Major Constraints in Industrial Growth of West Bengal

Transcription

1 319 CHAPTER 8 Major Constraints in Industrial Growth of West Bengal 8.1. Introduction To discuss the constraints in industrial growth of West Bengal, we shall divide the post-independence period into three broad sub-periods. These are: (i) , (ii) and (iii) Present period. Different sets of factors have worked as inducements or constraints in different periods, with varying degrees of importance. Some factors may be present in all the three sub-periods. The periodization is however a bit arbitrary, though there is some argument in this periodization. We know that during the colonial era. West Bengal was the leading industrialized province. It continued to prosper in the post-independence period and that continued up to mid-1960s when the entire Indian economy experienced an industrial recession. West Bengal was, like many other states, hard-hit by this recession. The decline in its dominance in the industrial scene of India started more or less from this period. Hence, we take the period as the first which may be called, with a risk of sweeping generalization, the period of prosperity. Again, whue considering the pattern of industrial growth in West Bengal, we have mentioned that West Bengal could not recover from the industrial recession and the related political turmoil of the state of the late 1960s for a long period. For a period of 25 years or so, the state fared very badly in terms of its industrial investment, output and employment. The average rate of growth of industrial output during was only about 2.5 per cent. Hence we have included these years in the second period. This period may be termed as the period of stagnation in the history of industrial development of West Bengal. After 1992 or so. West Bengal came out of its

2 320 industrial stagnation and registered a steady growth which still continues and its growth rate of industrial output is accelerating. Hence we like to consider the period 1992 onwards as a separate period. This period may be termed as the period of revival and recovery, if one has reservation to call it prosperity. Let us try to point out the major factors/constraints working behind the type of industrial growth specific to each period The Period from 1947 to 1965 Bengal was the wealthiest province at the time of arrival of the British- India. After the battle of Plassey in 1757, when Clive marched triumphantly into Murshidabad, the capital city of Sube-Bangla (Bengal and parts of Bihar, Orissa and Jharkhand), he was struck by the affluence of the city. It was Clive who started the British plunder of Bengal which gradually changed its forms and continued till Our Independence in 1947 also brought partition of the country and Bengal was divided into West Bengal and East Bengal (or East Paskistan, a part of Pakistan) and in the process, the economy of West Bengal was worst affected. At the time of Independence, West Bengal was industrially the most developed state in India. Kolkata was, so to say, the industrial capital of India. In 1947, West Bengal had the highest per capita income among the states. In literacy, she was second only to Kerala. In installed electric power capacity and per capita consumption, she was much ahead of other states. The state of West Bengal had easy access to industrial raw materials and had business connections and an infrastructure to make progress faster than any other state. Calcutta was the busiest city in India and its port handled much more cargo than even Bombay. In , the net domestic product (at prices) of West Bengal was Rs. 1, crores, i.e., 11.6 per cent of the total NDP of the country. This share was highest among the states, as shown in Table 8.1 given on the next page.

3 321 Table 8.1 Net Domestic Product of Selected States during and (at prices) States NDPin , (Rs. Cr.) Percentage share in NDP in (Rs. Cr.) Percentage increase over West Bengal 1, Maharasthra 1, Tamil Nadu Punjab - Haryana Gujarat Bihar Source: (1) Agony of West Bengal, Ranajit Roy (1972) (2) Focus on West Bengal, Article by Subir Choudhury (1972) Further, in 1951, West Bengal had the highest number of registered factories followed by the composite state of Madras (roughly Tamil Nadu and Andhra) and Bombay (Maharasthra and Gujarat). The number of persons employed in factories in that year was 475,084 in West Bengal, second to Bombay (537,969). In the year , the industrial production of the state was about 25 per cent of the total industrial production of the country. The locational advantage helped industries grow in and around Kolkata. The infrastructure facilities, wide market, availability of skilled personnel, etc. were some of the reasons for rapid industrialization in the state during ' The economy of West Bengal experienced a fairly steady growth during the First and the Second Five Year Plans. But since the period of the Third Five Year Plan, the economy of the state experienced a gradual deceleration. As Table 8.1 indicates, during to , the percentage growth of West Bengal has been the lowest compared to several other states. Many factories have been attributed to this economic decline. Some think that partition deprived the state of fertile lands and also provided less land in

