Perspective of Rate of Economic Growth in West Bengal-an Investigation since 1950s ?>

Perspective of Rate of Economic Growth in West Bengal-an Investigation since 1950s

Dilip Kumar Saha

Abstract:
India became free from the clutch of British Colonialism in the year 1947 inheriting a very remarkable low rate of economic growth. For this the then nation builders gave notable emphasis to accelerate the rate of economic growth of Indian politico-economic system and formed different states by means of formulating and implementing five years economic plans since the year 1951. And till today 12 such plans have been formulated and implemented.
The state economy of West Bengal being a sub-system under this politico-economic system has taken share in the stated planned growth process. Besides this, sub-system has also implemented a lot of economic schemes and programmed at its own capacity since the fore-mentioned year to achieve accelerated rate of economic growth. Presently at various levels of the society in West Bengal, the rate of growth of the state economy of West Bengal has been a matter of theoretical debate.
However, an economy has whether been receding or forwarding economically may be unearthed with the help of taking an account of the movement of its rate of growth overtime. So, in connection with the stated issue the problem to be studied here is to search out the prospect of growth performance of the state economy of West Bengal since the inception of first five year plan. More categorically whether the rate of economic growth is retarding or accelerating is the question to be answered within the periphery of the present study.

Key words: Rate of economic growth, agriculture, industrial growth, per capita income, plans.

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Introduction
India became free from the clutch of British Colonialism in the year 1947 inheriting a very remarkable low rate of economic growth. For this the then nation builders gave notable emphasis to accelerate the rate of economic growth of Indian politico-economic system and formed different states by means of formulating and implementing five years economic plans since the year 1951. And till today twelve such plans have been formulated and implemented.

Objectives
The main objectives of this study are:
(a) To depict brief overview on the socio-economic profile of West Bengal.
(b) To present a review on the existing literature concerned to this type of problem.
(c) To analyze the sectoral composition of State Domestic Product in order to identify the major economic sectors
as well as activities of the state economy of West Bengal.
(d) To study the rate of growth of agricultural activity in West Bengal.
(e) To unveil the growth performance of industrial activity.
(f) To examine the rate of growth of State Domestic Product and per capita income.
(g) To search out inter temporal economic position of West Bengal to other states in India.
(h) To mark out broad based findings and to draw conclusion.

Methodology
The entire work will be carried out on the basis of secondary sources of information; statistical tables along with some other types of statistical techniques will be used in the study subject to the availability and the nature of the data.

Data is available with base years at 1970-80, 1980-90, 2004-05 to2012-13(A) and 2014-15(constant). Converting from one base to another base is not a straight methodology. This is so because when data is converted, the individual components would vary drastically if only composite figures are taken. Similarly if individual components are converted individually, the composite values change. Also, long term doesn’t reflect the performance effectively. So the methodology followed here is as follows:

(a) Series wise absolute values are taken and growth rates are analyzed for real GSDP.
(b) As the values of GSDP are not available in 1970 series, NSDP values are analyzed.
(c) As the current values can be easily converted, the long term evolution is analyzed on the basis of current
values of GSDP.
(d) As growth percentage remains constant irrespective of bases, real GDP growth rate is also analyzed for long
run.

Growth Performance
The State Domestic Product (SDP) at factor cost is regarded as the important single economic indicator to measure the growth and pattern of economic development of a state. The structure of state economy and its performance by economic activity can be looked upon by the estimates of its gross/net State Domestic Product by different sectors. The per capita income is a useful measure of the prosperity of an economy.

