01-28-2006, 09:43 PM
http://www.thehindubusinessline.com/busine...es/041360mj.htm
EXPECTATIONS are running high in West Bengal. The public mood has changed dramatically with the communist party changing tack from ideology to economy after winning the Assembly elections and coming back for its sixth term. People believe that the Left Front will now get down to real business and revive the State's past glory -- a belief strengthened by the induction of new people in the leadership of the communist party, whose industry-friendly image is beginning to resuscitate investor confidence in the State.
The new Chief Minister of West Bengal, Mr Buddhadev Bhattacharya, has quickly responded to the people's new mood. Instead of wasting time bickering with the Opposition, he has made a beginning by drawing up a road map for State's future. It is natural that the new government will take its own time to settle down and decide on the priorities in charting out the course for industry. But early parleys with business leaders have indicated Mr Bhattacharya's commitment to reforms in the State economy.
Several new areas are emerging as crucial to economic development. Once an important base for manufacturing activities, West Bengal was affected by the structural changes in the economy, where development through manufacturing activities was marginalised. The current development trend shows a perceptible shift from manufacturing to services to sustain economic growth.
While the manufacturing sector missed its own Plan target, service sector pitched for higher growth and emerged as a strong driver of sustainable growth. The service sector accounts for over 45 per cent of the country's GDP. Similarly, the West Bengal economy banks on service sector. It accounts for the bulk share in the State's GDP -- about 42 per cent. There is great scope for the growth of the State's service sector, which remained almost untapped for nearly three decades under the former chief minister, Mr Jyoti Basu, despite West Bengal's huge potential and edge over other States.
Mr Buddhadev Bhattacharya's first move was to revolutionise the IT sector, on the lines of his counterpart in Andhra Pradesh, Mr N. Chandrababu Naidu, and mobilised the State's large pool of skilled manpower which, hitherto, had been migrating to other States looking for jobs.
The Chief Minister has had discussions with the Confederation of Indian Industry (CII), hardly ever before approached by any leader of the previous Communist government. PriceWaterhouseCooper's advice was that the State has huge potential in the IT sector. The consultant suggested that West Bengal could well be a leader, particularly in the IT-enabled service industry, provided the State Government immediately took the right initiatives, supported by a clear-cut policy.
The consultant's suggestions stemmed from the State's extant institutional support, which provides a large pool of skilled manpower. The country's best engineering college (as rated by India Today) IIT, Kharagpur; the premier business management school, IIM Calcutta; and the fourth best science college, Presidency College, are instances.
But IT is not a miracle drug to resuscitate the State's employment scene. While it could provide a considerable spurt in overall employment growth, harping on IT alone will not address all the problems arising from the State's sagging economy.
While gauging the scope for other areas in contributing to the its prosperity, the State has the distinct advantage of geographical location. Its potential is strengthened due to its proximity to the huge foreign markets beyond its Eastern and North-Eastern borders. It is flanked by India's two major neighbours, Bangladesh and Nepal, and is near Myanmar.
In this arena, border trade can play an important role and bolster the State's active participation in India's trade with these countries. The total annualised official trade with Nepal and Bangladesh is around $1 billion, and a larger part of the trade with Bangladesh is through Bengal's border. Besides, a huge volume of unofficial trade flows through the State's border to Bangladesh and Nepal.
With the SAPTA (South Asia Preferential Tariff Area) becoming a reality, and SAFTA (South Asia Free Trade Area) on the anvil in 2003, West Bengal can emerge a prospective gateway for India to expand trade with Bangladesh, Nepal, Bhutan and also Myanmar through back-up support to Assam and Mizoram. Kolkata could serve as the main trading hub, and Siliguri as the satellite for India's trade with these neighbours. If China can utilise West Bengal as one of its major entry points for dumping goods in India, why cannot the West Bengal Government promote the State as a major trade channel in its own right?
After the removal of QRs (quantitative restrictions), the significance of manufacturing activities is diminishing because of fierce competition from cheap imports. Small and medium enterprises are going through tough times, and only a few big houses are striving while investing in new projects. The attraction of ``greenfield'' investments is waning and mergers and acquisitions are emerging as an attractive investment route.
The drawback for West Bengal is that it is saddled with very old manufacturing companies which hardly provide any scope for mergers and acquisitions. Besides, the State is hampered by poor infrastructure facilities. It has surplus power, but that is not the only infrastructure required for the development of manufacturing. It is not easy to develop infrastructure within a short period to lure investors from other States.
It is unfortunate that the IT revolution in the State is beginning at a time of global recession in IT due to the slowdown in the US economy. But analysts believe that this is a temporary phase. India will see better prospects for its IT skills. Inversely, the slowdown in the US economy will force Americans to buy cheaper software, which India alone can provide.
The resurrection of the State's economy depends upon two important factors -- the development of IT; and the energising of trading activity. While bolstering trading activity, the State government should learn valuable lessons from such nations as Japan and Korea, whose global marketing expertise was strengthened by a few giant trading houses, including Sogo in Japan.
The validity of the argument rests on the fact that IT-buoyant Bangalore alone was able to project Karnataka as the ideal investment destination for entrepreneurs, despite the State being shackled by inadequate infrastructure facilities for manufacturing activities. Soon, it became the country's Silicon Valley. And Hong Kong is an important trade engine that powers China's galloping export growth. Why cannot Kolkata, then, serve as the springboard for IT development and trading activity in the State, to revive its past glory and reinforce its significance to the country's economic development?
go to link to see the table, which cant be C/P-ed here
EXPECTATIONS are running high in West Bengal. The public mood has changed dramatically with the communist party changing tack from ideology to economy after winning the Assembly elections and coming back for its sixth term. People believe that the Left Front will now get down to real business and revive the State's past glory -- a belief strengthened by the induction of new people in the leadership of the communist party, whose industry-friendly image is beginning to resuscitate investor confidence in the State.
