Kolkata: West Bengal maintains connectivity to 8% of India’s landmass in the Northeast, which shares borders with China and Myanmar, among others. However, the geopolitically significant state has been in steady decline over the past six decades. There have also been demographic changes. The result of the parliamentary elections is therefore crucial – the new government in the state would have to step on the gas to attract investment in manufacturing while also investing in human resources and infrastructure. In short, the difficult task is to fulfill the aspirations of the people by restoring growth.
Pivot to low skills
The ‘Bhadrolok’ or upper class groups of Calcutta were embarrassed to read about the rest of India complaining about the lack of domestic help as Bengal polled 92% in the two-phase survey. From exporting the meritorious, a trend that started during the Naxalist era in the 1970s and took hold in the 1990s, the state now exports low-skilled workers across the country.
The key lies in Bengal’s decline in per capita income from third in 1961–62 to 24th nationally, according to the EAC-PM working paper, “Relative Economic Performance of Indian States: 1960–61 to 2023–24”.
West Bengal had the third highest relative per capita income among states in 1960-61, with an average income of about 127.5% of the national average, even higher than states like Gujarat, Karnataka, Tamil Nadu, Kerala, etc.
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“However, its growth has failed to keep pace with national trends. As a result, its relative per capita income has fallen to 83.7% in 2023-24, which is lower than traditionally lagging states like Rajasthan and Odisha,” the paper said.
In fiscal year 2025, per capita income at current prices was ₹181,786 according to India’s Department of Statistics, which is well below the national average ₹2,34,859. Of the four major states that have just completed polls, only West Bengal’s revenue was higher than Assam’s.
Anecdotal evidence suggests that agricultural wages are lower in West Bengal compared to wealthier states. So it’s no wonder that Bengalis crowd out low-skilled labor markets, from Kashmir to Kanyakumari.
Prominent in decline
Bengal has been a leading state in population control and now ranks among the states with India’s lowest Total Fertility Rate (TFR).
According to an article in the Economic & Political Weekly, published in 2024, West Bengal has an alarming TFR of 1.4, “posing a threat to sustainable population growth”. According to the fifth round of the National Family Health Survey (NFHS) conducted by the MoHFW in 2019-21, West Bengal’s fertility rate was 1.6 children per woman, which is lower than India’s TFR of 2.0.
A TFR of 2.1 is considered the reproductive level of fertility—the average number of children a woman would need to maintain a stable population size from one generation to the next.
The population began to shrink in the cities, starting with Calcutta. Figures for the city have not been released, but state health officials say Kolkata’s TFR was 1.1. Economist Sanjeev Sanyal believes urban Bengal is at 1.2, similar to Japan.
Meanwhile, the aspirations of at least two generations of families have remained unfulfilled because growth has not been triggered. In the last 13 years, West Bengal’s real GDP growth rate has been lower than the national average on 11 occasions, according to statistics department data.
The policy sponsored a suboptimal support-oriented life. There are plenty of jobs, the state government claims. He forgets to point out that they are low-paying and the prospects for upward mobility are limited. In other words, even though the unemployment rate according to the Periodic Labor Force Survey is lower than the national average, it does not reflect underemployment or the state’s wage crisis.
A struggling rural economy
Incumbent Mamata Banerjee is not responsible for the decline in the state’s economic fortunes for more than half a century. But it is responsible for not taking action to stop the trend. The ruined rural economy is an example of this. Jyoti Basu government of CPI(M) fragmented the land in 1977. It brought temporary equality. Today, small plots have become uneconomical.
A strict land ceiling and the shareholding rule limit the prospects for land consolidation. The poor give land to the rich on annual rent. The rich do everything to keep it under their control, but in the absence of ownership, they do not make large capital expenditures. Crop diversification and value creation prospects suffer.
Buddhadeb Bhattacharjee’s CPI(M) government tried to reverse the trend by allowing corporate entry. His party blocked it. Mamata Banerjee does not want to upset the status quo. The BJP has some firm promises for the agriculture sector – the key ones are ₹3,100 per quintal minimum support price (MSP) for paddy, identical to FCI rates for procurement from Punjab and a fair price for potato farmers.
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Politics minus industry
Industry has been leaving Bengal since the late 1960s. The arrival of the left in 1977 escalated the whole process. Buddhadeb Bhattacharjee tried to turn the wheel. Mamata Banerjee rose to power at the sacrifice. It even rejected the prized IT SEZ investment. The last decade was exceptional as industrialization virtually disappeared from the political discourse before the BJP revived the agenda in its 2026 manifesto. The saffron party promised to build industrial hubs on ready land available in the steel city of Durgapur, the port city of Haldia and Tata Nano famous Singur. This is certainly doable but not easy as it would take a long time for investors to get back to the state that haunted them in the phases. Any positive impact may take at least a decade to reverberate.
West Bengal had the lowest share of industry in the economy in 2024-25 among the four states that went to polls. With a 21.6% share in current prices, the state’s industrial pie is lower than Assam (36.3%), Tamil Nadu (33.4%) and Kerala (23.9%).
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The treasury is empty
In a bizarre decision in 2025, West Bengal retrospectively scrapped all industrial incentive schemes offered to businesses over the last three decades. The trigger is a lack of resources. Lack of industries and low revenue limited the scope of the central share of the tax. Self-tax collection (approximately 45%) is disproportionately dependent on the sale of spirits for growth. And the growth of own income, an indicator of the state’s ability to generate income, is low.
Revenue buoyancy is the elasticity of a government’s revenue with respect to its GDP. A revenue increase of less than 1 means that the percentage increase in the state’s GDP was accompanied by less than the percentage increase in the state’s revenue. “In the case of the state of West Bengal, the growth in total revenue during the period under consideration was largely less than 1, and even negative in 2019-20 and 2020-21,” said the document assessing the state’s finances for the period 2012-13 to 2023-24.
Mamata Banerjee therefore tried to run her patronage economy on limited resources. Moreover, due to competition with the Centre, it has replaced central schemes like Ayushman Bharat with its own. This increased the pressure on public finances. Trinamool has now increased offers of support in this election while BJP has doubled it. This means continued pressure in the coming days.
Meanwhile, the state government’s outstanding liabilities are a good 10 percentage points higher than those of a relatively healthier state like Tamil Nadu.
A new government, a new chief minister and a new finance minister would have their hands full, balancing aspirations with fiscal prudence.
The author is a prominent journalist and public policy analyst.
