforms hardly bought any better changes as compared to those implemented in some other
states in India. Only 77.94% of the acquired land could be distributed to the landless and
marginal farmers. In the national context the same figure is slightly higher (78.31%).
However the performance of this state is laudable as it has acquired 94.67% and distributed
73.76% of the surplus land to 20.44 lakh beneficiaries which is about 43% of the total
beneficiaries in the country as an average 0.46 acre per beneficiary. The corresponding
figures for the country are 87.25% and 68.35% only and the total numbers of beneficiaries
are 47.59lakhs.
It may be observed that efforts in reforms in WB have achieved a significant success in
breaking land concentration of the old Zamindari system and providing security to large body
of share-cropping tenants and has created the basis of a small-scale peasant economy on a
wider scale. The allotment of land had certainly enhanced the social position of the allotees in
the rural society. This is evident from the fact that they have now got associated with village
panchayats, gram sabhas and different political organisations. This is also may be partly
because of the competition to remain organised in order to discourage the rural vested interest
from trying to take back the land. It was notices that about half creation of a new class of 33
lakh marginal cultivators, which has been made possible by distribution of vested land and
recording of sharecroppers constitutes an instrument of social transformation. As a result of
the operation Barga, 14,26,264 bargardars were recorded in the state till October 1990.

In recent years, oeration barga has lost its initial successful focus. Under the guise of official
takeover, unscrupulous elements targets weak landholders like widows and take over their
lands, often leaving them destitute.

The bargardars, moreover, all still vulnerable, particularly economically, as they belong to the
lowest strata of rural society and continue to be dependent upon non-institutional sources for
credit to meet their cultivation and consumption costs. Hence, only assured and adequate
credit from non-traditional sources can accelerate economic growth of the rural areas, free the
sharecroppers from the yoke of exploitation and take operation barga to its logical
conclusion.

Debates on Operation Barga

There are various issues being debated by various scholars as regard to the recent phase of
tenancy reforms in WB particularly in respect of the programme of operation Barga. It may
be recalled that one of the purposes of operation Barga has been to record all bargardars
within a certain period so as to provide security to their tenure and entitle them to the
stipulated share of the produce as also to credit facilities from institutional agencies for
production purpose. In consonance with these objectives some modifications to the tenancy
legislation have also been made. However the programme of operation barga has been
subjected to serious criticism by many scholars. While many of the criticisms question the
justification of such a programme from an economic point of view, other raise doubt against
the whole strategy of agrarian transformation being persued .

The most formidable criticisms against operation barga have been voiced by Rudra(1981) and
khasnobis (1981,1982). On the economic front, Rudra agrues that (a) barga recording has not
led to any gain in the income of the bargardars (b) the bargardars who have recorded their
names have not been able to use much of modern inputs than before (c) recording of names
by the bargardars has choked the flow of production advances from the landlords to the
bargardars and (d) sharing of costs by the landowners which was gradually emerging as a
normal phenomenon in WB has been replaced by non-participation in cost by them. Rudra’s
other objections were perhaps more interesting. He argues that (1) barga recording has
actually failed to weaken the grip of the rich farmers in as much as nearly 50% of the
bargardars have not recorded their names (2) operation barga does not aim at abolition but the
perpetuation of tenancy (3) the barga system is by no means the foundation of WB’s
agriculture and the bargardars are by no means the most important section of the tolling
masses. In his view, agricultural labourers constitute the most exploited and oppressed
section of the rural population but their interest has been sacrificed under the left front rule.

Khasnobis praises the genuine political will of the government to promote the interests of the
bargardars. But similar to that of Rudra, he explains how the semi-feudal authority of
landlords exercises their control over the tenants to frustrate even a reformist policy such as
operation barga. In his view, operation barga which tries to record the rights of tenants
approves the intermediary rights of the landowners too. Thus the rent earning authority of
non-cultivators condemned by the bourgeoise democratic revolution gets a communist
saction. This is the faundamental weakness of the policies adopted by the left front govt. for
the promotion of the interests of the bargardars.

