Against the backdrop of the
ongoing elections in West Bengal, Maitreesh Ghatak examines how the
state’s economic performance compares with that of the country as a
whole, over the past three decades. He highlights that despite West
Bengal’s lack of economic dynamism, its agricultural growth rate as well
as the growth rate of consumption expenditure in its rural areas, that
house 72% of the population, has been higher than the national average.
‘Change’ was the buzzword 10 years
ago when the Trinamool Congress (TMC) defeated the Left Front in West
Bengal. This time around, one of the popular campaign slogans, used by
the Prime Minister Narendra Modi, is ‘real change’. The demand for
change clearly has not changed over the last decade in the state. The
question is – did anything actually change, especially on the economic
front?
Change is a tricky concept – it can
be for better or worse. Also, to measure change, we need some
benchmarks. Suppose we find that West Bengal’s growth is higher or lower
in the last decade compared to the previous one. It is possible that
this reflects national trends. So, whether anything different is
happening in the state has to be inferred after adjusting for the change
in the all-India average growth rates over two decades. By a similar
logic, if we just compare the West Bengal and all-India averages over
the last decade and find that West Bengal has done better or worse, we
need to check if the situation was similar or not in the previous decade
to determine change.
We will look at a couple of key economic indicators – the growth rate of per capita income at the state level, the sectoral growth rates, the
growth rate of per capita consumption expenditure based on household
surveys, and the percentage of people below the poverty line.
Per capita income
Until the early 1960s, West Bengal’s
per capita income was higher than the national average. In fact, it was
among the three richest states – the other two being Maharashtra and
Gujarat. By the early 1980s its per capita income was just about equal
to the national average. In the early 1990s, when the country was poised
to move to a higher growth trajectory, the rank of West Bengal had
fallen to seven. In 2000, it had fallen further to 10, and in 2011, when
a new government came to power promising change, its rank had fallen
marginally to 11. After a decade under the new regime, the slide has
continued – its rank now stands at 14.
As Table 1 shows, if we look at
annual per capita income growth in real terms, then between 1993-94 and
1999-2000, West Bengal’s growth rate was 5.5% while the all-India
average was 4.6%. During the next decade, West Bengal’s growth rate fell
to 4.9% while the all-India average went up to 5.5%. Between 2011-12
and 2019-20, West Bengal’s growth rate fell further to 4.2%, and
although the all-India average growth rate fell to 5.2%, the gap has
marginally increased.
Table 1. Growth of per capita net state domestic product (constant prices)
Year
|
West Bengal
|
India
|
Growth (1994-2000)
|
5.5%
|
4.6%
|
Growth (2000-2005)
|
4.1%
|
4%
|
Growth (2005-2010)
|
5.7%
|
7%
|
Growth (2000-2010)
|
4.9%
|
5.5%
|
Growth (2012-2020)
|
4.2%
|
5.2%
|
Source: RBI Handbook of Statistics on Indian Economy.
Note: Growth data for 1994-2000
use 1993-94 as the base year, Similarly, the data for 2000-2005 use
1999-2000 as the base year, 2005-2010 use 2004-05, and 2012-2020 use
2011-12. All growth rates presented are average of year-on-year annual growth rates.
Notably, the state’s growth rate was
higher than the all-India average during the 1990s. It fell below the
all-India average both during the last decade of Left Front rule and
during the previous decade (2011-2012 to 2019-2020). Clearly, West
Bengal’s growth has marginally decelerated in the last decade relative
to the previous decade. But the same is true of the all-India growth
rate, which reflects the general economic slowdown that already started
from 2016, before the impact of the Covid-19 crisis kicked in.
However, if we look at the sectoral composition of growth, it turns out that
West Bengal has performed better in terms of agricultural growth over
the last decade compared to the rest of the country, and in this respect
its performance is better than in the decade before. Even though its
share of agriculture and related activities is comparable to and
slightly higher than the national average, the growth rate of
agriculture in West Bengal has been 3.3% over the last decade (2011-12
to 2019-20), while that of India has been 1.6%. This seems to be largely
driven by the fall in the growth rate of agriculture in the country
over the last five years, because if we just look at the first five
years of the last decade (2010-11 to 2014-15), the all-India
agricultural growth rate was higher than that of West Bengal. Also,
during the decade prior to the last (1999-2000 to 2009-10) when the
state was still under the rule of the Left Front, the growth rate in
agriculture in the state was very similar (though marginally higher) to
that of the country, while the overall growth rate was lower. Of course,
a higher growth rate in agriculture in the state, in the last decade,
implies that the growth rates in manufacturing as well as services in
the state were lower than the national average given that the overall
growth rate was lower in the state relative to the rest of the country,
as we saw in Table 1.
Table 2. Growth of gross state domestic product (constant prices), by sector
|
Growth rate
|
|
West Bengal
|
India
|
Year
|
Agriculture
|
Manufacturing
|
Services
|
Agriculture
|
Manufacturing
|
Services
|
1994-2000
|
4.2%
|
7.3%
|
9.4%
|
2.6%
|
7%
|
7.9%
|
2000-2010
|
2.4%
|
7.1%
|
10.1%
|
2.1%
|
7.4%
|
8.5%
|
2012-2020
|
3.3%
|
6.6%
|
6.5%
|
1.6%
|
8.6%
|
7.9%
|
Source: RBI Handbook of Statistics on Indian States
Notes: (i) For all-India growth,
gross state domestic product was summed across all states for all
available data points. (ii) All growth rates presented are average of
year-on-year annual growth rates.
