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BW Businessworld

When Economics Lags Politics

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Although it is always harder to predict exact outcome of a general election due to the presence of complex multi-dimensional issues like income, caste, religion- it is almost certain that compared to its performances in earlier polls — the Left Front is expected to fare much worse in the forthcoming Assembly election in West Bengal. The general perception is that the front, especially CPI(M) has been alienated from a wide range of voters and the poll results in recent elections ranging from Parliament to Municipalities ascertain establish dwindling support bases of the ruling coalition of West Bengal, notably in rural areas, which formed their traditional vote bank. Many pundits attribute the left's failure to its mishandling of high profile media events in places like Singur and Nandigram. Others think complacency combined with highhandedness of its leaders and rank and file are factors that led to its decline. Yet some others believe that deviations from its socialist ideals have forced the exodus of dedicated voters and supporters from its fold.

While there is some grain of truth in each of these assertions, the main cause of the erosion of rural base is the rapid deteriorations of economic condition in the rural area together with rising inequalities, lack of public goods and infrastructure vis-a-vis urban Bengal. That is, the left had never dented the urban vote bank with a significant success. Instead, its strength was in the rural area. However, the base is eroding as economic gains have been diminishing in recent times.

All leading indicators glaringly reveal that there has been a tectonic shift in the basic economic well being of people living in rural areas and it all started about a decade ago.  The urban-rural  consumption ratio, in the year 1999-2000 in West Bengal was 1.90. The figure was 1.60 in 1983-84 and 1.70  in 1993-94. This ratio is 1.75 for overall India and 1.47 and 1.62 in the comparable period. In fact, only three other states had greater inequality than West Bengal in terms of rural-urban consumption ratio. The miserable state of the rural poor is also clearly borne out by the relative rankings of incomes generated within districts expressed as a percentage of income in Kolkata. The West Bengal Human Development report for 2004 clearly shows not only the affluent districts of the eighties are slipping in the rank but the further one travels from Kolkata, the greater is the decline of per capita income of the districts relative to the metropolitan city. Furthermore, the National Sample Survey data show that out of 1,000 families, about 106 starve for some months within a year. The same figure for Maharashtra is 10, 3 for Kerala and for Gujarat it is 3. The number of starved families (per thousand) all throughout the year for the state is 13, lagging behind only Assam (36).

Such a miserable state of affairs is confined not only to consumption and income of the rural inhabitants; the rural-urban gulf also extends itself to the provision of basic supplies of health and education by the state. The number of government hospitals in rural and urban areas in West Bengal in 2009 is 2.21 and 113.84, respectively, per one crore of population. Similar figures for Maharashtra are 60.21 and 82.58 respectively. In education, while enrolment in rural primary school is still higher than the national average, so are the dropout rates.

The stark realities captured in various statistics reveal worsening economic conditions for the poorer section of people in villages in terms of consumption, generation of income and access to health and completion of basic education over the last few years.  The intriguing question is: How did this state of affairs came into being? After all, it was always claimed in various quarters that although industry had experienced secular decline in the state, condition of the poor had vastly improved, particularly in rural areas.  It is true that the first fifteen years of the left front rule witnessed growth in agriculture courtesy the Operation Barga which prevented the eviction of sharecroppers and ensured a fair share in the agricultural output for the poor tillers. The scheme thus provided a mix of both incentives and insurance to the poorest and resulted in lower inequality, higher investment and a degree of rural prosperity. Hence, implementation of Operation Barga, together with multiple cropping led to a spurt in rural income that lasted until nineties. This also paid large dividends to ruling coalition in the form of a growing vote bank that returned the left front to power year after year.   However, the effect of the land reform is always temporary because it can increase the level of income in the medium term but has a limited impact on long-term growth prospects, which certainly is one of the crucial variables in the elimination of poverty. 

There are two pillars on which dynamics of economic growth stand and they are complementary to each other in the sense that each factor reinforces the other. The first one is continuous technological changes that occur mostly in the industrial sector more than it happens in agriculture. The second one relates to the development of right type of institutions which accelerate the process of growth by making the atmosphere conducive to technological progress, new investment and speed of industrializations. The effect of Operation Barga tapered off after two decades due to diminishing returns, lack of technological changes, and fragmentation of land, which made the rural poor in WB poorer. On the other hand, urban areas could not absorb growing unemployed from rural areas because the state also experienced de-industrialisation on a massive scale. True, the urban dwellers fared better in relative comparison to their rural inhabitants but absolute terms, all suffer due to lack of industrialization, crumbling infrastructure, non-existent public goods and deteriorating state of institutions.

Two factors contributed to this rural-urban relative gap over the years and miserable state of industrialization and infrastructure. First, ignorance of the left's think-tank about the modern economics of growth which places importance of reform on property rights (Operation Barga) but greater importance is assigned on technological progress as a vehicle for economic growth. The complacent left leaders thought that their job is over with the implementation of the Barga and thus   paid no attention on the complementary factors that could sustain the effects of land reforms.
Second, instead of creating institutional framework conducive to investment in both human and physical capital, the left had simply demolished the existing institutions to rubble by using them to augment their cadre base. Starting from the police, educational institutions, hospitals, everywhere cadres have been inducted to enrich the voting base and basic norms of fairness and meritocracy have been flouted right and left in making appointments and promotions in every form of institution in the state. The ruthless and systematic destruction of institutions made the urban human and physical capital vulnerable and forced them to leave the state. This in turn, led to further decline in the growth rate leading to even more decline of the rural sector which depends on the former for survival. The most unfortunate among them always was the marginal poor who deserted the left camp in the last couple of years. 

Of course, it is one thing to be disenchanted due to lack of economic opportunities and is completely another thing for the opposition to convert such anger into ballot boxes and the task is harder if the opposition itself is fragmented. Here, basically the events in Singur or Nandigram had created a platform for those affected by economic misfortunes and events in those places served as focal points that helped these people, mostly from rural areas, assemble under a common stage. Hence, Singur and Nandigram are symptoms of deeper maladies of growing rural poverty and not an inherent cause that destabilised the status quo in recent elections. Of course, to what extent, the magnitude of anti left sentiments will be cashed in the forthcoming election remains to be seen.

The writer teaches at Essex Business School.

He can be reached at sbanerji(at)essex(dot)ac(dot)uk