4 322 proportion to its population. It also caused a scarcity of good quality raw jute needed for its large jute industry. Further, partition caused a huge migration from erstwhile East Bengal which created much economic burden to the state. Still, due to its initial developed position, the state fared quite well up to But after that its pace of growth slowed down. Loss of fertile land, influx of refugees, some bad monsoon years, step-motherly attitude of the centre in some cases, indifferent attitude of the state government in some economic matters may be referred to as some of the causes of the starting of a fall or decline of the state. To quote Ranajit Roy (1972), Thanks to the Union Government's discriminatory policy and the State Government's xmcertain stand, the refugees have become West Bengal's most explosive social and political problem. To this has been added over all the plan periods a steadily increasing urban and rural unemployment.... No wonder. West Bengal has fallen into what appears to be a perpetual and killing crisis. From mid-1950s. West Bengal began to lose its position, other states, especially Maharashtra, Gujarat, Karnataka, Punjab, Tamil Nadu, began to grow more rapidly in industrialization than West Bengal. The contribution of West Bengal to national product came down to 10 per cent in , 8.76 per cent in However, the share increased to 10.2 per cent in but again slipped to 9 per cent in In , West Bengal possessed the first position producing about 25 per cent of the total industrial production of the country. It came down to 23 per cent in and only to 11 per cent in and further to 8.6 per cent in Thus, by 1965, West Bengal's supreme position in the industrial sector of the national economy was lost. And this decline continued at least up to We shall now turn to this period of decline ( ) of the state The Period from 1966 to 1991 The recession of mid4960s affected the industrial sector of India adversely. Food processing, textiles and engineering goods industries were

5 323 most badly affected. The effect of the recession on West Bengal was most severe and it took more than 25 years to overcome the after-effect of this recession. Among them, again, the engineering goods industries, particularly transport equipment industries were severely affected. Again, among the transport equipment industries, the worest affected was the railway equipment industry. There was a drastic fall in wagon production in the state which nearly wiped out a number of major industrial units in the state. West Bengal dominated the country in engineering industry. The percentage share of West Bengal in the production of engineering goods was 40 per cent in The percentage share of total registered factories was about 30 per cent. But in , this percentage came down to 23.4 per cent. A decade later in , this percentage came down to During this period, the percentage share of productive capital deployed in the engineering industry declined from 28.5 to Similarly, employment percentage in the same period ( ) became almost half from 30.5 to In pharmaceutical industry also. West Bengal had a pioneering position. In 1948, 70 per cent of total drug production was produced in West Bengal. But in , West Bengal's share declined to 10 per cent from 70 per cent. The percentage share was only 8 per cent in In 1966, the paid up capital of all companies in West Bengal was 18.2 per cent of the all-india total. It came down to 14 per cent by 1979, and 12 per cent in Further, industrial investment in the state was very sluggish in the 1970s and 1980s. Data on licences amply show this (Tables 3.12 and 3.13 in chapter 3). This is also corroborated by data on statewise fixed capital per employee in the factory sector. This is shown in Table 8.2. In this table, we have shown the amount of fixed capital per labour in and in in some selected states. The table shows that in West Bengal had the lowest fixed capital per employee among those eight states. In , the rank of West Bengal in terms of fixed capita per employee did not improve