In West Bengal, the overall economic growth rate improved in the 1980s and accelerated further in the 1990s as compared to the performance in the 1970s. The rate of growth of the State economy after the 1980s (1991-2006) had been nearly double the rate prevailed in the 1970s. It went up from 3% to almost 6%.
West Bengal performed better in agriculture since the early 1980s. According to the Planning Commission Report, the state started to lose its performance in manufacturing growth since the mid 1960s. But it can be seen that the rate of manufacturing growth increased after the mid 1990s.
During late 1970s and early 1980s the growth rates of West Bengal were rapid though they were in accordance with country’s growth rate. The rapidity shows greater contribution to GDP and heavy dependence on primary sector. The contribution of GSDP of West Bengal is 10.38%. The Economic Review
West Bengal shows how growth rate of West Bengal has been varied on a compounded on 5-yearly basis. It shows West Bengal was doing well during the period 1970-75, 1980-85, 1990-2000, 2005-2012 and 2014-15. The country performed at a much better pace during 1990s and 2014-15. Of late it can be seen that the economic growth was slower in West Bengal that India’s growth pace during 2004-08.

Manufacturing in West Bengal grew at around the rates of 2% and 3% respectively during the 1970s and 1980s and the rate improved to 6.6% during 1991-2006. The growth performance of this sector turned better after the mid 1980s compared to the period of state control.

The slow growth of manufacturing in the eastern part of the country, particularly in West Bengal, was a damaging consequence of the license permit raj. The policy of equalizing the prices of coal and steel to the loss of comparative advantage of resource-rich states such as West Bengal, Bihar, Orissa and M.P. was reported by Planning Commission Survey.

Industrial growth in West Bengal as in other constituent states in India, has largely been determined by the States Economic Policy adopted by the Central Govt., the allocation of central public investment industry and infrastructure, the allocation of credit by Banks and term lending institutions under the control of the Central Govt. and general attitude of large business houses and multinational corporations towards investment in the particular states.

The growth performance of West Bengal has outperformed India’s growth in agricultural sector. The agricultural sector saw a growth of 19.95 per cent (nominal) while India’s average was at around 9.45 per cent but in real terms, we didn’t see so much of growth in this sector. That can be attributed to high food inflation in the country. But still as per RBI Economic Review for 2011-2012, West Bengal, Bihar, and Jharkhand registered significant increase in yielding production and cultivated area, Bengal is the largest producer of rice in the country. Though there is spectacular growth in agriculture, the growth in other sectors was below average.

The growth of the service sector is a subject of much discussion. Income from the service sector has been growing at faster rate since the early 1990s. A careful observation at component break-up of GSDP shows that the height growth of services income is largely due to the rapid growth income from trade-related activities followed by Banking and financial services. The average of PCI during 2005-06 to 2012-13 (A) is 6.16%.

In recent years West Bengal’s manufacturing and agricultural sector performance has come down drastically. But services sector still plays a major role. In fact this sector did well during the years of recent global slump also. In the years before 2007-08, India was growing at a very fast pace. But West Bengal was not able to perform at that pace. This can be attributed to the Govt. that is there for 35 years in rule. As a result, we can also see that its overall contribution to GDP has come down.

The structure of the state economy during the period from 2004-05 to 2012-13(A), is observed that the primary sector reduced from 26.22% in 2004-05 to 17.42% in 2012-13(A). The contribution of the secondary sector was more or less stable during this period. However, a remarkable change was observed in the contribution of the tertiary sector. It was 55.69% in 2004-05 which shot up to 66.83% in 2012-13(A). So the tertiary sector is presently dominating the state economy.

The growth of service sector in the ninth and eleventh plan period was higher than the growth of agriculture and allied sector and industry sector. In the tenth plan period, the growth in the industry sector was the highest among the other sectors. In general, overall growth in the eleventh plan period was higher than the growth in the ninth and tenth plan period.

West Bengal draws rosy picture in 2014-15. The Economic Review said that the state registered a growth of 10.48 per cent in 2014-15 (at constant price) in comparison to national estimate of 7.5 per cent. The survey presented that per capita income of the state had jumped by 12.84 per cent in 2014-15, while the same for India was 6.1 per cent. The review shows that the industrial growth in West Bengal is 8.34 per cent as compared to India’s industrial growth 5.6 per cent. Increase in agriculture, forestry and fishery in 2014-15 is 6.49 per cent as compared to national estimate of 1.1 per cent.

