The story of Bengal’s economy

Income and urban expenditure grew at below the national average. But rural expenditure grew faster, and there is a sharper dip in poverty levels
A man walks past a labourer resting on a handcart in a closed wholesale market amid a lockdown in Kolkata last year. (File photo)
A man walks past a labourer resting on a handcart in a closed wholesale market amid a lockdown in Kolkata last year. (File photo)
Published on Apr 15, 2021 12:54 PM IST
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ByMaitreesh Ghatak

Poriborton, or change, was the buzzword 10 years ago when the Trinamool Congress (TMC) defeated the Left Front. This time around, one of the popular campaign slogans, used by the prime minister, is asol poriborton or real change. The demand for change clearly has not changed over the last decade in West Bengal. The question is — did anything actually change in the last decade, especially on the economic front?

Change is a tricky concept – it can be for better or worse. Also, to measure change, we need some benchmarks. Suppose we find West Bengal’s growth is higher or lower in the last decade compared to the previous one. It is possible that this reflects national trends. So, whether anything different is happening in the state has to be inferred after adjusting for the change in the all-India average growth rates over two decades. By a similar logic, if we just compare the West Bengal and all-India averages over the last decade and find that West Bengal has done better or worse, we need to check if the situation was similar or not in the previous decade to determine change.

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Let us focus on three main economic indicators – the growth rate of per capita income at the state level, the growth rate of per capita consumption expenditure based on household surveys, and the percentage of people below the poverty line.

If we look at annual per capita income growth in real terms, then between 1993-94 and 1999-2000, West Bengal’s growth rate was 5.5% while the all-India average was 4.6%. During the next decade, West Bengal’s growth rate fell to 4.9% while the all-India average went up to 5.5. Between 2011-12 and 2019-20, West Bengal’s growth rate fell further to 4.2%, and although the all-India average growth rate fell to 5.2%, the gap has marginally increased.

So interestingly, the state’s growth rate was higher than the all-India average during the 1990s. It fell below the all-India average both during the last decade of Left Front rule and during the previous decade (2011-12 to 2019-20). So clearly West Bengal’s growth has marginally decelerated in the last decade relative to the previous decade. But the same is true of the all-India growth rate, which reflects the general economic slowdown that already started from 2016 before the impact of the Covid-19 crisis kicked in.

Let’s turn to the growth rate of monthly per capita consumption expenditure in real terms, based on National Sample Survey (NSS) reports on household expenditure in urban and rural areas.

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Unfortunately, the last period for which data is readily available is 2011-12. The 2017-18 NSS report was circulated briefly and then withdrawn. However, based on the draft report that was released, we can compare the annual growth rate of monthly per capita consumption expenditure (after adjusting for inflation) between 2011-12 and 2017-18 for West Bengal and the all-India average. We can compare these, in turn, with figures from earlier rounds that roughly correspond to the previous two decades, namely 1993-94 to 1999-2000 and 2001-02 to 2009-10.

For urban areas, the pattern is similar to that of income growth — the state did better (4.2%) than the national average (4%) between 1993-94 and 1999-2000. Its growth rate fell to 3.8% during the next decade and stayed the same in the last decade, while the national average was 3.7% and 4.7% respectively in these two decades. To the extent that urban growth reflects general growth in economic opportunities, this picture is consistent with the change in the growth rate of incomes. Clearly, West Bengal has fallen behind more, relative to the national average, over the last decade.

The picture changes, however, if we look at per capita consumption expenditure in rural areas. Between 1993-94 and 1999-2000, West Bengal’s growth was 0.3%, which was well below the national average of 2.3%. During the next decade, there was some improvement both at the state level (2.4%) and the national level (3.2%) but West Bengal was still trailing behind the national average. In the last decade, West Bengal’s growth rate shot up to 5%, well above the national average of 3%.

As 72% of people in the state live in rural areas, this improvement in rural expenditure levels is reflected in the percentage of people below the poverty line.

In 1999-2000, 27% of the people were below the poverty line in West Bengal while the national average was 26.7%. During the next decade, poverty fell by 7 percentage points to 20% in the state, while the national average fell to 22%. However, in the last decade poverty fell to 14% in the state (similar to the drop in the previous decade) while nationally poverty went up marginally to 23%.

The figures suggest that, despite the state’s lack of economic dynamism, the rate of growth of purchasing power in rural areas of West Bengal has been higher than the national average. This could be partly due to the state government’s various transfer programmes, such as the Kanyashree or Krishak Bandhu or Yuvashree. This has to be balanced against the perceptions of corruption, mismanagement and political repression that seem to be driving an anti-incumbency headwind against the TMC.

How the election results turn out will depend on how these factors stack up against the promise of change offered by the BJP emphasising growth as opposed to doles, given its less than stellar economic record at the national level, and how big a role identity politics based on religion and caste, which has certainly been much more salient than in any other campaign in recent memory, plays out.

Maitreesh Ghatak is professor of economics at the London School of Economics (LSE).

The views expressed are personal

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Sunday, May 22, 2022