6 324 perceptibly - it was seven among those eight industrial states. Only Andhra Pradesh lagged behind West Bengal. Table 8.2 Fixed Capital per Employee in the Factory Sector in and in some Selected States (in Rs.) State Fixed Capital per Employee Rank Rank West Bengal Maharashtra Gujarat Tamil Nadu Uttar Pradesh Bihar Karnataka Andhra Pradesh Source: Annual Survey of Industries, Relevant Issues. Further, engineering industries in West Bengal had some locational advantage. But the introduction of freight equalization policy for steel and coal in the mid-1950s wiped out this locational advantage. It made new locations for engineering industries, at a distance from steel plants, viable. As a result, new engineering industries began to grow outside West Bengal. Moreover, the engineering industry in West Bengal was dominated by old units while other states had new units or were in the process of establishing new units. While the old units of West Bengal were badly damaged by the recession of mid-1960s, other states could absorb the impact of recession without great damage to their industrial structure. Further, there was large scale retrenchment in West Bengal during the recession. This resulted in severe labour agitation. With this, there was a general political unrest following a steep rise in food prices. All these resulted in very little industrial investment in the state between 1965 and A number of industrial units moved out of the state in this period. West Bengal had the earliest

7 325 industrialization. Its main industries by mid-1960s became relatively old. They badly needed modernization and development. With the lack of modernization, the cost of production became relatively high and it eroded the export competitiveness of West Bengal to other regions. This further narrowed the scope for employment for capital and labour and led to the incidence of capital moving oiit of the state during The situation slightly improved after Units lying closed during , started re-opening. In the textile industry (jute and cotton), employment increased by about 53,000. This was mainly through the opening up of closed units as new textile units were hardly set up in this period. The state goverrunent successfully persuaded the central government to take over the sick giant engineering units. Important among them are Jessop, Burn, Braithwaite and some other companies. These units became sick because of lack of orders from the railways which is under the sole control of the central government. Admittedly, these takeovers prevented considerable loss of employment. But at the same time, it must be mentioned that it was no substitute for investment in large scale central public sector units in the state. According to many authors, the root cause of this industrial decline of West Bengal in the national economy is the partition of Bengal in Just after the partition, lakhs of people from erstwhile East Pakistan crossed the border. About 70 per cent of them concentrated in and around Kolkata. The city could hardly bear the burden of this huge influx. It created many economic, social and political problems. Law and order began to deteriorate. Many industrialists left Kolkata. With the growth of population, the importance of Kolkata as a market increased, it retained its position as an important trading centre, but it lost its relative importance as a producing centre.

8 326 Besides, the jute industry, the main industry of Bengal, was the victim of partition. There was scarcity of good quality raw jute which was produced in the erstwhile East Bengal. The airport and the seaport of Kolkata also lost its relative significance due to partition. It has been alleged by many industrialists, the chambers of commerce of Kolkata and the leftist government of West Bengal that Central Government's discriminatory attitude is responsible for this industrial decline of the state. It is blamed that the Central Government was discriminating against West Bengal in respect of issuing industrial licence, sanctioning of credit, public investment, development of infrastructure, etc. Facts and figures also indicate that. Table 8.3 shows that licences and letters of intent were not easily issued to prospective entrepreneurs who were willing to set up industrial units in this state. In , West Bengal was granted only 21 industrial licences. But in the same year, Maharashtra was granted 96 licences, Gujarat 86, Tamil Nadu 61, and Karnataka 42. In , the number of licences to West Bengal was 71 against 243 to Maharashtra, 142 to Tamil Nadu, 103 to Gujara:t. Table 8.3 Statewise Distribution of Letters of Intent (LI) and Industrial Licences (IL) in Some Major States during to Year States LI IL LI IL LI IL LI IL Maharashtra Tamil Nadu Gujarat Karnataka West Bengal : Source: Quarterly Bui letin of Statistics, Ministry of Industry, Government of India Further, all-india financial institutions have not done justice to West Bengal. New entrepreneurs and the existing industrial units in West Bengal

