West Bengal - Economy
The economy of West Bengal is the sixth-largest state economy in India. At current prices, gross state domestic product (GSDP) of West Bengal was estimated at Rs 11.55 trillion (US$ 165.26 billion) in 2018-19. The average annual GSDP growth rate from 2011-12 to 2018-19 was about 12.06 per cent. Penetration of electricity in the rural areas is low in West Bengal, as is exemplified by the fact that only 40% of the rural households are electrified
West Bengal has abundant natural resources of minerals and suitable agro-climatic conditions for agriculture, horticulture and fisheries. It is in vicinity to mineral rich states like Jharkhand, Bihar and Odisha. It offers excellent connectivity to the rest of India in terms of railways, roadways, ports and airports.
Steady growth along with fiscal consolidation has been the hallmark of the State economy. When India has grown 4.7 percent, West Bengal has grown 8.62 percent as per CSO’s report published on 1st August,2014. GSDP growth in West Bengal was higher than the National Average for 2013-14. Growth rate in National Average of GDP at Current Prices in 2013-14 was 11.50%, while Growth Rate in GDP in West Bengal for the same period was 14.27%. Growth rate in National Average of GDP at Constant Prices in 2013-14 was 4.7%, while Growth Rate in GDP in West Bengal for the same period was 8.62%. Growth rate in Per Capita Net State Domestic Product at Current Prices for 2013-14 for West Bengal was 13.14% as against the National Average of 9.64% during the same period. Growth rate in Per Capita Net State Domestic Product at Constant Prices for 2013-14 for West Bengal was 7.78% as against the National Average of 2.70% during the same period.
Even after 30 years of Left Front rule in West Bengal, the state has lagged behind in a few economic indicators, this, despite better performance in agriculture. Agricultural growth rates have however declined in the last decade or so, the reasons for which have been elaborated upon. A gradual movement towards unorganised labour has characterised working patterns in the state. It is suggested that a policy that favours inclusive growth with greater emphasis on small enterprises could be followed by the government if it wants to sustain the gains made and address the shortcomings in the state.
West Bengal was conspicuous not only for being ruled by an elected Leftist coalition since 1977 (often described as sound ‘political stability’), but also for its widely acknowledged successes in fertility transition, execution of redistributive land reform and political decentralisation programmes. Ironically, however, the state, in almost all comparative assessments of social, human and infrastructural developments occupies a lagged position vis-à-vis many other states, especially in the south and even against all-India records.
West Bengal is the largest producer of rice in India. Rice production for the state totalled 14.99 million tonnes in 2017-18. The agriculture sector in West Bengal is characterized by the predominance of small and marginal farmers with per capita land holding being less than 1 ha. Rice is the dominant produce in the alluvial and coastal zone, and horticulture crops dominate productions in the hill and the terai region. Though there is a limitation in land availability for agriculture, but high levels of ground water extraction in the alluvial plains have enabled West Bengal to be number 1 in the country vis a vis rice production. Such levels of over extractions of ground water may be unsustainable in the future.
Kolkata is the prime center for India’s jute industry. The state stands first in the country in terms of jute production.
West Bengal is the second largest tea-producing state in India. West Bengal is home to the globally acclaimed Darjeeling tea variety. The northern areas around Darjiling and Jalpaiguri have long been known for their production of high-quality tea. The Darjiling region also produces oranges, apples, pineapples, ginger, and cardamom. During 2014-15, WB produced 329.3 million kg of tea, accounting for 27.8 per cent of India’s total tea production and is home to the globally acclaimed Darjeeling tea variety. Total tea production in West Bengal from April-September 2015 stood at 211.1 million kilograms.
WB's progress in land reform has occurred in three areas: redistribution of agricultural land ownership, regulation of sharecropping relationship (more popularly operation barga) and distribution of homestead plots. The main components of operation barga include tenure security protection for sharecroppers (bargadars) and control over the share afforded to bargadars.
The livestock population in West Bengal is large, but milk productivity is low, and does not meet the nutritional requirement of the population, mostly because of lack of adequate feed availability for the livestock.
West Bengal is also a major producer of fish. During 2017-18, the state produced a total of 1.74 million tonnes of fish and fish production for 2018-19 has been anticipated at 1.85 million tonnes.
Its location advantage makes the state a traditional market for eastern India, the Northeast, Nepal and Bhutan. It is also a strategic entry point for markets in Southeast Asia. The cost of operating a business is lower in Kolkata than in other metropolitan cities.
The state’s most important industrial belt is a corridor extending for a distance north and south of Kolkata, along the Hugli River. Another significant industrial region is located along the Damodar River. There are steel plants at Durgapur and Burnpur and a locomotive plant at Chittaranjan. Haldia, the terminus of an oil pipeline from Assam and the site of a large oil refinery, also has a petrochemical industry. Other important manufactures include ships, automobiles, chemicals and fertilizers, wagons, electronics, paper, jute, and cotton textiles. The state has a large number of small-scale and cottage industries as well. In the late 20th and early 21st centuries, the only mineral resources of West Bengal that sustained nationally significant exploitation were coal and clay for brickmaking. As of November 2019, West Bengal had a total installed power generation capacity of 10,786.89 MW, of which 6,607.95 MW was under state utilities, 2,842.34 MW was under the private sector and 1,336.60 MW was under central utilities.
According to the Department of Industrial Policy & Promotion (DPIIT), FDI inflows in West Bengal, along with Sikkim and Andaman & Nicobar Islands, during April 2000 to June 2019, totalled US$ 5,599 million. West Bengal achieved the eleventh position among Indian states in rankings based on ease of doing business and reforms implementation, according to a study by the World Bank and KPMG.
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