The state received Rs 2, 43,100 cores worth of investment proposals at the Bengal Global Business Summit, the survey said. The review also highlighted food grain production of 173.37 Lake MT till now for the current fiscal, marginally higher from 171.56 lake MT registered in 2013-14. In promoting education, the review noted that 28 new primary, 329 upper primary schools were set up. A total of 192 secondary schools were upgraded to higher secondary and 53 junior schools were upgraded to secondary schools.
The’ Kanyashree Prakalpa’ which is one of the flagship programme of the State Government targeting well-being of girl child has been enrollment of 21 lake girls till December 4, 2014.

The review also highlighted construction of two new 500 MW thermal power units, expected to commence production in 2015-16. Bengal is surging ahead. The recent figures make it clear that Bengal offers a golden investment opportunity. While land acquisition became an issue a few years ago, it was no more a problem with plenty being available for big and small industries. The government believes the perception was changing and “investment will come over a period of time.” The performance of different sectors of the state economy of West Bengal in different plan period is shown in various tables and grapes:-

The West Bengal draws rosy picture in 2014-15 as compared to India. Annual Growth of NSDP of West Bengal at constant prices (2004-05):-

P=provisional, Q=Quick, A=Advance

Source: Bureau of Applied Economics & Statistics, Govt. of West Bengal.

The State envisaged an annual average growth of 7.21 per cent in its NSDP at constant prices during 2005-06 to 2012-13(A). It is observed from the table that the average growth of the secondary sector comprising manufacturing, electricity, gas and water supply and construction during the same period was 5.49 per cent along with 9.68 per cent growth in tertiary sector of the state economy. The average growth in primary sector is 1.90 per cent which was low due to negative growth of agriculture in 2008-09 and 2010-11. The rate of growth of per capita income of West Bengal, an indicator of well being of the people, at constant 2004-05 prices was above 5 per cent during the last seven years except for 2008-09. The average growth of PCI during 2005-06 to 2012-13(A is 6.16 per cent.

Average growth of GSDP at constant price (2004-05) in five year plan (percent):

Sector wise average growth rates in 9th plan period (1997-2002), 10th plan period (2002-2007) and 11th plan period (227-12) have been furnished in the above.

It shows that growth of service sector in the 9th & 11th plan period was higher than the growth of agriculture and allied sector, Industry sector in the 10th plan period, the growth in the industry sector was the highest among the other sectors. In general, overall growth in 11th plan period was higher than the growth in 9th and 10th plan period.

Percentage share of different sectors in total NSDP at constant (2004-05) prices:

Percentage share of NSDP at constant (2004-05) prices of different sub-sector in primary, secondary and tertiary sectors for the period from 2004-05 to 2012-13(A) is given in this table. From the table, it is observed that in the primary sector the percentage share of agriculture is the highest in the range of 76-78 per cent for all the years followed by the tertiary in the secondary sector, the percentage share of the construction sector is the highest, although its share has decreased over the years except at advance estimate in 2012-13. The share of unregistered manufacturing sector was higher than the registered manufacturing sector, in the tertiary sector contribution of communication sector is increasing gradually.

Growth Performance Long Term

This tables shows how West Bengal growth rate has varied on a compounded on 5-yearly basis. It shows West Bengal was doing well in during periods 1970-75, 1980-85, 1990-2000, and again 2005-12.

Sectoral Composition of NSDP of Broad Economic Activities at Constant Price (2004-05)

The following chart reveals that sectoral contribution to NSDP at constant price (2004-05) shows decling trend in Agriculture and Allied and Industry sector but contribution of service sector in the State income plays an important role after 1980s.

Growth of GSDP and GDP of West Bengal and India at constant price (2004-05)

The Gross Domestic Product (GDP) for all India at factor cost at constant price (2004-05) in the year 2011-12 (Q) is estimated at 52,43,583.00 crores where the contribution of GSDP of W.B. is 10.38 percent.

In this figure growth of GSDP at constant price (2004-05), shows lower than national GDP up to the year 2010-11 and higher from 2011-12 (Q) onwards.