9 327 were not provided credit as were done by other states by the financial institutions and scheduled commercial banks. As K. Basu (1989) argues, Kolkata is the biggest city in India, but its claim for having the head offices of financial institutions like LICI, IDBI, IFCI, SBI, UTI etc. was denied. Most of the head offices of them are located in Bombay. The locational advantages of head offices were absolutely enjoyed by Maharashtra, Gujarat and other Western States. The Eastern Region including West Bengal was deprived. Our Table 8.4 shows that in , all-india financial institutions disbursed Rs crore in West Bengal, while in that period, they disbursed Rs crore in Maharashtra, Rs crore in Gujarat, Rs crore in Uttar Pradesh, Rs crore in Tamil Nadu, Rs crore in Andhra Pradesh. Form to , total disbursement of credit to West Bengal was Rs crore against Rs crore to Maharashtra. Up to March 1983, while the total credit disbursement to Maharashtra was Rs. 2,442 crore. West Bengal received oruy Rs. 895 crore., Table 8.4 Credit Disbursement by All-India Financial Institutions to Some Major States (Rs. Crs) States Rank Rank Up to Rank to March 'S3 Maharashtra ,442 (21) 1 Gujarat ,555 (12) 2 Tamil Nadu ,162 (10) 3 West Bengal (8) 4 Note: Figures in the bracket are percentage of total. Source: Kalipada Basu (1989) : West Bengal Economy. Thus, West Bengal has not receiyed fair deal from all-india financial institutions and scheduled commercial banks. Similar is the case in regard to the distribution of basic industrial inputs and raw materials. Such inputs and raw materials are under the control of the Centre which has, more often than

10 328 not, followed a discriminatory policy against West Bengal. For example. West Bengal was given only 10 per cent of the total requirement of copper during the initial years of 1960s while Maharashtra got 28 per cent and Gujarat 70 per cent of their requirements^. The state was also heavily subjected to discrimination during 1960's and 1970's in respect of the distribution of cement which is urgently needed for the construction of industrial infrastructure and establishments of factories. Another reason for the industrial deceleration in West Bengal during the period under consideration was the slow growth of industrial infrastructure in West Bengal. During , there was acute power shortage in the state and consequently, frequent load-shedding and low voltage. During this period, there was practically no expansion of railways and no major improvement in road transport. Industrial development depends largely on the infrastructure facilities. But West Bengal, except Kolkata, was backward in this respect at least up to This factor also played a vital negative role in her industrial decline. Another factor behind the sluggishness of the industrial sector during was permit-quota system and the MRTP Act. Under the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, seventy-five industrial houses whose capital exceeded Rs. 20 crore, were identified as monopolists. The Government of India decided not to allow them to expand further. For historical reasons, these monopoly houses dominated in West Bengal. The Central Government did not permit these big industries to invest further in the state. As a result, industrial development of West Bengal was hampered. No doubt. West Bengal was most affected by the MRTP Act. Another factor behind the slow industrial growth during was the deterioration in the relation between employer and the worker. Number of industrial disputes in the state increased remarkably after These disputes, such as, strikes, gheraos, cease works, etc. retarded industrial

11 329 growth of the staste. Owing to this labour unrest, many industrialists decided not to invest in West Bengal and preferred other states where trade unions were not so turbulent and militant. The number of lock-outs increased from 87 in 1966 to 206 in 1967 and 149 in 1968 along with an increase in average duration from 28.0 days in 1966 to 48.2 days in 1967 and 37.9 days in The number of closures increased from 34 in 1966 to 123 in 1967,139 in 1968 and 317 in The figures for work stoppage were 244 in 1966,438 in 1967, 894 in 1969 and 865 in Another setback in the economic development of West Bengal especially in the industrial field was the Naxalite Movement in the state during There was indiscriminate killing of individual persons in the name of Maoism. This created a terror particularly among business community and industrialists. Law and order situation in the state seriously deteriorated during this period. The investors were shaky. Ir\flow of capital was stopped; rather outflow of capital was started. Due to this Naxalite Movement, the economy of the state of West Bengal badly suffered and it took several years to regain the confidence of private investors. Thus, there were many factors in operation for the slow growth of the industrial sector in West Bengal during 1965 to Partition of the state, discriminatory attitude of the Central Government in regard to allocation of licences^ and scarce raw materials and, more importantly, freight equalization policy for steel and coal played havoc for the industrial sector of West Bengal. The problems were cumulated by the state's own miseries in terms of strikes, lock outs and shortfalls in power supply. There were also poor conditions of other infrastructures, such as, roads, ports, sewerage, etc. in the whole of 1970s and all of 1980s. For these reasons, the industrial sector of West Bengal fared very badly during During this period, the state government had played largely a passive role for industrial development. It should have played a positive role which it started to play only in 1990s.

