West Bengal was the richest Indian state In 1960

Friday, April 2, 2021

/ by mansuralisaha

The News Cover: Hundred years after the fall of the Mughal Empire, North India witnessed frequent rebellious uprisings. The torments and atrocities of the East India Company had made people’s lives miserable. Before East India Company set foot in India, Bengal’s textile industry was renowned worldwide. In the late 15th century, a Portuguese traveler talked about Bengal’s cotton and sugar export. He mentioned that clothes manufactured in Bengal were of the finest quality. Marco Polo, a popular explorer, also talked about Bengal’s cotton. 

Europeans liked the muslin of Dhaka and Sonargaon, and the malmal of Malda and Shantipur. They praised malmal asserting that there’s nothing that compares to it in the world. By 1720, around 1.5 million tons of Bengali textiles were exported to Europe. The industries in Bengal were severely affected by colonialism and partition. The industrial revolution of Britain introduced new technology. And Bengal’s textile industry couldn’t compete with it.

 After partition, the jute factories that manufactured jute clothes still operated in Bengal. But the mills that actually created jute were located in East Pakistan. And after partition, it became difficult for these factories to acquire raw jute. With the worsening conditions, East Pakistan imposed export duties on raw jute. Due to this, the quality of jute declined in India while its price soared. Despite partition and colonialism, West Bengal’s economy remained strong. In 1951, 

West Bengal’s literacy rate was second only to Kerala’s. In the 1960s, West Bengal’s economic performance was better than that of Maharashtra’s. You can mark that Bengal’s Net State Domestic Product (NSDP) was better than Maharashtra’s and best when compared to the rest of India. But over time, Maharashtra overtook Bengal. And the gap between them widened. Between 1960 and 2013, Bengal’s growth rate was lower than the all-India growth rate. So what happened? The key factor that contributed to the downturn of Bengal’s economy was the decline in its industry. In 1955, 

Bengal accounted for 24% of India’s industrial production and 27% of the industrial employment of the country. But by 2007, these figures fell to 3.9% and 4.9%. Not just that, even the contribution of the industry to Bengal’s economy also fell. For any economy, there’re broadly three sectors – agriculture, industry, and services. In 1960, the industries contributed 20% to Bengal and Maharashtra’s economy. But for Bengal, the figure dipped between 1960 and 1995. 

Several economists conducted researches to understand this industrial decline. And we will study this research in order to answer this question: What happened to Bengal’s industries after the 1950s? To answer this question, Aditya Raychaudhari and Gautam Kumar Basu divided Bengal’s economy into three phases. If we consider the time period of 1965 onwards, three factors are responsible for the condition of Bengal’s industries. The first factor is the India-Pakistan wars that took place in 1965 and 1971. These wars reduced the government’s investment in the railways. 

As we can see, between 1963 and1976, it decreased by 10%. How was Bengal affected by the cutback in railways investments? Between the 16th and 19th centuries, the textile industry must've dominated Bengal’s economy. But in the 1960s, Bengal’s industry depended more on the engineering industries. In 1965, more people worked for engineering industries as compared to jute industries. Government investment was necessary for the development of engineering industries. The more the government invested in railways, the greater would be the need for engineering industries. 

Because the investment would’ve created the need for building wagons or installing electrical equipment. But this didn’t happen. And it led to the fall of Bengal’s engineering industries and consequently its economy. The second factor was the domination of the Left political parties in Bengal. 1969 state elections were the first elections when CPI(M) won more seats than the Indian National Congress. And the Left parties had a degrading impact on Bengal’s industries. 

As you can see that between 1967 and 1970, the number of industries and the number of people employed in these industries witnessed a sharp decline. Many of you might question: How did the rise of Left parties led to the decline in Bengal’s industry? It was due to the strikes and lockouts. You might want to know the difference between a strike and a lockout. 

A strike takes place when the employees refuse to work. And the lockouts take place when the management refuses to give work. Basu and Raychaudhri showed that between 1967 and 1970, strikes and lockouts increased suddenly. In fact, a researcher showed that as the vote share of Left parties increased, several man-days were lost in strikes and lockouts. Due to this, many companies transferred their plants to other states. And the applications for private investments ceased too. The third factor was the Freight Equalization Policy introduced by the Indian government in 1956. 

Under this policy, railway freight rates for minerals like coal and iron were made similar across the country. This means that if you want to transport coal from Bengal to Maharashtra or from Bengal to Bihar, the railway cost would be the same. What was its impact? The companies that were based in mineral-producing states like Bihar, Odisha, and Bengal, weren’t obliged to remain in those states. They could simply set up manufacturing plants in Maharashtra and Gujarat, that had better facilities and bigger ports. 

That’s why several industries left Bihar, Odisha, Bengal and moved to Maharashtra and Gujarat. We talked about this in a previous video where we discussed why UP and Bihar are so poor. Researchers have shown that this policy had a deprecating impact on the industries of Eastern India. After the emergency in 1975, the Left government ruled Bengal steadily between 1977 and 1991. Jyoti Basu was the chief minister of the state. 

During this time period, two factors were responsible for the sluggish growth of Bengal’s industry. The first factor was the industrial policies announced by the Left government in 1978. Under this policy, the government wanted to support small-scale industries. 

Why? It’s because of the ideology of the Left government. It’s not happy with large-scale industry. It curtails the industry’s influence to increase the power of labor. Due to this, in 1989, while Maharashtra’s small-scale industries employed 67% of the people, the figure for the same in West Bengal was 89%. Researchers suggest that the small-scale industries succeeded at providing jobs, but it hampered the growth of local industries due to their poor quality, service, and delivery. The second factor was the persisting strikes and lockouts. As compared to 1969,

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