The Gross Domestic Product (GDP) for all India at factor cost at constant price (2004-05) in the year 2011-12 (Q) is estimated at 52,43,583.00 crores where the contribution of GSDP of W.B. is 10.38 percent.

In this figure growth of GSDP at constant price (2004-05), shows lower than national GDP up to the year 2010-11 and higher from 2011-12 (Q) onwards.

Hypothesis
The Gross Domestic Product (GDP) for all India at factor cost at constant price (2004-05) in the year 2011-12 (Q) is estimated at 52,43,583.00 crores where the contribution of GSDP of W.B. is 10.38 percent.

In this figure growth of GSDP at constant price (2004-05), shows lower than national GDP up to the year 2010-11 and higher from 2011-12 (Q) onwards.

(a)Primary sector is the major economic sector and agriculture is a major economic activity.

(b)The state started to lose its performance in manufacturing growth since the mid 1960s.

(c)West Bengal performed better in agriculture since the early 1980s.

(d)The state economy was slower that India’s growth pace during 2004-08.

(e)The growth of the service sector has been growing at faster rate since the early 1990s.

(f)The height growth of services income is already due to the rapid growth income from trade related activities.

(g)The rate of growth of per capita income of West Bengal has been higher than national growth.

(h)In West Bengal, the overall economic growth rate improved in the 1980s, and accelerated further in 1990s.

(i)The expansion of services sector is mainly the major reason for the growth of the state economy. And, the
tertiary sector is presently dominating the state economy.
(j)The contribution of the secondary sector was more or less stable during 2004-05 to 2012-13(A).

(k)The Economic Review said that the state registered a growth of 10.48 per cent in 2014-15 (at constant price) in
comparison to national estimate of 7.5 per cent.

(l)As a result its overall contribution to GDP is growing.

Significance
This study would signify the efficacy of the Govt. as well as political parties forming it in different periods, with respect to the economic growth aspect of the state economy.

There remain contradictions between economic growth and collective view of welfare of the society. But this is very much recent phenomenon and mostly true in the cases of developed nations of the world. In the context of a particular region of a developing nation and the nation as a whole economic growth possesses a lot of significance. All-round social development of such a region and the nation largely hinges upon the state of the rate of economic growth

As it may be pointed out in a very simplistic manner that the higher the rate of economic growth the higher will be the level of employment of unutilized resources and this will direct a society to move towards higher and higher socio- economic levels in a recurrent way.

Conclusion
So, for this, the empirical investigations correspond to the objectives set out has critical importance. Form the results of this investigation more or less proper prospect of the economy dynamics of the state economy of West Bengal is likely to be visible on the one hand and on the other more appropriate as well as rational policies, plans and programmed may be formulated, if necessary. That is this exercise, may contribute something more in the policy aspect of the planned growth and development process not only of West Bengal but also of India as whole.

Bibliography
Ahluwalia, I.J. (1984), ‘Industrial Growth in India stagnation since the mid-sixties’ Delhi Oxford University press, Bombay, Calcutta, Madras, India.

Bag chi, A. K. and Banerjee , N. (1981), ‘Change and Choice in Indian Industry’s published for Centre for Studies in Social Science, Calcutta.

Basu, K.(1989)’, West Bengal Economy- past, present and future’—First Edition, Calcutta,1989, published by Fima Pvt. Ltd.

Ray, S. K.(1983), “Growth and Instability in Indian Agriculture”, Institute of Economics Growth, Delhi.
Saha, A. and Swaminathan, M.(1994), “ Agricultural Growth in West Bengal in the 1980s “A disaggregation by District in Crops”, EPW.

Saha, B. K.(1995), “Growth Performance of Agriculture in Cooch Behar District of West Bengal” Novum Organum, a half-yearly Journal of Social Science, June 1995, vol.7, No2.
Economic Review West Bengal.

The writer is the Assistant Professor, Dilip Kumar Saha, Department of economics, Halakura College, Halakura, Dhubri, Assam. (India)

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