There are other criticisms too against operation barga. Dutt (1981) is doubtful how long the
bargardars can sustain their strength in the absence of economic viability. Bereft of
institutional finance and marketing facilities, he argues, the bargardars are bound to the
landowner-cum-usurer. He further argues that the left front govt. seems to have
underestimated the degree of penetration of usury and merchant capital in the rural economy.
If this were appreciated, more efforts should have been made to consolidate land holdings of
poor peasants, to unite them through various forms of cooperatives, which would include
labourers but definitely exclude landowners who exploit other’s labour.

Sengupta (1981) goes on to argue that with near completion of the land reform programmes
of the first phase in WB in terms of abolition of intermediary interests, acquiring of surplus
land for redistribution and barga tenancy reform, the agrarian policies of the left govt. have
reached their ‘saturation point’. He therefore asks “where does one go from here?”

Defects in the system

It is true that the primary objective of barga recording was to offer teburial security. With
regarf to the protection of the rights of the tenants, land reforms programme had much to
offer. Initially when the land reform act was adopted, a landowner was permitted to evict a
sharecropper when the land was needed for personal cultivation. Eviction of sharecroppers
was a common phenomenon in rural Bengal in the 50’s and 60’s. The land reforms
amendment act of 1971 attempted to stop misuse of provisions relating to personal
cultivation. According to the amendment act the land-owner who terminates the cultivation of
barga land on the ground of personal cultivation either by himself or by any member of the
family will be required under the provision of the act to live near the land for the most part of
the year. Moreover, the main source of earning of the same landowner must be from
agriculture. According to the amendment act, when a bargardar is evicted from the barga land
on the ground of personal cultivation, the same land will have to be cultivated either by the
landowner himself or by the members of the family. Under no circumstances the landowners
will be allowed to cultivate the same land with the help of wage labourers.
Legislative measures were not enough to improve the living conditions of the sharecroppers.
It was necessary to give then tenurial rights by some other methods. In order to do so, the
govt. of WB came out with the new method for the registering of the names of sharecroppers.
The programme to be known as operation barga. The registration of names was carried out
with the help of govt. workers, panchayats and peasant organisations. The following steps
were taken in this operation. First, identification of priority areas wuth larger concentration of
bargardars, second, formation of official squads for moving into these priority pockets, third,
conducting the meeting of the squad with the bargardars and owners preferably in the evening
and in the public place, fourth, hearing from both the parties by the govt. officials and
examining documents and finally, passing judgement and issuing the certificates to the
bargardars whose names were recorded.

However, attempts were made to enthuse the sharecroppers to use modern agricultural inputs,
HYV seeds, irrigation, etc. by offering them loans from banks and cooperatives. It is
important to examine these questions at length as for the first time a new experiment was
carried out in a state on a massive scale to improve the conditions of sharecroppers. One
novel feature of the experiment is that it relied entirely on group actions by involving the
govt. officials, elected panchayat members and kisan sabha activists. Besides the question of
improving productivity under operation barga, several other issues need close attention., e.g.,
some writers have pointed out that the barga recording has not improved the economic
conditions of the bargardars. The recorded bargardars have not been using modern inputs and
institutional loans have failed to reach the needy sharecroppers. The programme failed to
weaken the grip of the rich landowners. Non-recording of names of a large number of
sharecroppers also questions its effectiveness. Some writers draw our attention to the fact that
instead of abolishing tenurial relation, the WB govt. through this programme has legitimised
an age-old practice of exploitation through rent.
Industry in WB

In 1946, West Bengal had a larger number of factories and factory employees than any other
province in India, But Bombay, which was placed second in terms of number of factories and
employment therein, had a far larger aggregate value added, and hence also larger value-
added per employee. Between 1946 and 1951, West Bengal went through the trauma of the
partition: the transport network between West Bengal and East Pakistan was badly disrupted
thereby seriously disturbing the flow of jute which was the raw material on which its most
important industry was based, as we have noted above. For the industries of West Bengal the
market in East Pakistan was soon virtually lost; disruption of communications with Assam
seriously affected the tea marketing agencies and those industries in and around Calcutta
which depended on the tea trade and supplies to tea gardens and their labourers. The effect of
ail this was al-ready felt in 1951, by which year factory employment in West Bengal had
fallen behind that in Maharashtra.

