West Bengal Emerges As Key Investment Destination

The Communist government of West Bengal is set to celebrate 20 years of uninterrupted power to the tune of economic liberalisation, and not socialist hymns, as it woos investors of all hues.

The transformation of West Bengals dyed-in-the-wool Marxists to enlightened social democrats, combined with remarkable political stability, has been an irresistible lure for investors.

The Communist Party of India-Marxist or CPI(M) rode to power in 1977 state elections on a pledge of agricultural reform. Its power base is still firmly rooted in the villages of West Bengal.

But the state is now a key destination on the industrial map as India travels along the road of economic reforms.

 

Growth in the manufacturing sector is expected to touch 10 per cent in 1997/98 (ending March) after eight per cent in 1996/97.

India began liberalising its economy by opening up trade and industry in 1991 and dismantling decades-old socialist controls.

They (the Communist government) saw an opportunity in the reforms, said Subroto Niyogi, senior director at the Confederation of Indian Industry (CII) in Calcutta. There is a greater sense of commercial orientation now, he said.

Bidyut Ganguly, the energetic industry minister of West Bengal, told Reuters in an interview: Investment started picking up from 1991 onwards.

The reforms ushered in by the federal government in New Delhi offered West Bengals rulers a chance to break out of their ideological shackles.

There is political stability, which implies continuity of decision-making, said Niyogi.

The West Bengal government rewrote history by announcing a new industrial policy in 1994 which welcomed foreign investment and technology, particularly in infrastructure sectors.

This reaffirmed the governments commitment to the ongoing reforms programme, said an official of a multinational company, who asked not to be identified. We are more pragmatic now, Ganguly said.

Meanwhile, other states were throwing open their economies and vying with one another to attract investment. Not to be outdone by its rivals, West Bengal also began its own hard-sell campaign. Chief Minister Jyoti Basu, a low-key, 82-year-old veteran of many political battles, visited Britain and the United States in 1995 to sell West Bengals untapped potential.

Investment approvals in the first 10 months of 1996 stood at Rs 6,225 crore.

Investor response has been quite good, said Ganguly.

West Bengal is strategically blessed. Besides the bustling port of Calcutta, it is also closer to the markets of South-East Asia.

The state can be a gateway to the economies of the Asia-Pacific, Ganguly said. The state is home to several multinationals like Siemens India, a unit of Siemens AG, Motorola Inc, Caltex, a unit of Chevron Corp and Texaco Inc, Matsushita Electric, and Philips India, a unit of Electronics NV, he said.

Japan is today a major investor in West Bengal, Niyogi said. In recent years a number of projects involving Japanese firms have been finalised in West Bengal.

Itochu Corp, Toyo Engineering, Marubeni Corp and Mitsubishi have already finalised plans or are in the process of implementing projects in the state.

Industrial rejuvenation

Ganguly said the steady growth of agriculture in the state, spurred by radical land reforms and supported by institutional changes like strong local governments at the village level, had created a strong demand for industrial goods.

The farming boom also fed growth in services and food processing industries in the states rural areas, he said.

Along with agricultural growth, the supply of key agricultural inputs like power, roads and telecommunications had improved, industry leaders said.

Meanwhile, the state has adopted a cautious but open stand on the privatisation of state-owned units, Ganguly said.

There are four cases where sick public sector units have been handed over to the private firms, he said.

We want financially sound and viable private sectors firms and not fly-by-night operators, he added.

The endemic labour unrest that characterised West Bengal in the 1960s and 1970s has now given way to peace at the pickets.

We want a reasonable attitude towards labour and coordination between workers and management, Ganguly said. We do not want workers to be slaves.