West Bengal's 2024 economy: Story of growth amid challenges

The state demonstrated a significant economic expansion outlook, with its Gross State Domestic Product (GSDP) projected to surge by 10.5 per cent in the 2024-25 fiscal, significantly outpacing the national average of 7.32 per cent and reinforcing its position as the fourth-largest economy in India, according to Shashi Panja.

Kolkata: West Bengal's economic narrative in 2024 was one of striking contrasts -- steady growth and fresh investments juxtaposed with fiscal concerns and a worrying trend of industry flight from a perceptively "non-investor friendly" state.

The state demonstrated a significant economic expansion outlook, with its Gross State Domestic Product (GSDP) projected to surge by 10.5 per cent in the 2024-25 fiscal, significantly outpacing the national average of 7.32 per cent and reinforcing its position as the fourth-largest economy in India, according to state industries minister Shashi Panja.

The manufacturing sector played a crucial role in this upward trajectory during the year, achieving a robust growth rate of 7.8 per cent, exceeding the national average. This growth was further propelled by substantial investments across various sectors.

Infosys inaugurated a Rs 426 crore development centre, spread over 3,20,000 sq ft, in New Town. It is set to house over 4,000 employees and focus on cloud computing and digital services. Chief Minister Mamata Banerjee, calling it "A New Year gift to West Bengal", expressed hope for increased IT investments in the state.

The manufacturing sector's strong performance was underscored by the inauguration of two major projects with investments totalling Rs 2,100 crore -- Shyam Steel's integrated steel facility and Dhunseri Poly Films' venture. These projects are expected to create over 5,000 jobs, providing a significant boost to the state's industrial health.

The state government is developing a 200-acre Silicon Valley project in New Town, aiming to attract Rs 27,000 crore in investments and create 75,000 jobs, positioning Bengal as a key IT hub.

In terms of data infrastructure, NTT completed the first phase of its data centre campus in Kolkata which began operations in March 2024, with an initial capacity of 6 mw and a potential expansion of up to 25 mw.

CtrlS Datacenters also announced an investment of Rs 2,200 crore (about USD 264 million) to develop a data centre in Kolkata, to be implemented in four phases, with the first phase, a 16 mw facility, expected to go live shortly.

The Micro, Small, and Medium Enterprises (MSME) sector also displayed resilience, with the state looking to exceed its credit target of Rs 1.53 lakh crore for the fiscal year 2024-25, building upon the previous year's achievement of Rs 1.42 lakh crore and representing a 7.7 per cent increase.

The shipbuilding industry also saw continued growth, with key players like GRSE, Cochin Shipyard, and the Titagarh group expanding their order books for projects within the state.

The inaugural edition of Bengal Shopping Festival 2024 in September drew over 1.5 lakh attendees, generating Rs 100 crore in sales and boosting the state's retail appeal, the state government claimed.

Amidst this positive momentum, however, certain challenges emerged. A significant concern was the continued trend of corporate relocations.

Harsh Malhotra, Union Minister of State for Corporate Affairs, recently informed Parliament that between 2019 and 2024, 2,227 companies, including 39 listed firms, moved their registered offices from West Bengal, a trend that raises concerns about the state's business environment.

West Bengal, which held the third-largest share of national GDP at 10.5 per cent in 1960-61, accounted for only 5.6 per cent in 2023-24. It has seen a consistent decline throughout this period, according to a working paper by the Economic Advisory Council to the Prime Minister.

"This serves as a wake-up call for policymakers, emphasising the pressing need for reforms to enhance administrative ease, operational efficiency, and cost structures in the state. If Bengal does not act swiftly to address these issues, it could risk losing more businesses moving to other states like Gujarat and Karnataka," a senior industry chamber executive stated.

Fiscal management also presented a challenge.

A CareEdge Ratings report highlighted a growing imbalance between revenue and capital expenditures in the first half of FY'25. While revenue expenditure saw a year-on-year increase of 13.5 per cent, capital expenditure grew by only 7.7 per cent, falling short of budgeted targets, the report stated.

The fiscal deficit for the first half of FY'25 was at 3.7 per cent below the target of the 15th Planning Commission, it added.

The state failed to advance the much-hyped infra project of the Tajpur deep sea port project, neither re-tendering for fresh bids nor allowing the Adani Group, the previous bidder, to proceed.

In the year ahead, West Bengal may face a severe headwind on several counts, including the fast-changing political situation in Bangladesh. The new government across the border is perceptively keen to forge closer ties with Pakistan and is likely to look for greater trade at the cost of Indian exports, experts said.

Bangladesh's imports from India were worth USD 13.69 billion, and exports to India amounted to USD 2 billion.

Evidently, the CM is focused on hosting the upcoming edition of the Bengal Global Business Summit in February 2025, with a concerted effort to attract further investments and showcase the state as a vibrant investment destination.

Preparatory meetings have already been held with diplomats from over 42 countries.

"While Bengal remains attractive with steps like improved ease of doing business and a land bank policy, the government must eliminate local political interference to ensure investors can complete projects efficiently. We find only 3 per cent of the announced projects get implemented showing large investors backing out," said economist Suman Mukherjee.

Net net, experts said, continued reforms and strategic planning to ensure sustained and balanced development is the prescription to keep the Bengal economy afloat and buoyant.