West Bengal is often stereotyped as a state of bandhs, gheraos and strikes. So the 2018 edition of the Bengal Global Business Summit last week presented a somewhat-incongruous picture: the Mamata Banerjee government managed to gather India’s top industrialists as well as delegates from 32 countries in Kolkata to pitch the state to them as an investment destination. The summit drew investment commitments of Rs 2,19,000 crore, with India’s richest man Mukesh Ambani punning, “West Bengal is becoming Best Bengal.”

Despite the optics, Banerjee is walking a tight rope. She and her Trinamool Congress
came to power in 2011 in West Bengal on the back of their 2008 agitation against the Left Front government’s forcible acquisition of farmland for a Tata factory in Singur town. Yet, even as it cemented her status as West Bengal’s tallest leader, the agitation angered industrialists. Now, in her second term as chief minister, Banerjee is trying hard to rectify this image and sell the state to big industry.

Poor tax revenue

Since the Trinamool came to power, West Bengal’s economy has actually done well, even in the absence of big-ticket investments. In 2015-’16, for example, as the Indian economy grew by 7.3%, West Bengal’s economy grew by 12.02%. Between 2012 and 2015, West Bengal was the third-fastest growing big state in the country. The growth was driven by the agricultural sector, the state’s largest employer. In 2015-’16, the agriculture sector grew by 5.55% in West Bengal as against 1.1% nationally. The state has also achieved success with Micro, Small and Medium Enterprises; it boasts the largest number of such enterprises in the country and recorded the highest bank credit flow to the sector in the past five years.

But all this has done little to help the West Bengal government’s tottering finances. It is under a mountain of debt. While Banerjee often blames the Left Front for leaving her with this burden, her administration has not solved the problem fast enough. In its first term, the Banerjee government managed to reduce the share of debt in the gross state domestic product by 9%. But, as this piece in the Mint points out, this decline was nearly the same as under the previous Left government of Buddhadeb Bhattacharjee. As of 2016, West Bengal’s debt to gross state domestic product ratio was the third-highest of any state. At the same time, the state has been unable to shore up its finances, with the tax revenue to gross state domestic product ratio significantly lower than the national average.

False start

These tottering finances were the reason the Left had attempted to change its image from an agrarian communist organisation to one that was even willing to forcibly acquire farmland if that was what it took to bring in big industry. Today, the Left would note with some schadenfreude that those same factors are squeezing Banerjee enough for her to now vigorously court industrialists.

Yet, as the numbers show, Banerjee’s courting of big industry has not yielded much. The total investment promised at the 2018 Bengal Business Summit, for all the hoopla, amounts to less than the commitments made at the 2017 and 2016 editions. Moreover, much of this is notional. Like Gujarat, where the concept of organising highly publicised investment summits was pioneered by Narendra Modi when he was chief minister, there is a stark mismatch between commitments and actual investments.

For example, the steel plant promised by the OP Jindal group during the Left’s rule was eventually inaugurated by Banerjee on January 15. But instead of the promised investment of Rs 5,000 crore, it is only a Rs 800-crore plant. While this downgrade was largely driven by the global financial crisis and the coal block scam, it is a reminder to not take investment promises tom-tommed by politicians too seriously.

Land question

Land is the axe hanging over Banerjee’s head. West Bengal is densely populated and, like in other states, industrialists look to the state government to act as the middleman and buy land for them. Banerjee campaign in Singur was vindicated in 2016 when the Supreme Court held that forcibly acquiring land for a private corporation’s business needs could not be said to serve the public purpose and declared the Left’s actions illegal.

This emphatic victory, ironically, places Banerjee on the horns of a dilemma. She cannot take the political risk of publicly going back on her position – vindicated by both the popular vote and the courts. Even the slightest hint of deviation from this policy could deliver a stinging blowback. Banerjee has often claimed the existence of a land bank in the state but is yet to put it to use for big industry.

Given these bottlenecks, it remains to be seen if the Bengal Business Summit can catalyse the industrial revival of West Bengal, or just remain a messaging platform for Banerjee to shore up her national aspirations in the run-up to the 2019 Lok Sabha election.