WEST BENGAL ECONOMY

Economy

Bengal Economy collapse

Why in News?

One of the issues related to the state’s crumbling economy is the West Bengal assembly elections.

Important Points

The reasons for this are corruption, stalled industrialization, weak credit growth, lack of new jobs, lack of infrastructure development and spending on agriculture.

Credit

In 2019-20, the growth rate of West Bengal was 7.26%, which was more than 4% of the national growth rate in the same year. But during the four years out of five years between 2015-16 and 2019-20, the growth rate of West Bengal has been lower than the national level. Between the fourth quarter of 2018 to 2020, where the credit of banks across the country increased by 20%, it was only 10% in West Bengal.

Bank deposit

In these two years, while the bank deposits across the country saw an increase of 19.8 percent, it was only 14.1% in West Bengal.

Unemployment

Unemployment is also an important issue in the largest state by fourth in terms of population. The Centre for Monitoring Indian Economy (CMIE) data for February 2021 show that the unemployment rate in West Bengal was 6.2 percent, which was lower than the national figure of 6.9%. However, the state ranked 17th among 27 states.

Daily wages and per capita income in the state are also low. While every laborer at the national level receives Rs 294 a day for the non-agricultural sector for FY 2020, a Care Ratings report shows that the wage rate in West Bengal was almost 8.5% lower than this figure. Even in terms of per capita income, West Bengal’s figure of Rs 1.16 lakh was 16% lower than the national average.

MSME Registration

According to an analysis of 13.47 lakh enterprises completing the MSME enterprise registration process, West Bengal does not appear anywhere in the list of top 10 states. West Bengal had only 27,776 MSMEs registered and employed an average of 5.84 persons.

Expenditures in various sectors

Although official figures show that the state spending on education and rural-urban development areas is above the national average in 2019-20 but lags behind in the road, health and agriculture sectors. There has been a steady increase in spending on education, health, sports, arts and culture, housing, water supply, labor welfare and more.

Agricultural sector

The Mamata Banerjee government spent very little in agriculture in 2019-20. The share of agricultural expenditure in total expenditure in March 2020 was the lowest in the last six years. Even the expenditure on infrastructure saw a decline in 2019-20 and it was only 3.33 percent of the total expenditure in 2019-20.

Health sector

The state’s expenditure on the health sector is 5.1% in 2019-20 (budget estimate), slightly lower than the national average of 5.3 percent during the same period. West Bengal kept its expenditure for agriculture and allied activities at 5.1% in 2019-20, much lower than the average of 7.1 percent of all states.

Education sector

In 2019-20, the state kept spending for the education sector at 16.8%, higher than the average of 15.9 percent.

Rural and Urban Development

State spending on rural development is higher than the national average. In 2019-20, West Bengal spent 10.1 percent for rural development, which is 6.2 percent more than the average expenditure for rural development. On urban development, West Bengal allocated 5 percent of its expenditure for 2019-20, which is 3.4% higher than the average allocation for urban development.

-According to PRS Legislative Research and West Bengal budget documents, the state spending on roads and bridges for 2019-20 is far behind the average of 4.2 percent of the rest of the states.

-Along with this, the state government has been accused that central schemes have not been implemented, including PM Swanidhi Yojana, Ayushman Bharat and PM Kisan Samman Nidhi Yojana.