What will happen to Bengal?

“Dada, amader Bengal er ki hobe”? (What will happen to Bengal) ask haggard businessmen, (read Marwari businessmen) with anxiety writ large on their faces, wherever I go these days. And the reasons are not far to seek.

  • The treasury is empty with the state hovering dangerously near bankruptcy.
  •  The Government has walked out of the ruling coalition in the Center, thereby abdicating the chance of negotiating any financial package for the bail out
  • There are no central ministries to offer sops or the attendant benefits
  • The state Government is out to prove that it is more pro poor than the left, in the process sending out wrong signals to the industry
  • Land acquisition continues as the biggest hindrance ion the path of industrialisation
  • The absence of son-of-soil industrialists – people who will invest for the love of the state, complicating matters
  • A class of traders, pampered by the left and turned into industrialists powered by illegally mined “disco” coal and a supported by a complete blind eye to their blatant infringements (remember AMRI) falling like ninepins post change in governance
  • No Greenfield mega project (like an integrated steel plant) in the pipeline
  • The decay, dormancy and death of the riverine port system  and the outright despondency in Haldia
  • Lack of even the willingness to address the issues and the even the presence of minds who can initiate a dialogue on matters economic or deliberate thereon.

What exactly is happening? Stumped for an answer, I approached Pawan Ruia, the Chairman of the Ruia Group and one of the finest (sharpest) minds in business. What is ailing Bengal? Why are so many people, who voted so overwhelmingly for change, are disillusioned so early on? Is the fear of a meltdown real, or is it being spread by the enemies of the state with mischievous intent?

Not wanting to be drawn into a political debate and never sort of willing to pick up a chance to propagate his life view, what Pawan Ruia told me, needs urgent and immediate comprehension.

“In any typical demand supply equilibrium, a natural price is arrived at. If you force the price artificially down, while the demand will remain latent, the supply will naturally go down. Instead of creating more demand, which in its wake will create supplies, you are actually forcing the economy into regression.”

“There is no incentive for capital to create production capacities to augment supplies as the returns are neither assured, nor lucrative. With no investment, there is no creation of fresh wealth. With no creation of fresh wealth, there is no distribution of new wealth. Forget about the multiplier effects, your economy is in fact shrinking in real terms. A few constructions here and there and an unnatural emphasis to pass of service sector earnings as core sector ones may help you window dress but in effect, the Emperor has no clothes.”

What is the way out? Pawan Ruia refused to answer, stating that often, answers to such economic riddles can be found only in the realms of politics. I guess I’ll have to ask Dinesh Trivedi!

– Chawm Ganguly