Bengal today is crying for industry and employment. At independence, it was among India’s leading industrial states. Kolkata and the Hooghly areas were hubs of many industries ~ jute mills, engineering industries, foundries, chemicals, port-linked commerce, rail workshops, headquarters of the tea industry, etc. The state was a major contributor to India’s industrial output and tax revenues. Partition led to the loss of hinterlands and markets, and in the case of jute, raw materials.
But from the late 1960s onwards, the Left systematically began stoking labour unrest, crippling industries. In the early 1970s, the Naxal movement plunged the state into widespread political violence and chaos. When the Left Front came to power in 1977, Bengal’s economy was already under stress, but instead of reversing the decline, their 34-year rule accelerated the exodus of industries and capital, leading to a prolonged industrial stagnation Bengal is yet to recover from. Till the early 1960s, Bengal was among India’s richest and most industrialised states and contributed almost 11 per cent to the national GDP.
When the Left rule ended in 2011, this had declined to only 6 per cent, a decline unmatched by any other state, and has never improved since. Over this period, Maharashtra’s share in India’s GDP increased from 12 to 15 per cent, much at the cost of Bengal, while Gujarat’s share doubled to 10 per cent. As a consequence of this decline, Bengal’s economy became informalised and ancillarised, and the share of unregistered manufacturing in manufacturing SDP nearly doubled to 60 per cent in the 1990s from only 30 per cent in the 1980s. The result was poor scale economics, lower productivity and insecure employees who sought protection, and continued voting for the CPM.
In the traditional industrial belts like Howrah, Barrackpore, Durgapur, Asansol and Hooghly, large industries collapsed. Many iconic and even public sector firms fell victim to Left-engineered strikes, lockouts, gheraos and political unionisation of workplaces, among them Jessop, Burn Standard, Braithwaite, GKW, Metal Box, Indian Standard Wagon, and many others. While large factory employment stagnated, labour militancy rose and industries started shifting to Maharashtra and Gujarat.
The entrepreneurial dynamism of Bengalis vanished and Bengal’s image as an anti-business state became nationally entrenched. One major factor behind the flight of industries was a continuously deteriorating power situation. Generation could never keep pace with demand due to ageing thermal plants, inadequate transmission infrastructure and their poor maintenance, low investment, coal shortages, and financial weakness of the state electricity board. During the 1970s, load-shedding became so pervasive across the state that industrial units were facing power cuts lasting several hours daily.
Lacking captive power, small and medium enterprises suffered even more. Industries tend to locate near mineral and coal-producing regions to reduce transport costs, which gave Bengal and neighbouring states tremendous natural advantages. Coal from Raniganj and Jharia, rail, river and port access through Kolkata and availability of a skilled industrial workforce had given Bengal a strong comparative advantage in heavy industries like steel, engineering, etc.
In 1952, the Government of India had announced a Freight Equalisation Policy under which the railway freight for key raw materials like coal, iron ore, and steel were subsidised. As the power situation in Bengal worsened, industries now started relocating to Maharashtra, Gujarat, or Tamil Nadu ~ being able to obtain these inputs at nearly the same cost, and neutralising Bengal’s natural advantage. Then came the political instability between 1967 and 1972, including repeated changes of government and the resultant economic paralysis.
The offshoot of all this was that Bengal’s position declined sharply relative to other states, and the 1991 liberalisation almost completely bypassed the state. While Maharashtra’s per capita private investment in industry soared from Rs 679 in 1980 to Rs 12385 in 1994, for Bengal, it only rose from Rs 469 to Rs 4376 over this period. Gujarat’s rise was even more striking, from Rs 1142 to Rs 22776. Between 1991 and 2003, Gujarat and Maharashtra together attracted roughly one-third of India’s industrial investment proposals, while West Bengal attracted only 4.7 per cent of applications. In terms of value, Bengal’s share was only 3.9 per cent, and only 35 per cent of these proposals materialised, compared to 55 per cent in Gujarat.
Organised manufacturing stagnated – the total organised industrial employment barely rose between 1977 and 1999, from 8.26 lakh to 8.81 lakh over 13 years, while small-scale and ancillary units started dominating the industrial landscape rather than large-scale manufacturing. As new vibrant industrial ecosystems emerged and thrived in Gujarat, Maharashtra, Tamil Nadu and Karnataka, Kolkata, a flourishing industrial-commercial city till the 1960s, languished from bureaucratic rigidity, ideological suspicion of private capital and poor industrial infrastructure.
It was no longer a destination for industry and investment. The decline was accelerated by the government’s staunch opposition to the introduction of computers during the late 1980s and early 1990s. In this dismal and hopeless scenario, Buddhadeb Bhattacharjee attempted a dramatic policy shift by promoting IT, encouraging private investments, and inviting large industrial projects like that of Tata Motors at Singur-Nandigram. It was too late and could not overcome the internal ideological contradictions of a Left that was still living in the 19th century and had forgotten imagination.
The Singur-Nandigram movements not only politically destroyed the Left but also marked a major psychological setback for industrial investors, and the long shadow of Singur clung to the 15-year TMC rule that could not overcome investor anxiety or restore their confidence. Even 17 years later, the abandoned site symbolises the industrial insecurity in Bengal. Gujarat’s automobiles, Tamil Nadu’s electronics, Karnataka’s tech manufacturing or Telangana’s pharma clusters are shining examples of a new India, but in the traditional industrial corridors comprising Barrackpore, Howrah, Bhatpara, Jagaddal and Naihati, parts of the old manufacturing belt, increasingly witnessed a transition from industrial production toward land monetisation, informal urbanisation and real-estate activity, with allegations of politically mediated syndicate control over construction, benefiting local TMC goons.
Between 2011 and 2025, as many as 6,688 companies shifted registered offices (not necessarily factories) out of West Bengal, including 110 listed companies. Though the number of registered companies increased from 1.4 lakh to 2.5 lakh over this period, they were mostly MSMEs ~ fragmented, informal, and added low-values. The organised formal sector that adds real value remained conspicuously absent in Bengal’s fractured industrial landscape. The Left rule was partly sustained by its success in rural reforms, especially during its initial years. Initiatives like Operation Barga, tenancy reforms, decentralisation, and irrigation expansion led to major agricultural improvements.
Operation Barga conferred legal rights to almost 1.5 million sharecroppers (bargadars), and protected them from arbitrary eviction by landowners (jotedars) while ensuring their rights to a fair share of the produce. This significantly improved the rural economy and for some time, Bengal became India’s largest rice and fish producer. The real agricultural SDP increased nearly threefold between 1980 and 2011. Rural prosperity was one reason why the Left could not be dislodged from power over more than three decades. But the percentage of owner-cultivators declined over time, while the number of agricultural labourers soared, leading to increasing marginalisation of rural households.
By 2022-23, almost 40 per cent of the workforce was trapped in agriculture that yielded less than 10 per cent of total output, leading to subsistence wages and migration of labour to other states. The drift continued unabated, and West Bengal has now degenerated into a remittance economy. Only 20 per cent of the workforce are engaged in salaried jobs; educated, talented youth are fleeing the state in hordes in search of greener pastures elsewhere. Singur has already made the acquisition of land, a prerequisite for industrial growth, politically toxic, and the TMC government could never imagine a coherent manufacturing strategy.
Instead, it ensured electoral victory through unprecedented expansion of handout-based welfare that drained precious resources away from productive investment. Half a century of unimaginative and directionless rule has thus reduced a once prosperous, industrial powerhouse into a land of pervasive gloom.
(The writers, schoolmates once, are, respectively, former Director General at the CAG of India, and Distinguished Professor, RKMVERI, Belur)