12 330 On the other hand, for India as a whole, there had been considerable spurt in the production of chemical, electronic and light consumer industries following the policy of industrial liberalization and inflow of foreign capital since the middle of 1980s. But in West Bengal, in the absence of large public sector investments during , many of the private industrial houses in West Bengal sought to invest in other parts of the country. The relative industrial backwardness in West Bengal vis-a-vis India as a whole during is due to the interplay of these major factors. However, some changes were occurring after mid-1980s. These changes gradually brought a favourable situation for industrial revival of the state. We have mentioned that the traditional industries in the state, such as, jute, cotton and engineering industries were declining in 1980s. So workers were losing jobs. Hence, trade unions became less aggressive^. Further, in many tripartite discussions, state government was successful in persuading the trade unions to accept some of the terms and conditions imposed by the private investors. This encouraged the private producers to repose faith on a leftist government. They began to believe that the help of the government would be available to settle an industrial dispute. Thus, the ground conditions gradually'became favourable in the early 1990s in the state for its revival. However, above all, there were two major policy changes that brought the winds of change and new light in the so far bleak industrial scenario of West Bengal. One is the new licensing policy of 1991 and the other is the change in freight equalization policy for steel and coal. In the new licensing policy of 1991, the Central Government almost abolished the licensing system. The freight equalization policy for steel and coal was partially abrogated. The first removed the step-motherly attitude of the central government towards the state in allocating licences to private investors. The state government is no longer required to get central

13 331 government approval for ari industrial unit. It gave the state the muchneeded freedom in the industrial sector. And the second, as we have mentioned, was the partial abolition of freight equalization policy for steel and coal. It returned the locational advantage of Eastern India. With these fundamental changes in policy decisions. West Bengal entered a new phase of industrial development. We shall now turn to this phase in the next section The Period from 1992 onwards During 1980s West Bengal's performance in agriculture was very much satisfactory. In fact, the state has been experiencing high growth of agricultural productivity since the late 1970's. This factor has a great contribution in the industrial growth of West Bengal during the period under consideration. Table 8.5 highlights this aspect. Table 8.5 Average Annual Growth Rates of Agricultural Productivity (Yield per Hectare) of Some Major Agricultural Districts of West Bengal Districts Average Annual Growth Rates (over the period ) Bankura 15.3 Burdwan 6.7 Birbhum 14.3 Midnapore 12.6 Purulia 19.0 Hooghly 7.8 Howrah 8.5 Nadia 11.8 Malda Parganas 14.5 Source: Economic Survey, Government of West Bengal, 1991 The table shows the agricultural performance of major agricultural districts of West Bengal. It depicts the fact that the growth rate of agricultural productivity of West Bengal during was quite impressive. Table 8.6 given on the next page conveys the same information.

14 332 Table 8.6 Index of Agricultural Productivity during to in West Bengal (Base: Triennium ending crop year = 100) Year Productivity Index (P) Note: P= Provisional Source : Statistical Abstract, 2005, Bureau of Applied Economics and Statistics, Government of West Bengal, 2005 In Table 8.6 above we have considered growth of agricultural productivity in West Bengal during The table shows that during this period, agricultural productivity in West Bengal has steadily increased. Chart 8.1 Line Diagram showing Index of Agricultural Productivity in West Bengal during to S D C i* > ^ _A_ 3 o 0 s. e 3 3 U c ( B < i; j r Year

