The Hindu Business Line : In a State of resurgence

After achieving a thumping victory in the Assembly elections, the CPI(M) veteran and Chief Minister, Mr Bhuddhadeb Bhattacharjee, has set off debates if he can pioneer an Indian brand of Marxism and engineer a paradigm shift in West Bengal's economic reforms.

Mr Bhattacharjee's perplexity over West Bengal limping to follow Vietnam and China even after achieving success in land reforms and his call for "reform or perish" have led to a new thinking among a section of the Left that it is time West Bengal geared up for industrial reforms to keep pace with other States. His new thinking and his perception that "we cannot live on agriculture alone" have attracted investors. The Tatas, the Ambanis, and Infosys have already evinced interest in the State even as MNCs are monitoring developments in "Sonar Bangla" (golden Bengal).

Growth obscure

Though the State, as of now, makes but faint blip on the industrial radar, its GDP growth has been quite high. Since 1994-95, West Bengal's economy has grown at an annualised rate of 7.1 per cent. It remains in the forefront in reaching the benefits of land reforms to its farmers. Once a big "importer" of rice, the State has now become one of the biggest producers of the cereal rice in the country. West Bengal also leads in the production of vegetables, especially potato, and ranks second in poultry output.

But the over-dependence on agriculture has skewed the West Bengal economy, leading to high unemployment levels. Private capital fled the State to which foreign investors were reluctant to come. The funds-strapped State has little money to invest in public sector projects.

However, West Bengal has witnessed an industrial resurgence since 2002 when Mr Bhattacharjee took the reins of the State. Industrial investment has picked up since. Between April 2002 and April 2005, total investment zoomed by 75 per cent, mainly in the services sector, followed by construction.

IT boom

Human talent-intensive information technology has seen good growth in the State, which is home to three of country's premier technical institutions. Nasscom and Gartner have ranked West Bengal as the best place in the country in terms of power infrastructure. Since 2003, many IT majors, such as Wipro, HSBC, Cap Gemini, NIIT, PWC, Genpat, IBM, TCS, Lexmark, HCL, Interra, Lxia and Satyam, have set up shop in Kolkata. The State accounts for five per cent of the country's software exports, and is targeting an ambitious 15 per cent by 2010.

West Bengal can also emerge a key trading hub, serving as it does as a gateway to North-Eastern India as also Bangladesh and Nepal. The launching of SAFTA (SAARC Free Trade Area), from July 1, offers West Bengal a platform to expand trade with Bangladesh and Nepal with which countries it abuts.

Unique trading advantages

West Bengal is well positioned to take advantage of this. It can, for instance, set up Free Trade Warehousing Zone (FTWZ), a scheme introduced in this year's EXIM Policy. With the privileges of a Special Economic Zone, the FTWZ provides warehousing facility for imported goods, duty free. With its unique positioning — sharing borders with two countries and the entry point for such States as Jharkhand, Chattisgarh and Uttar Pradesh — West Bengal, especially Kolkata, can serve as the Rotterdam for eastern India. West Bengal needs to showcase its new. The general fear of a militant labour should be countered with a massive campaign that highlights the availability of cheap and talented human resource.

(The author is an Adviser with Japan External Trade Organisation, New Delhi. The views are personal.)