West Bengal suffered a slow-down, compared with 'Bombay' from the very beginning, and in
some sense, the slow-down occurred most rapidly between 1951 and 1956. While public
sector projects, especially in steel and engineering in the eastern region from the end of the
First Five-Year Plan period, stimulated some growth in West Bengal, that stimulus was not
enough to compensate for the relative sluggishness of private investment. Later on, with a
drastic decline in public investment, the rate of industrial growth in West Bengal not only fell
further behind such thrusting states as Gujarat, Maharashtra, Karnataka or Andhra Pradesh,
but the state had to suffer a process of deindustrialisation as well - a process which still seems
not to have ended.

Some of the proximate factors leading to the deceleration of West Bengal's growth during the
first three periods can be stated as follows-
First, West Bengal inherited mostly export-oriented, old processing industries most of which
had been controlled by the British before the second world war. In the 1930s most of these
industries had gone through a recession, and net investment by the firms controlling them
had slowed down or vanished altogether. This proposition would apply not only to the jute
mills but also to the two major paper mills in West Bengal, both of which were controlled by
British firms. While the Second World War boosted profits of these firms, wartime shortages
of supplies of machinery, and restrictions on capital issues, and foreign exchange control did
not permit a renovation of their badly eroded capital stock. After the war, transfer of
ownership of many of these firms combined with the troubles caused by the communal riots
of 1946 and the partition badly dampened the propensity to invest of the incumbent firms.
The transfer of ownership from the British to the Indians had itself a deleterious effect on the
efficiency of these firms. First, most of the new Indian owners had been speculators and
traders, with little experience of the running of large manufacturing plants, and few of them
seem to have put in a major effort to learn the production side of the business: their control
extended primarily over finance, raw material supplies and marketing channels. They did not
often know how to get the best results out of the existing plants, Jet alone how to adapt them
to the changed conditions of an independent and partitioned state.
Secondly, the independence of India also caused a managerial crisis, especially in factories
which passed into Indian hands. The British had controlled labour primarily by using racial
stigmata, the state apparatus and threats of dismissal or violence at the place of work against
which there was virtually no appeal. In independent India, no firm could use these methods in
quite the same fashion, and Indian owners were doubly handicapped because they could not
use racialism as an ideological weapon, and because they often were not even familiar with
the supervisory functions.
The result of the new Indian owners trying to continue colonial-style management, without
either the authority (based though it was on a mixture of terror and respect) or the expertise of
the older cadre of managers (only a handful of whom were Indians) in the new political envi-
ronment was a confrontation between increasingly militant workers and capitalists with
feudal conceptions of the relationship between master and employee (or less euphemistically,
servants), This confrontational relationship was exacerbated from the 1960s until the end of
the 1970s when workers digging in their heels were pitted against inefficient, and often
thieving, owners keen to strip the assets rather than put in investments in industries which
appeared to be doomed.