The new Chief Minister of West Bengal, Mr Buddhadev Bhattacharya, has quickly responded to the people's new mood. Instead of wasting time bickering with the Opposition, he has made a beginning by drawing up a road map for State's future. It is natural that the new government will take its own time to settle down and decide on the priorities in charting out the course for industry. But early parleys with business leaders have indicated Mr Bhattacharya's commitment to reforms in the State economy.
Several new areas are emerging as crucial to economic development. Once an important base for manufacturing activities, West Bengal was affected by the structural changes in the economy, where development through manufacturing activities was marginalised. The current development trend shows a perceptible shift from manufacturing to services to sustain economic growth.
While the manufacturing sector missed its own Plan target, service sector pitched for higher growth and emerged as a strong driver of sustainable growth. The service sector accounts for over 45 per cent of the country's GDP. Similarly, the West Bengal economy banks on service sector. It accounts for the bulk share in the State's GDP -- about 42 per cent. There is great scope for the growth of the State's service sector, which remained almost untapped for nearly three decades under the former chief minister, Mr Jyoti Basu, despite West Bengal's huge potential and edge over other States.
Mr Buddhadev Bhattacharya's first move was to revolutionise the IT sector, on the lines of his counterpart in Andhra Pradesh, Mr N. Chandrababu Naidu, and mobilised the State's large pool of skilled manpower which, hitherto, had been migrating to other States looking for jobs.
The Chief Minister has had discussions with the Confederation of Indian Industry (CII), hardly ever before approached by any leader of the previous Communist government. PriceWaterhouseCooper's advice was that the State has huge potential in the IT sector. The consultant suggested that West Bengal could well be a leader, particularly in the IT-enabled service industry, provided the State Government immediately took the right initiatives, supported by a clear-cut policy.
The consultant's suggestions stemmed from the State's extant institutional support, which provides a large pool of skilled manpower. The country's best engineering college (as rated by India Today) IIT, Kharagpur; the premier business management school, IIM Calcutta; and the fourth best science college, Presidency College, are instances.
But IT is not a miracle drug to resuscitate the State's employment scene. While it could provide a considerable spurt in overall employment growth, harping on IT alone will not address all the problems arising from the State's sagging economy.
While gauging the scope for other areas in contributing to the its prosperity, the State has the distinct advantage of geographical location. Its potential is strengthened due to its proximity to the huge foreign markets beyond its Eastern and North-Eastern borders. It is flanked by India's two major neighbours, Bangladesh and Nepal, and is near Myanmar.
In this arena, border trade can play an important role and bolster the State's active participation in India's trade with these countries. The total annualised official trade with Nepal and Bangladesh is around $1 billion, and a larger part of the trade with Bangladesh is through Bengal's border. Besides, a huge volume of unofficial trade flows through the State's border to Bangladesh and Nepal.
With the SAPTA (South Asia Preferential Tariff Area) becoming a reality, and SAFTA (South Asia Free Trade Area) on the anvil in 2003, West Bengal can emerge a prospective gateway for India to expand trade with Bangladesh, Nepal, Bhutan and also Myanmar through back-up support to Assam and Mizoram. Kolkata could serve as the main trading hub, and Siliguri as the satellite for India's trade with these neighbours. If China can utilise West Bengal as one of its major entry points for dumping goods in India, why cannot the West Bengal Government promote the State as a major trade channel in its own right?
After the removal of QRs (quantitative restrictions), the significance of manufacturing activities is diminishing because of fierce competition from cheap imports. Small and medium enterprises are going through tough times, and only a few big houses are striving while investing in new projects. The attraction of ``greenfield'' investments is waning and mergers and acquisitions are emerging as an attractive investment route.
The drawback for West Bengal is that it is saddled with very old manufacturing companies which hardly provide any scope for mergers and acquisitions. Besides, the State is hampered by poor infrastructure facilities. It has surplus power, but that is not the only infrastructure required for the development of manufacturing. It is not easy to develop infrastructure within a short period to lure investors from other States.
It is unfortunate that the IT revolution in the State is beginning at a time of global recession in IT due to the slowdown in the US economy. But analysts believe that this is a temporary phase. India will see better prospects for its IT skills. Inversely, the slowdown in the US economy will force Americans to buy cheaper software, which India alone can provide.
The resurrection of the State's economy depends upon two important factors -- the development of IT; and the energising of trading activity. While bolstering trading activity, the State government should learn valuable lessons from such nations as Japan and Korea, whose global marketing expertise was strengthened by a few giant trading houses, including Sogo in Japan.
The validity of the argument rests on the fact that IT-buoyant Bangalore alone was able to project Karnataka as the ideal investment destination for entrepreneurs, despite the State being shackled by inadequate infrastructure facilities for manufacturing activities. Soon, it became the country's Silicon Valley. And Hong Kong is an important trade engine that powers China's galloping export growth. Why cannot Kolkata, then, serve as the springboard for IT development and trading activity in the State, to revive its past glory and reinforce its significance to the country's economic development?
go to link to see the table, which cant be C/P-ed here