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Monday, Apr 19, 2004

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Economic illusion and reality

Ranabir Ray Choudhury

The "brand image" of West Bengal still rests largely on militant trade unionism and a State administration which, when it comes to the crunch, would side with labour in any confrontation with company managements. The State needs to re-build that image "on the lines of the southern States such as Andhra Pradesh, Tamil Nadu or even Kerala".

LAST WEEK the CII held a meeting in Kolkata on the theme "Showcasing Success Stories" in the eastern region, the objective being to spread the message that the east is looking up and should be considered as an investment target by enterprising entrepreneurs and moneybags in the country and abroad. Needless to say, the quest is unexceptionable generally speaking because everyone everywhere would want to partake of the fruits of economic development, and the eastern part of the country, including States such as West Bengal, Bihar and Orissa, is no exception. But is the quest likely to be fulfilled, even partly? In other words, is the message of the "showcasing" outpacing the ground realities that exist in the region, thereby becoming a trifle unrealistic?

Taking the case of West Bengal, the first point that needs to be underscored is that in recent years there has been a whiff of "development", which has been the main engine behind the current campaign to change the outside perception of the State. But this specific "development" in this State is a complex phenomenon in that economic progress has taken place stealthily in the rural areas mainly because of the good agricultural performance under the guidance of the Left Front Government covering land reforms, etc. The most important result of this has been the emergence of a rural farming class with more money in its hands than ever before but which has yet to undergo an attitudinal change that would ensure that a large part of the surplus income goes into modern investment avenues.

This is one reason why the visual appearance of rural West Bengal has not changed drastically for the better, in the sense that someone visiting the economically successful areas after a gap of 20 years would hardly be able to decipher a material improvement apart from seeing a larger number of two-wheelers on the narrow streets and more women and children watching television in the evenings. The phenomenon of money being spent on houses and items of conspicuous consumption such as flashy clothes and footwear, among other things, is conspicuously absent (a point of major difference perhaps with emerging prosperous rural areas in other parts of the country, including the south).

But what about small towns in the rural areas and their larger cousins at district headquarters? Do they reflect the creeping development that has taken place in the farming areas, mainly by way of being the target of investment by farmers who now have more money to spend? The short answer to this (in the case of West Bengal) is that nothing of the sort has happened. As far as appearances go, the district towns have remained in the pathetic state they have always been as far as one can remember, something which cannot warm the cockles of the hearts of those who congregated at the CII "showcasing" meet in Kolkata with noble intentions.

Even Kolkata, for instance, does not reflect the development that is claimed to have taken place in the State barring the couple of new flyovers that have come up in the last couple of years and, of course, the housing complexes on the eastern fringes of the city and the swanky shopping malls in the city itself. But make no mistake, there is money in the hands of the people of the city (just as is the case with people in the rural areas) for otherwise how can one explain the fact borne out by experience that Kolkata is one of the most promising retail outlets in the country.

More concretely, "development" has affected West Bengal in the shape of the implementation of the giant Haldia petrochemical complex, a unit which though working at a respectable capacity has been able to earn for itself a less than enviable reputation because of problems associated with its financial structure, principally its debt-equity profile.

If image and perception is all that matters in convincing potential investors to sink their money into the State, it can be argued that HPL (which is constantly being showcased by the Left Front Government in the State as being one of its prized economic achievements) has been a big negative point in view of the unending bickering that has been going on among its promoters on how best to restore the financial health of the project.

Hopefully, this period of uncertainly has now ended with the recent induction of GAIL into the company and certain other measures taken by the founder-promoters on the financial restructuring front. But what is certain is that the image makeover of HPL will take time (perhaps a year at the least from now) before the project can be touted as being representative of an economically resurgent West Bengal.

Someone at the CII meeting suggested that West Bengal should stage a larger number of roadshows all over the country to convince investors that the situation in the State had changed for the better and that investments made would earn equal if not higher returns compared to other parts of the country. This is a sensible marketing ploy but, at the end of the day, the central point remains, namely, whether the promises made outside the State will live up to their claims when investors respond favourably and decide on setting up shop in West Bengal.

This is essentially a matter for the Left Front Government to sort out and it is to be hoped that the Chief Minister, Mr Buddhadeb Bhattacharjee, will do his best in delivering the goods.

Indeed, one appreciates the fact that the Chief Minister asked the Tata Steel chief, Mr B. Muthuraman (the new chairman of the CII's eastern region outfit), to shift to Kolkata because he "would need suggestions...every now and then". This is all very good, but the important point is that the suggestions would be wasted if the State Government took its own time to respond to them, which is something potential investors detest if only because, to them, time is money.

Two other points were made which make eminent sense per se but which perhaps fail to pass the test when applied to the eastern region States, particularly West Bengal. The first refers to the "brand image" of the States concerned, the advice being to build that image "on the lines of the southern States like Andhra Pradesh, Tamil Nadu or even Kerala". Andhra Pradesh has its Chandrababu Naidu and Tamil Nadu its Ford and Hyundai plants. What does West Bengal have that can even remotely compare with these icons? If anything, the "brand image" of West Bengal still rests largely on militant trade unionism and a State administration which, when it comes to the crunch, would side with labour in any confrontation with company managements.

Someone mentioned that West Bengal had reached the "brink of credibility" and that the time had come for the State Government to communicate this favourable development.

Again, an eminently sensible suggestion but for the fact that the "brand image" of the State Government itself is tarred with the pro-labour brush, which is, to say the least, a big disadvantage in this specific situation.

The brings up the second point referred to above, namely, the suggestion made at the meeting that "one needs a leader who inculcates a sense of pride in people (which) will uplift the morale of the people". Unfortunately, there is no one in West Bengal who fits this bill.

More important, there is no one on the horizon who can do so in the forseeable future, which is doubly sad for the State and its hapless but talented people.

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