The troubles of the ageing industries of West Bengal were aggravated by two sets of policies
pursued by the central government, One was the policy of freight equalisation for coal and
steel delivered anywhere within the country. This policy deprived the whole of the mineral-
rich eastern region of its regional comparative advantage without putting in any strong
measures for initiating a process of building up dynamic comparative advantage. The second
policy adversely affecting the export-oriented industries of West Bengal was that while tariffs
and quantitative restrictions protected industries catering to the domestic market, no major
incentives were offered to the exporters until much later In fact, for a time, the jute industry
had to pay an export tax. As a result, the predominantly import-substituting industries sucked
capital away from the mainly export-oriented industries. The firms catering to the domestic
market also found it more advantageous to locate themselves nearer their markets in the
faster-growing states, especially in view of the freight equalisation measure mentioned above.
Many of these disadvantages, which were already dampening the growth of private industry
in West Bengal (and the eastern region) in the 1950s, were cloaked by the large direct and
indirect impact of the large public investment projects located at Durgapur, Ranchi, Rourkela,
and Bokaro (which came later), and by the publicly-assisted expansion plans of Tata Iron and
Steel Company, From the middle of the 1960s, public sector investment in the eastern region
slowed down very considerably, This was immediately a fall out of the Indo-Pakistan war of
1965, and the massive harvest failures of 1965-66 and 1966-67, which at one and the same
time depleted public revenues and made additional demands on them for relief and control of
inflation. But from a more long-term perspective, it was the consequence of the disarray of
the old ruling coalition cobbled together in the Indian National Congress (which regrouped
itself as a more authoritarian formation around the person and family of Indira Gandhi), and
the inability of the state to evoke from the private sector or public enterprises under its
direction that response of savings and productivity-raising investment which alone could
have sustained a planning exercise financed by budget deficits.
However that may be, the massive decline in West Bengal's capital goods industries that
occurred from 1966 could not be reversed in the subsequent years. The central government
could not or would not send orders or resources the way of the large engineering firms while
there was still time. When, under the policy of take-over of sick units, most of these firms
were nationalised, their financial structure was unsound, physical equipment obsolete or
worn-out or both, and management and work force demoralised by years of low-capacity
working. In the case of jute, the story was even grimmer.

The strangle-hold the speculators in jute had on the marketing of the raw material and the
final manufactures could never be loosened, especially since most of the jute mills had passed
into their control. Several efforts at the modernisation of the industry by giving it soft loans
were aborted either because the funds were misdirected or were not availed of at all. Up to 31
December 1981, for example, the IDBI, IFCI and ICICI had sanctioned Rs 51,34 crore to the
jute mills, but only Rs 9.64 crore had been disbursed by that date .
The state of industrial relations in West Bengal has been frequently (almost universally, in
establishment media) blamed for the low rate of industrial investment in West Bengal.
Labour militancy certainly reached a peak in the late 1960s, and continued for several years
thereafter. But how far that militancy was an expression of the anger of workers at the
massive displacement experienced by them, how far 'strikes' were themselves provoked or
even engineered by managers of firms as an excuse for declaring lock-outs (which might
otherwise be considered to be illegal, and in other ways costly for management) and how far
it was really challenging the capitalist order itself and thereby undermining the confidence of
potential investors will remain a tangle of debatable issues.

What is however undeniable is that labour militancy declined very consider-ably from the
1980s and the decline continued in the 1990s. Between 1989 and 1995, lock-outs contributed
between 98.4 per cent and 99.6 per cent of the total number of mandays lost in all the years
except 1992 and 1995, and in those years lockouts accounted for 68.6 per cent and 80.8 per
cent respectively of the mandays lost. A major contributory factor to the decline of labour
militancy was continued con-traction of employment in many factories. During the period
1987-90, for example, over 45,000 workers in jute mills lost their jobs as a result of lock-
outs in 15 mills. In most of these mills, the management had simply spirited away the funds
deposited by the workers (along with legally binding contributions by employers) on account
of provident funds and Employees' State Insurance benefits. In even those mills which
continued to work, the employment fell between 20 and 33 per cent over the years 1984-90.
The fate of large-scale industry in West Bengal as in other constituent states is primarily
determined by the stance of economic policy adopted by the central government, the
allocation of central public investment in industry and infrastructure, the allocation of credit
by banks and term-lending institutions under the control of the central government, and the
general altitude of large business houses and MNCs towards investment in that particular
state. The state government can play only a marginal, at most facilitating, role in fostering
large-scale industry. The central government's implicit attitude towards allocation of funds or
credit for development of large-scale industry in West Bengal was at best lukewarm up to the
period 1977 and turned positively hostile after the coming to power of the Left Front
government. The propensity of private large-scale business to invest in West Bengal was
weak in the first place, as we have argued above, became feeble, after the onset of the
recession from 1965, and turned into positive aversion during the Left Front regime.
Attempts on the part of a political establishment with its experience and support base among
peasants and workers rather than businessmen, assisted by a rather ham-handed and lethargic
bureaucracy, and increasingly battered trade unions seem not to have yielded much result.