Per capita consumption expenditure
Let us turn to the growth rate of
monthly per capita consumption expenditure in real terms, based on
National Sample Survey (NSS) reports on household expenditure in urban
and rural areas.
Unfortunately, the last period for
which data are readily available is 2011-12. The 2017-18 NSS report was
circulated briefly and then withdrawn. However, based on the draft
report that was released, we can compare the annual growth rate of
monthly per capita consumption expenditure (after adjusting for
inflation) between 2011-12 and 2017-18 for West Bengal, and the
all-India average. We can compare these, in turn, with figures from
earlier rounds that roughly correspond to the previous two decades,
namely 1993-94 to 1999-2000 and 2001-02 to 2009-10. I present these
findings in Tables 3a and 3b for urban and rural areas.
Table 3a. Monthly per capita consumption expenditure growth (urban)
|
West Bengal
|
All-India
|
Year
|
Growth (nominal)
|
Growth (deflated)
|
Growth (nominal)
|
Growth (deflated)
|
Growth (1994-2000)
|
12.9%
|
4.2%
|
12.7%
|
4%
|
Growth (2002-2010)
|
9.7%
|
3.8%
|
9.7%
|
3.7%
|
Growth (2011-2018)
|
6.9%
|
3.8%
|
7.8%
|
4.7%
|
Sources: RBI Handbook of Statistics on Indian Economy, NSS Surveys. The growth rates are annualised.
Table 3b. Monthly per capita consumption expenditure growth (Rural)
|
West Bengal
|
All-India
|
Year
|
Growth (nominal)
|
Growth (deflated)
|
Growth (nominal)
|
Growth (deflated)
|
Growth (1994-2000)
|
8.6%
|
0.3%
|
10.5%
|
2.3%
|
Growth (2002-2010)
|
8.5%
|
2.4%
|
9.3%
|
3.2%
|
Growth (2011-2018)
|
7.2%
|
5%
|
5.2%
|
3%
|
Sources: RBI Handbook of Statistics on Indian Economy, NSS Surveys. The growth rates are annualised.
For urban areas, the pattern is similar to that of income growth –
the state did better (4.2%) than the national average (4%) between
1993-94 and 1999-2000. Its growth rate fell to 3.8% during the next
decade and stayed the same in the last decade, while the national
average was 3.7% and 4.7%, respectively, in these two decades. To the
extent that urban growth reflects general growth in economic
opportunities, this picture is consistent with the change in the growth
rate of incomes. Clearly, West Bengal has fallen behind more, relative
to the national average, over the last decade.The
picture changes, however, if we look at per capita consumption
expenditure in rural areas. Between 1993-94 and 1999-2000, West Bengal’s
growth was 0.3%, which was well below the national average of 2.3%.
During the next decade, there was some improvement both at the state
level (2.4%) and the national level (3.2%) but West Bengal was still
trailing behind the national average. However, in the last decade, West
Bengal’s growth rate shot up to 5%, well above the national average of
3%.
Poverty
In 1999-2000, 27% of the population
in West Bengal were below the poverty line while the national average
was 26.7%. During the next decade, poverty fell by 7 percentage points
to 20% in the state, while the national average fell to 22%. However, in
the last decade poverty fell to 14% in the state (similar to the drop
in the previous decade) while nationally, poverty went up marginally to
23%.
Table 4. Percentage of population below the poverty line
|
1999-2000
|
2011-12
|
2017-18
|
2000-2012 change
|
2012-2018 change
|
West Bengal
|
27
|
20
|
14
|
-7
|
-6
|
All India
|
26.1
|
21.9
|
22.8
|
-4.2
|
0.9
|
Sources: Various NSS reports, Bhattacharya and Devulapalli (2019) for the 2017-18 figures.
Concluding remarks
These figures suggest that, despite
the state’s lack of economic dynamism, the rate of growth of purchasing
power in rural areas of West Bengal has been higher than the national
average. There could be several factors behind this. As we saw, the rate
of agricultural growth was higher in the state over the last decade.
The state government’s various transfer programmes, such as the Kanyashree or Krishak Bandhu or Yuvashree
could also have played a role. This has to be balanced against the
perceptions of corruption, mismanagement, and political repression that
seem to be driving an anti-incumbency headwind against the TMC.
How the election results turn out
will depend on how these factors stack up against the promise of change
offered by the Bharatiya Janata Party (BJP) emphasising growth as
opposed to doles, given its less than stellar economic record at the
national level, and how big a role identity politics based on religion
and caste – which has certainly been much more salient than in any other
campaign in recent memory – plays out. The chaos and misery unleashed by Covid-19, as well as the cyclone Amphan –
all in the last 12 months – have introduced a degree of
unpredictability. However, given that 72% of people in the state live in
rural areas, the fact that the rural economy in the state over the last
decade has outperformed the national average – a fact that has almost
gone unnoticed – might end up playing an important role.
This post draws on two shorter articles published in the Hindustan Times and NDTV.com. The author gratefully acknowledges excellent research assistance by Ramya Raghavan.
Further Reading
- Bhattacharya, P and S Devulapalli (2019), ‘India’s rural poverty has shot up’, Mint, 3 December.
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