With the manufacturing sector, West Bengal’s traditional strength showing signs of growth, the state may well be on the verge of an economic upswing in times to come.

Driven in great part by the boom in iron and steel, the state is poised to garner Rs 2,600 crore in domestic investments in the year 2003-04, of which Rs 1,350–1,500 crore would be from projects already commissioned in the iron and steel sector.

Last year, the state moved to the no. 2 position in terms of domestic investment at Rs 1,422 crore, just behind Gujarat’s Rs 1,938 crore—leaving behind other showcase states of India like Andhra Pradesh and Karnataka.

Have government initiatives improved the investment climate over the past 3 years? West Bengal’s present business environment     Corruption in West Bengal Regulatory framework, red tape, bureaucracy     ICC Business Perception Survey 2003  Base: 60 CEOs Though on a much lower base, Kolkata has seen significant growth across IT and other industry sectors in recent years Source: STP Kolkata

State officials trace West Bengal’s spurt in domestic investment to a surge in activity in the iron and steel, plastics and chemical industries, despite the fact that the government went all out to focus attention and incentives in the ‘new economy’—software, IT-enabled services and, of late, the agri-business (an area recommended by McKinsey; largely food processing). 

Healthcare in Kolkata For ‘rest of West Bengal’, 52% said healthcare was ‘bad’, and 40% said it needed improvement Law and order

Even though there has been almost zero impact and activity in ITeS, despite significant policy shifts and incentives, a senior bureaucrat says you can’t rush this: negotiations take time to mature, as all the ITeS major employers are talking to several states at the same time. Kolkata believes it’s ‘attractive’ for software development, data processing, digitization and BPO. And the state government says that Kolkata has the ‘fastest growing STPs’ in India.

The state government has been trying to roll out a red carpet to investors for some years. A recent marketing line is: “The safest state in India”. West Bengal had the lowest crime rate among all Indian states in 2002, according to the National Crime Record Bureau. At a recent meeting of the CM Buddhadeb Bhattacharya with more than 20 heads of missions in New Delhi, he and his colleagues repeatedly pointed out that the state was devoid of any religious or sectarian violence, had no regional agitations, and had a tradition of political stability ‘committed to democratic decentralization’.

Supporting the image makeover of West Bengal came the recent High Court ban on rallies in the city by Justice Amitav Lala.

This opened up a can of worms, with the Left Front government initially opposing the move, but finally giving in by putting into shape a set of proposals that restrict the holding of public meetings and taking out processions in Kolkata. These, if adhered to, would go a long way in dispelling the notion that West Bengal is a land of bandhs and rallies, a place where nothing ever moves.

Another indication that the industrial climate of the state is improving was the result of a ‘business perception survey’ for West Bengal 2003, as conducted by the Indian Chamber of Commerce (ICC). Questionnaires about the state’s economy and business environment were filled out personally by a cross section of 60 CEOs and other captains of industry and opinion
makers in the state’s business circle. 

Skilled HR availability Salaries in Kolkata (vis-a-vis cost of living)     Transport and air connectivity Has WB missed the industry bus, after 1991 reforms?     ICC Business Perception Survey 2003  Base: 60 CEOs   Infrastructure that needs immediate attention Does Kolkata’s pollution discourage manpower inflow, investments, etc? For ‘rest of West Bengal’, 90% said that pollution was not a problem Is credit from banks a problem? Not responded: 8% Tackling rallies and strikes Key growth areas WB should focus on “The state government’s attitude has significantly improved at the top, but needs to percolate down” “Order a bandh on all bandhs.” Respondents to the ICC survey. More recently, Justice Amitav Lala of the WB High Court issued a ban on rallies in Kolkata, triggering protest and debate   “Investors and industrialists do not lend credence to the state government’s pronouncements. The ground reality on infrastructure and labor relations has not changed.” A survey respondent

Says ICC president Vikram Thapar: “Perception is reality, when investments are considered. On many counts, the perception about West Bengal is far worse than the objective reality, and that affects investment.” The survey, he says, highlighted two key things: the areas where change has to be effected to improve perception and investment, and two, if the perception continues to be far from reality, what must we do to “aggressively market the State both within and outside.”

ICC secretary-general Nazeeb Arif says that the survey showed a healthy trend on the investment perception. Investors see a change. They see government attitudes changing. But infrastructure, particularly roads, have come up as a top concern, and a top priority item for development. And not surprisingly, knowledge-based industries, healthcare, tourism, biotechnology, are those that have come out on top in growth potential. “While skills are available, there is a need to enhance our capacities in that direction”, Arif says. “Social infrastructure needs to be improved, as is apparent from the ratings. Bureaucratic inefficiencies need to be tackled at the implementation levels.” 

Clearly, with infrastructure improvements, better government procedures and efficiency, and aggressive marketing, West Bengal will probably regain its winning edge. That’s no rocket science. The question that remains, as another year passes by: When?

Shehla Raza Hasan is with the Indian Chambers of Commerce at Kolkata