Because we are different.

Business plan

3 December 2012

Bengal could take a lesson or two from Gujarat where the ruling party keeps politics and progress separate, writes debasish bhattacharyya

Some time back, a Goa-based top industrialist shared the experience of his first meeting with Gujarat chief minister Narendra Modi with some of us, including a former advocate-general of Goa and a former president of CII-Goa.

The industrialist heading a conglomerate with a combined yearly turnover of more than Rs 20,000 million wanted to explore the possibility of setting up a medium-scale enterprise in Gujarat. He said that within couple of days of his seeking appointment with Mr Narendra Modi, he had been summoned to the secretariat for preliminary discussions. The industrialist met Mr Modi in the presence of a few key officials and came away impressed. At the end of a 20-minute meeting, the industrialist was asked to submit the project proposal. He confessed that he had been a bit worried initially about meeting the chief minister ahead of Assembly polls in Gujarat fearing that he may be asked to contribute to the BJP’s election fund or help the party in some other way. Not only his fears proved to be unfounded but the industrialist was also left awestruck when Mr Modi personally asked him to get in touch directly in case he encountered government red-tape. It was some time before it dawned on the industrialist that unlike in many other states, including his own, neither bureaucrats nor politicians from the ruling party had sought favours.

The narrative is significant. One, the industrialist is not among those Indian entrepreneurs making waves across the world yet was received personally by Gujarat’s chief minister. Secondly, all he had proposed to set up was a medium-size venture. Yet, Mr Modi’s eagerness to seize the opportunity is notable. This despite Gujarat being already home to 1,500 large-scale enterprises and more than four lakh micro, small and medium-scale ventures.

However, Mr Narendra Modi can no way be credited singularly with Gujarat’s impressive industrial development. The western Indian state had always had been industrially developed but Mr Modi deserves credit for diversifying its industrial base to bring about an all-round development. And, this regardless of the shadow of Gujarat riots. Mr Modi’s leadership qualities have helped Gujarat remain a frontrunner when it comes to industrialisation and that is a fact.

Perhaps Bengal’s inadequacies can be viewed in the backdrop of Gujarat’s success. The idea is not to engage in a futile exercise of comparison because Gujarat has always remained traditionally strong in the manufacturing sector with little reliance on the services sector. But given that Gujarat is an Indian state plagued by all the essentially Indian troubles, it is worthwhile to assess why Bengal failed where Gujarat shone.

Unlike Gujarat, true industrial development of West Bengal remained limited to the first few decades after Independence. Industrialisation faced hurdles thereafter leading to sluggish growth. While some hurdles are of the state’s own making, some, of course, are consequences of Central government policies.

Also, no serious effort was made to expand infrastructure by enhancing power and water supply grids and by building roads, ports, and technical education institutions. Little was done by way of framing incentives to woo industrialists and much needed trust-building measures got lost in the vortex of political expediency. What successive governments in Bengal failed to do was to promote industries in the underdeveloped areas of the state to correct regional imbalances. And, militant trade unions did their bit to ensure that investors kept their distance despite the state boasting one of the largest consumer bases in the country.

The CPI(M)-led Left Front government was in power for 34 years. While this had ensured political stability, it did little to attract investors. The state’s information technology sector is a product of a curious hit-and-miss initiative that somehow worked out for the state. When it comes to industrialisation, the Trinamul-led government of Miss Mamata Banerjee hasn’t distinguished itself either. Without a defined roadmap, merely meeting industrialists and promising them the earth will not make investments pour into Bengal.

Mr Edouard Louis-Dreyfus, the chief executive officer of Louis Dreyfus Armateurs (LDA), the French partner of Haldia Bulk Terminals (HBT) alleged in a recent interview: “In Bengal, especially in Haldia, the private and personal interests of some people always come before the general interests of the port and the country.” The century-old French company that partnered with ABG Ports to form HBT to handle cargo at Haldia port continues to be very much present in other major Indian ports in Vizag, Tuticorin, and Mangalore. HBT’s exit from Haldia only helped reinforce the perception that Bengal is far from industry-friendly. And, the Bengal government ~ through its actions and statements ~ only opened itself up to harsher scrutiny.

Mr Nirupam Sen, industries minister in the erstwhile Left Front government wrote in a March 2011 article titled Industrial Development in West Bengal: Achievements and Constraints: “It has to be kept in mind that it is not possible in the present capitalist economic structure to usher in a non-capitalist way of development at the instance of the state government”. Unquestionably, a tardy acknowledge of a harsh reality! Bengal’s incumbent chief minister will do better if she takes note of Mr Sen’s observation.

In the existing federal structure, states are unlikely to get better share of revenue, necessary Central support and will continue to enjoy limited power. These are stark realities. It’s also true that every political party advances its own interests and there is nothing wrong in it as long as it strikes a balance between political stand and efficient policy. But, this is where Bengal fumbled ~ it always put short term political gain above long-term progress.

Very recently, a number of industries chambers and a few state-based industrialists hailed the chief minister’s move to engage former Union minister Saugata Roy to draft a new industrial policy to replace the current one drafted by the Jyoti Basu government in 1994. Mr Roy has a difficult task ahead as he must evolve a guiding principle that has nothing to do with land acquisition or setting up special economic zones (SEZs).

But there seems to be a silver lining. The Bengal government’s land and land reforms department has reportedly identified nine lakh acres to set up a land bank for industries. While this is unlikely to serve big industries well, there is hope yet for small and medium sectors.

But an insincere industrial policy will not augment industrialisation. While the Bengal government quite expectedly plans to seek inputs from stakeholders in the industry, it should also consult political parties. The objective should be to frame a comprehensive policy by forging a broad-based alliance to ensure minimal political differences. Political one-upmanship has led the state nowhere. While objective politics can be a tall order, nothing stops Bengal’s people from questioning the political leadership. If Maharashtra, Gujarat and Tamil Nadu can do it, why not Bengal?

The writer is former deputy general manager, India International Centre in New Delhi, and former general manager, International Centre, Goa