A question may be raised as to why medium-scale plants using new technologies did not
grow sufficiently fast to compensate for the decline of older large-scale factories utilising
obsolete technologies. Actually, even in the 1960s and 1970s, medium-scale enterprises
tended to show some growth in West Bengal and eastern India as a whole. However, in most
industrial sectors, the West Bengal firms have tended to get locked in low-productivity, low-
wage segment of the spectrum of products.
The reasons for the entrapment of the West Bengal medium-or small-scale units in low-wage
alleys are to be sought in the history of its deindustrialisation, the traders' domination as
financiers and intermediaries in all these segments and the barriers to entry of skilled
personnel into the promising segments posed by the domination of the trader-intermediaries
and the consequent lack of access of potential producer-enterpreneurs to institutional credit
and marketing outlets.

Changing pattern of livelihood in post-reform WB

 Work Participation and Nature of Job

Since agriculture is becoming unremunerative in the state, the livelihood pattern in rural
West Bengal is changing nowadays. For a substantial percentage of rural workforce,
agriculture is no longer the mainstay of living. The livelihood pattern in urban West Bengal is
also changing, thanks to decline in organised industry. In order to elaborate this point, we
shall consider first the changing pattern of workforce distribution in West Bengal, as reflected
in the decennial census data.
Between 1991 and 2001, the work participation has in fact increased in urban and rural
West Bengal with respect to both male and female population. This increase was due to the
increase in the percentage of marginal workers across gender and across the rural-urban areas
of the state. The percentage of main workers has declined from 51.18 to 46 between 1991
and 2001 for rural male. For the urban male, the relevant percentage increased marginally.
The decline in the percentage of non-workers among urban male was mostly due to the
increase in the percentage of marginal workers (from 0.31 in 1991 to 3.47 in 2001). For the
female, the work participation increased due to increase in the percentage of both main and
marginal workers in urban as well as in rural West Bengal. In sum, the increase in work
participation rate during this period in the state is largely due to the increase in marginal
workers, i.e, the workers who do not get regular employment. This indicates increase in the
casualisation of work force.
Although the work participation rate is increasing, the importance of agriculture as a source
of livelihood has declined during 1990s in West Bengal. This is true for both male and female
main workers. A large number of workers are now being driven to non-agricultural sector
which includes, in the main, small industries and small enterprises. The majority of the male
workers in the state is now being driven to non-agricultural activities. In fact, in six districts
of the state around Calcutta, agriculture as a source of livelihood has lost importance to a
large extent. While it is natural that the workforce would gradually be shifted from
agriculture to non-agricultural activities in course of economic development, the dynamics of
sectoral distribution of workforce in West Bengal should be interpreted carefully. With
economic development, the workforce usually shifts to organised industry and modern
tertiary activities, as it happened in course of economic development in the developed
countries of the world. In this particular case, however, the shifting of the workforce from
agriculture to non-agriculture is largely associated with the growth of activities in the
unorganised sector which hardly provides a decent livelihood to the people.
The employment in the organised sector, which was 2.664 million in 1980, has declined to
2.230 million by 2004. A sharp decline in employment in the organised private sector took
place in 1980s and early 1990s; and then it almost stagnated at about 0.75 million. There had
been some increase in the public sector employment between 1980 and 1985. During 1990s,
however, it stagnated at about 1.6 million. By the beginning of this century there had been a
declining trend in the employment in public sector. Although there had been somewhat
improvement in the employment in organised private sector in this period, the overall
scenario was not promising. If the work participation increased during this period, new jobs
must have been created mostly outside the organised sector of the economy.

