Mammoth challenge

Stern test for Mamata

Despite winning a mammoth majority in the state legislature, Mamata Banerjee has work cut out for her in trying to revitalise West Bengal after its moribund existence for three decades under Communist rule.

Not that Mamata is inheriting such a ramshackle, lawless, backward and resource-poor state like Nitish Kumar did after 15 years of Lalu’s misrule in the neighbouring Bihar. On the contrary, West Bengal recorded a compounded average economic growth rate of 8 per cent per annum between 1994 and 2004 which jumped to 10 per cent in the next 3 years. The state has rich reserves of minerals such as coal, limestone, dolomite and granite and is the largest producer of fruits and vegetables and jute in the country, while its highlands in the north turn out the second largest tea crop in the country.

The Left rule may be blamed for many of West Bengal’s present infirmities but it cannot be gainsaid that, by and large, law and order and administrative control was maintained, unlike the total disorder in Bihar under Lalu. A legacy from the Left rule which Mamata should be grateful for is the implementation of total land reform and institution of a strong panchayat raj system.

On the flip side, to maintain its stranglehold in rural Bengal, the Left pursued a dual control system, with the legitimate administration along one strand and party cadre on the other. The embedded partymen exercised more power than the government officials and extracted their percentage on all budgeted spending. The first challenge for the Trinamool government will be to dismantle this parallel power edifice and restore confidence to the legitimate government officialdom.

The recent implementation of the Fifth Pay Commission recommendations by the Left Front government pushed the state government deeper into debt. The state’s revenue deficit to gross fiscal deficit increased to about 84 per cent in 2009-10 (revised estimates) from 73 per cent in the previous year. Committed expenditure (salary, pension and interest expenditure) formed 112.4 per cent of the revenue receipt.

Mamata has some hard decisions to take. To cut down the deficit, she will have to cut the flab in the administrative system, close down or privatise perennially loss-making state public sector units, revisit and revise subsidy schemes which line pockets of middlemen rather than actually help the poor and cut back on flashy projects which do little to alleviate the plight of the ‘aam admi.’

The scope for raising taxes to increase revenues is very limited in West Bengal whose population is mainly composed of the poor and lower middle classes with a smattering of the middle class element. As it is, they are just managing to keep their noses above the inflation line and any further decrease in their take home income due to enhanced taxes will drown a majority of them.

Industrialisation

The one single avenue Mamata has of increasing the state’s revenues substantially without breaking the general public’s back is through industrialisation. But this is far easier said than done. Part of the problem is historic. Commencing from the mid-60s, the meticulous efforts of the Left pack, led by Jyoti Basu, systematically decimated the state’s industries through aggressive industrial action.

In 2001, West Bengal alone accounted for 62 per cent of the total man-days lost in the country. A second blow was the imposition of the Freight Equalisation Scheme, which put paid to the natural advantage West Bengal had in being close to the raw material sources of the engineering industry.

The combined effect was a steady flight of capital from the state. According to a position paper by IMRB International,  in the post-liberalisation period, 1991 to 2004, industrial investment through IEM (Industrial Entrepreneur Memorandum) in West Bengal accounted for only 4 per cent against 18 per cent in Maharashtra, 16 per cent in Gujarat, 10 per cent in Andhra Pradesh and 9 per cent in Tamil Nadu. Foreign Direct Investment (FDI) flowed in copiously to Maharashtra, Gujarat, Haryana (Gurgaon), Uttar Pradesh (Noida), Tamil Nadu and Andhra Pradesh, but not West Bengal.

There has been some pull back in the last 5 years, when the Left Front, confronted by a restless tide of unemployed youth and empty state coffers, made an attempt at attracting  business investors  through offers of developed land and  reining in of trade union aggression. All this came to a nought with the Singur and Nandigram debacles.

Ironically, these two flashpoints, which enabled the Trinamool to oust the Left Front, could prove a roadblock in Mamata’s attempts to reindustrialise West Bengal. As 70 per cent of the state’s population is dependent on agriculture-based income, the transfer of farm land to industries is extremely difficult. Having fought against acquisition of agricultural land for industries at Singur and Nandigram, it will now be difficult for Mamata to do a volte-face and procure land for industrialisation.

There are two other fronts where Mamata is faced with ticklish problems. Having  played footsie with the Maoists in Nandigram, the Trinamool will find it embarrassing and, perhaps, impossible to dislodge the insurgents from their enclaves in the surrounding districts. The second issue has to do with the agitation for Gorkhaland state which has been simmering for over three decades.

The Left Front was rigid in its opposition to this demand and even Mamata has, in the past, maintained that she is against further division of Bengal. With the local parties in the hills having supported her in the recent elections, she will be walking a tightrope fending off their demand.