15 333 We have shown the index of agricultural productivity during to in West Bengal in the form a line diagram (Chart 8.1) on the previous page. The diagram shows a slow but steady growth in agricultural productivity. Economists have attributed this growth to various factors. Important among them are land reform, good monsoons, better irrigation facilities and use of HYV seeds and fertilizers. Now, in the early 1990s, the Central Government almost abolished the licensing system. It relieved the state of its dependence on the Central Government regarding licences to industrial units. We have also mentioned that the central government partially abrogated the freight equalization policy for steel. This returned the locationaradvantage of West Bengal. With these favourable policy decisions of Central Government together with a long period of good harvests, industrial climate of the state became quite favourable. With this, if one adds the long political stability arid a period of mild inflation, then one cannot escape the conclusion that the situation prevailing during 1990s in West Bengal created the condition most favourable for industrial resurgence. The state government took the opportunity of the situation and began to adopt various favourable proactive policies to attract private capital into the state. It announced a new industrial incentive scheme in In September 1994, it also armounced a new industrial policy. This policy reiterated the government's positive attitude towards private capital. It also implicitly indicated the government's pragmatic approach to the capital-labour relationship. In the past, the state government had mainly approached the Central Government for allocating industrial investment to the state through the licensing system. In the liberalized era of the 1990s, the state government began to approach directly the capitalists to persuade them to invest in the state. This approach removed greatly any remaining hesitation of investing in a leftist-ruled state. Another favourable factor for industrialization in the

16 334 state was the condition of foodgrains production. Between and , the annual average growth rate of foodgrains production in West Bengal was 5.7 per cent. This was the highest among the states in India in that period. These factors have led to a significant increase in industrial investment in West Bengal. During , the state received a huge number of approvals for industrial investment. It also received a good amount of direct foreign investment. The actual implementation of projects in the state during this period has also increased considerably. We have mentioned all these facts in Chapter 3. Thus, after about 25 years of industrial stagnation and decline. West Bengal has registered an industrial revival since mid-1990s. However, some questions have arisen centering the process of industrialization. We know that West Bengal has a very negligible amout of barren land that can be used for these upcoming industrial units. So, for these untis agricultural land is to be used. Here comes the question of land acquisition, eviction of small and marginal farmers, their compensation and rehabilitation, etc. The land acquisition programme in the early months of the year 2007 has created severe unrest and law and order problems in the rural areas of West Bengal. A large number of farmers have tried to resist this land acquisition programme of the state government tooth and nail. Some have also raised the question of food security in the coming years. Some others think that private producers are claiming more land than what they actually require^. These questions may be put in the following way : (i) Who is the central actor during the industrialization process? (ii) What is the desired or optimum sectoral commodity composition of output produced by industrial growth? (iii) Who are benefited from this industrialization? Prof. Bhaduri (2007) thinks that these questions lie at the heart of any process of industrialization. We shall take up these issues in the next section.

17 Gainers and Losers in Industrialization: Search for an Alternative We know that industrialization is not merely an instrument of economic growth. It has an in-built mechanism for distributing the costs and benefits of growth. West Bengal is now going through a process of industrialization at a satisfactory pace. This process is being led by corporations who are private concerns. In this process, the government's role is of a promoter, an agent of private corporations, not one of a regulator between big business houses and poor people. Now, it is being pointed out that industrialization has its costs. But we should keep in mind that the poor and the most marginalized sections of the population are not capable of bearing it. Hence, the private corporations who have huge financial power should be made to bear the costs. But unfortunately, instead of making them bear the costs, the state governments all over India and the Union Government are subsidizing them. These big corporations are being provided with land at concessional rates and other facilities. As a reaction to this policy, people of different regions are now trying to resist this move collectively. We know that land is a state subject. So the state government can acquire land and can even override private property right in land in public interest. Hence land is being acquired by different state governments including government of West Bengal. Land is being acquired in different guises, for mining, for the location of industries, for large estates and information technology parks and, most importantly, for SEZs. Land is the largest, primary source of livelihood in the rural sector. In this type of transfer of land, the gainers are invariably the private corporations and the losers are the ordinary people coimected with land iri many ways, such as, cultivators, agricultural workers, share croppers, bargadars, village artisans, etc. So, the question is whether an alternative model of industrialization more friendly to