 Employment in Unorganised Sector

According to NSSO 61st Round (2004-05) data, 85.4% of the workers in West Bengal find
their livelihoods in the unorganised sector (which includes unorganised agriculture). The
percentage of unorganised workers is higher (91.2%) than workers in unorganised sector
because a sizeable section of the workers in the organised sector does not get
employment/social security benefit. The scenario is marginally better than the all-India
scenario. At the all-India level, the percentage of workers in the unorganised sector is 86.3,
the percentage of unorganised workers being 92.4. But then one should mention that the
scenario in West Bengal is much worse than another left-run state, namely Kerala where the
comparable percentages are 63.4 and 81.3 respectively. A sizeable section of this workforce
in West Bengal (about 40%) belongs to agriculture and allied agricultural activities. The rest
earn their livelihoods from various non-agricultural activities.
At the very outset, we should point out that 77.6% of the non-agricultural workers in West
Bengal are unorganised workers. The percentage is higher than all-India average. One may
add that the incidence of informalisation of the workforce in non-agricultural sector is much
lower in Gujarat (61.3%) and Maharashtra (62.4%), two major industrialised states in India.
In construction, trade, hotel and restaurant and private household sectors, the percentage of
unorganised workers in West Bengal does not differ much from the all-India pattern.
However, the data indicates that the percentage of unorganised workers is very high in the
manufacturing sector of West Bengal. While at the all-India level the percentage of
unorganised workers in the manufacturing sector is 71.2%, in West Bengal the percentage is
78.6. In Gujarat and Maharashtra, the percentage of unorganised workers in manufacturing
sectors had been 45.6 and 55.1 respectively. The implication is that the small manufacturing
units account for a higher percentage of workforce in the manufacturing sector than the
average at all-India level. Again, in the major industrialised states of India the incidence of
employment in unorganised manufacturing sector is not as high as in West Bengal. This
indicates a particular pattern of manufacturing activities in West Bengal. West Bengal
accounts for the highest number of manufacturing units in the unorganised sector in India. In
terms of employment also the state ranks first among all the major states in India.
West Bengal now accounts for 15.82% of the workforce in India that earns livelihood from
employment in unorganised manufacturing units. The other point that one might note is that
in West Bengal, the number of workers in unorganised manufacturing had been much higher
than the number of workers in organised manufacturing. In West Bengal, the average daily
number of employees in registered factories had been 8,72,000 in 2000-01.Some of the
workers in registered factories do belong to the unorganised sector. Even if we assume that
all the workers in registered factories are organised sector workers, the number of workers in
unorganised manufacturing units in West Bengal (58,68,300) remains much higher than the
organised workers in manufacturing sector of the state. The manufacturing sector in West
Bengal is largely a sector with unorganised workers and unorganised units.
In the net state domestic product (NSDP) of the state, the contribution of the unregistered
units is persistently higher than the contribution from the registered factories.
In West Bengal, the unorganised units thus play a very important role in the manufacturing
sector. Unorganised labour contributes to a large extent in other enterprises as well. Thus,
94.8% of the sales jobs are in unorganised sector. In transport and related activities 80.4% of
the jobs are in unorganised sector. In unorganised non-agricultural sector, 91% of the
enterprises are own account enterprises (OAE), i e, enterprises without hired workers, 8% are
non-directory establishments (NDE) (employing 2 to 5 workers) and the residual, only 1%
belongs to directory establishments (DE) (employing 6 to 9 workers). This is consistent with
the average scenario in the country as a whole. One may, however, point out that in Kerala,
the situation is different. The percentage of OAE is 77.4 in Kerala. A very high percentage of
the enterprises (20.4) in Kerala engage 2 to 5 workers per unit. The percentage of DE (6 to 9
workers) is also higher (2.3%) in Kerala. In West Bengal, the small enterprises are usually
OAE where the family runs the enterprise without engaging outside labour. Needless to say,
the scale of operation is quite low in these enterprises and these enterprises run on a small
capital base. And such enterprises play very important role post-land reforms in West Bengal.