18 336 the poor is feasible in today's West Bengal as well as India. To answer this, we should consider the second question. What should be the sectoral composition of India's industrial growth? In the present process of industrialization, land is being taken away from the peasants and given to private corporations. This is the most visible symbol of transfer of resources to the corporations. But, actually, this transfer mechanism is more pervasive. It works systematically against the poor both directly and indirectly. For example, the direct bias, as argues Prof. Amit Bhaduri, is seen in plan allocation. Whereas about 60 per cent of our working population lives in agricultural sector, only 5 per cent of plan allocation is made to agriculture. The indirect bias works pervasively through the pattern of production and consumption promoted by the state. In urban areas, fancy malls, underground metros, flyovers, car racing turf, etc. are being constructed. We take it for granted that these are necessary for efficiency, saving time in travelling, improving the quality of life and even for attracting investment. But we should keep in mind that we need more desperately higher efficiency and better quality of life in rural India where majority of the people lives. Further, these malls, metros, swimming pools, modern stadia, etc. are used by the urban elite people. It leads to uncontrolled urbanization and mega cities which again require huge energy, water and urban housing space. To build up so-called modern cities, we are destroying urban slums without providing any resettlement to slum-dwellers. In order to expand and modernize cities, livelihoods of both urban and rural poor and lower middle class are being destroyed. More flyovers, bigger airports, wider roads, large housing complexes, etc. are taking heavy price from the poor. Majority of ordinary citizens, who do not consume them, also have to pay directly or indirectly for this pattern of consumption. Much resources are spent for these goods and services and v&y little is left for water and electricity to agriculture. As a result, agricultural productivity in our country is very low.

19 337 About 60 per cent of our population is engaged in agriculture. But they contribute only about 25 per cent of national output. Thus/it is clear that per worker productivity in agricultural sector is much lower than the industry and service sectors. This gap is widening over time. The productivity in the sector producing non-agricultural goods consumed by the richer class is very high. Economic consideration will then prescribe transfer of more and more resources to this sector. Hence, rural sector does not get money for its development. On the other hand, the governments, both at the centre and at the state levels, are granting huge tax concessions to SEZs. This fund could have been utilized for the development of rural areas where majority of our population lives. These rural development programmes could create huge employment. Then purchasing power of the rural poor would have increased. That would have sustained long term industrial development which would have broad base of those goods which are demanded by majority people. On the other hand, this corporate-led growth cannot create sufficient employment. It will not be able to make 'Lewisian' transfer of surplus labour from rural to urban sector (Lewis, 1954). These corporations want to maximize profit by reducing costs, particularly labour cost. As a result, in recent past, though India's industrial output has increased at an average rate of 8 per cent, regular employment in the industrial sector has increased only by one per cent. Thus, it is a pattern of, as we have already mentioned, jobless growth. It exploits the agricultural sector and the vast rural economy of the country. Hence, we should search for an alternative kind of industrialization, an alternative path of economic development. That should centre around agricultural and the rural economy. Then our internal market will expand. This will sustain our process of economic development. The corporate-led growth, in spite of its high rate, is unlikely to sustain for long, as this type of growth produces those nonagricultural goods which are consumed by the rich and elite class. Hence a

20 338 programme of rural industrialization is to be sorted out. It should be decentralized, employment oriented and should be implemented through participatory democracy at the local level. Only this type of development can uplift the standard of living of the vast poor. NOTES 1. West Bengal was discriminated against also in respect of steel, zinc, tin, nickel, aluminum, etc. 2. Source : Subodh Banerjee, (1972) ; 'Problems of Economic Development' in Focus on West Bengal. 3. We have presented relevant data in Tables 3.12 and 3.13 in Chapter In many cases they agreed to terms of settlements in late 1980s which they could never accept earlier. 5. Many apprehend that these new investors will use the extra land in building up housing complexes just like promoters in order to earn high profits.