 Output and Employment in Organised Industry

While West Bengal is doing well in unorganised non-agricultural sector, the relative position
of the state in the organised industry of India is becoming bad to worse. At the time of
independence, the contribution of West Bengal in industrial output in organised sector of the
country had been 24%. It then declined almost monotonically over next 30 years. By the time
the LF came to power, the share of the state in total industrial output from organised sector in
India had already declined to 11.9%.
The successive LF ministries could not arrest the decline. The share of West Bengal in total
ex-factory value of industrial output in the country went on declining further. By 2001-02,
West Bengal was accounting for only 4.6% of total industrial output in the country. It is not
true that the contribution of West Bengal declined in absolute terms. In fact, the ex-factory
value of output was increasing in absolute terms in West Bengal as well. However, the
growth rate here was much lower than what was realised at all-India level.
The reason for such a phenomenal decline in the share of West Bengal in organised industrial
production is often stated to be the militant trade union movement in the state. However, this
is not evidenced by the published data on the incidence of industrial disputes in West Bengal.
During the LF regime, mandays lost due to strikes by the trade unions had been quite
insignificant compared to the number of mandays lost due to lockouts.
The possible reason might be that the potentiality of organised industry has declined in West
Bengal and the increased incidence of lockouts is the response to that. The productivity in
organised industry in West Bengal has declined over time, which, might have reduced the
profit rates in West Bengal industries. As the profit rate declines, incentive for investment
declines and the decline in growth rate of output and employment takes place. This might be
what has happened in the organised industry of West Bengal.
Notwithstanding the crisis in organised industries, the left could garner sufficient political
support to retain its rule over successive general elections. This was largely due to the fact
that a substantial section of the rural people were benefited due to land reforms in the first
place. The economic consequence of the decline in organised industry was also partially
offset by the growth of enterprises, particularly manufacturing enterprises in the unorganised
sector of the state. These enterprises were generating employment in the rural as well as in
the urban areas (particularly the small towns) of the state. In these enterprises, wage rates
were low, output growth rates were moderate. But the growth was “inclusive” in nature
because the technology was labour intensive and the capital requirement was low in these
enterprises. The effect of such developments on income and poverty had been such that the
left did not have to face any popular discontent that might have dislodged them from power,
even though there had been a secular decline in organised industry of the state.
 Income and Poverty in West Bengal

Nominal monthly per capita consumption expenditure (MPCE) in rural West Bengal had
been Rs 279 in 1993. It increased to Rs 454 in 1999-2000. The results of the 61st round
survey of the NSSO reveal that MPCE was Rs 562 in rural West Bengal in 2004-05. In urban
West Bengal, MPCE was consistently higher than the all-India average.
The rate of increase in nominal MPCE in three successive surveys had been higher in West
Bengal than many of the states, so much so that between three successive rounds of NSSO
survey, the relative position of West Bengal has improved. In the previous two rounds, the
MPCE in rural West Bengal had been lower than the all-India average (which had been Rs
281 and Rs 486 in 1993-94 and 1999-2000, respectively). In 2004-05, the nominal MPCE in
rural West Bengal was above the all-India average (which was Rs 559). The scenario of rural
West Bengal had always been worse, compared to more prosperous states of India, such as
Kerala, Haryana and Punjab. But its rank was not much below the ranks of Maharashtra and
Gujarat, two leading industrialised states of India. The scenario remained unchanged in 2004-
05 as well, as the NSSO data indicates. In urban West Bengal, as we have already pointed
out, the MPCE had been consistently higher than all-India average in all of these rounds of
survey. Again, the relative position of urban West Bengal vis-à-vis other state has improved
over time.
West Bengal did gain in terms of real MPCE as well, over this period, both in its rural and
urban segments. By 2004-05, rural West Bengal had better real MPCE than rural
Maharashtra. West Bengal is much below rural Kerala, Punjab or Haryana in terms of real
MPCE. But it is not much behind rural Gujarat. This is quite striking particularly for a state
which lost its edge over others in organised manufacturing industries since 1960s.
In terms of per capita income West Bengal is still below all-India average. One should,
however, note that the state is catching up the all-India average level of per capita income. In
1993-94, the income gap (per capita) between West Bengal and all-India average had been Rs
935. By 2004-05, the gap has reduced to Rs 120 (measured at constant 1993-94 prices). The
implication is significant. In spite of the fact that the share of the state in output in organised
manufacturing sector had remained very poor, the performance of the state had not been as
poor as one would expect in terms of per capita income. Consider another indicator, viz,
decadal growth rates of NSDP in West Bengal vis-à-vis other states. In 1960s and 1970s, the
SDP growth rate in West Bengal had been as low as 2.28% and 3.23%, respectively. There
had been a turnaround in 1980s and by the end of 1990s, it surpassed all states except
Karnataka in terms of NSDP growth rate. The implication is that the performance of the
economy was not bad in spite of the setback that it suffered in the organised industry.

 Conditions of Living in West Bengal

The mainstay of West Bengal’s economy is agriculture and small enterprise. Results of the
59th Round of NSSO survey (2003) indicate that the average income of a marginal farmer in
West Bengal is Rs 519 (all-India Rs 435). Average income of a small farmer household in
India is Rs 1,578. In West Bengal, the average monthly earning of a small farmer household
is Rs 7,225. It appears that in spite of recent impasse in agriculture, small and marginal
farmers can enjoy a better living, compared to an average Indian farmer in this category.
Wage rate (per day) in West Bengal was Rs 85 in 2005, according to the findings of the same
survey. All-India average being Rs 70, one may infer that the conditions of the rural labour
households are also relatively better in West Bengal.
One may add that the incidence of poverty among unorganised non-agriculture workers is
also not very high in West Bengal. Among the unorganised non-agricultural sector workers,
the incidence of poverty is lower in West Bengal compared to Maharashtra and Karnataka.
The average scenario at all-India level also appears to be worse than that in West Bengal.
On general poverty and inequality in the state, on the basis of the head count ratio, the
scenario in rural West Bengal remained worse than the all-India average during the early
period of the LF rule. The reduction in rural poverty was phenomenal in West Bengal during
1983–1993-94 when the ratio of head count poverty in West Bengal declined to 37.35% from
61.56% in 1983. By 1993-94, West Bengal was very near to the all-India average. The
reduction rate slowed down in the next decade. However, the poverty ratio was now just
above the all-India average. The situation was somewhat better in urban West Bengal
where the poverty on headcount ratio remained lower than all-India urban average during the
entire period.
How can one explain the higher incidence of poverty in rural West Bengal when the other
results indicate that the sectoral poverty had been lower in the state? This is firstly due to the
fact that incidence of unemployment and underemployment is higher in West Bengal. The
large majority of the unemployed and the underemployed workforce live in rural West
Bengal which is why the rural poverty is high in the state. It is true that severity and depth of
poverty is declining in West Bengal. It is also true that inequality has also declined in West
Bengal during 1983 and 1993-94. But then the fact remains that the severity and depth of
poverty in rural West Bengal is not much less than all-India average even in 2004-05. The
reality is that the economy is failing to create sufficient jobs so that the incidence of poverty
could not decline at a more rapid pace.