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The Rediff Business Special / Arup Chanda

Comrades, capitalists, camaraderie: Bengal's brush with industrialisation

Last Sunday, a plenary session of Destination West Bengal --Investors' Meet was held at a resort at Raichak, a few kilometres away from Calcutta on the banks of the Hooghly river. The session was hosted by the West Bengal Industrial Development Corporation and the state government.

Captains of the leading industrial houses of the country aired their views regarding the industrial climate in West Bengal and possibility of investing in this state.

They also heard the opinions of Chief Minister Jyoti Basu and his comrades. Basu's team comprised Home Minister Buddhadeb Bhattacharya, who is possibly Basu's heir, Finance Minister Dr Asim Dasgupta, Industry Minister Bidyut Ganguly and Somnath Chatterjee, the Communist Party of India-Marxist's leader in Parliament and WBIDC chairman.

What did the industrialists who are being wooed to invest in West Bengal hear?

Amidst applause, Basu admitted his government's failure to redeem a bagful of promises on industrialisation and assured the large gathering of his government becoming more pro-active and investor-friendly.

"The government will reorient labour-management relations with a thrust on production and productivity. The government will not intervene in labour disputes and will only act as an honest broker," he said.

Dr Dasgupta offered a package of goodies. He divided the state into three categories: 'A', 'B' and 'C'.

'A' includes the area under the Calcutta Municipal Corporation where the new incentives are sales tax deferment for nine years (ceiling: 90 per cent of fixed capital investment) or sales tax remission for seven years (ceiling: 85 per cent)

'B' covers the districts of South and North 24 Parganas, Howrah, Hooghly, Burdwan, Midnapore and Nadia which have been offered sales tax deferment for 11 years (ceiling: 110 per cent) or sales tax remission for nine years (ceiling: 100 per cent).

'C' consists of the rest of the industrially backward districts which have been given sales tax deferment for 15 years (ceiling: 175 per cent) or sales tax remission for eight years (ceiling: 150 per cent). Capital investment subsidy for the small scale industries will be continued and electricity duty waiver for five years will also continue.

A special incentive has been given for thrust areas like petrochem, leather, electronics, agro-processing, software and infotech. In these sectors, sales tax deferment/remission will be available for more than two years with an additional ceiling of 25 per cent of fixed capital investment over and above the locational benefits.

Besides, Dasgupta also promised a special package for mega projects on a case-by-case basis and made rehabilitation of closed units eligible for sops given to new units.

He announced that this package of goodies would come into effect from April 1.

However, the hero of the day was Bhattacharya. Instead of avoiding the issue of industrial rife and law and order problems, he candidly admitted it in front of the industrialists.

Bhattacharya collected praises from the industrialists for the way he appreciated the report by US-based company, McKinsey. ''To date they had heard our problems but went ahead on their own path. This was the first time they are analysing the problem of investment in West Bengal with an open mind'' -- that was the general view of the industrialists.

Industrialists from all over the country are quite familiar with Basu and his team. Bhattacharya, because of his earlier radical Marxist views, clean image, penchant for literature and culture was something of an enigma for them.

He earned the confidence of the industrialists when he categorically stated that in no way violence by the labourers in industries in the state would be tolerated. He even went on to say that political will for industrialisation was not sufficient.

He felt that trade union leaders would also have to keep pace with time and change their attitude towards industry and they need to be convinced in this regard. Coming as it did from Bhattacharya, a powerful CPI-M state secretariat member, the highest decision-making body in state party unit, the signal was clear for the industrialists.

They applauded when he said, "The Left Front government has no hidden agenda. The lives and wealth of industrialists are safe and protected in this state."

Replying to a question by Subhash Chandra of Zee TV whether the government would be able to implement the recommendations of McKinsey, Dasgupta said, "When we are taking industrialists into confidence, we are also ready to break our traditional ways in the interest of industrialisation of the state."

What are the main points in the McKinsey report? The report says: the law and order situation and the state government are stable; there is potential in West Bengal of a large market; the state has skilled labour, huge natural resources and development in agriculture.

However, it notes that the state's record in industrial relations, marked by frequent labour problems and lack of work culture, is poor. It also mentions red-tapism, bureaucracy, lack of government initiative, infrastructure and bright image as far as the industry is concerned besides low productivity.

The report recommends that the 90 per cent of the approvals required at present must be done away with; focus must be on two to three mega projects; a coalition must be forged between the government, management and workforce; infrastructure must be boosted to create the right environment; a taskforce must be set up within a fortnight to ensure Haldia Petrochemicals' success.

'Destination West Bengal' was in fact the largest gathering of industrialists in the state in the last few years since the summit of the Confederation of Indian Industry in January 1997.

After the staunch followers of Communist manifesto decided to implement the radical report for industrialisation by McKinsey, the prospective investors looked happy.

Within 24 hours of the Left Front government's tall promises, workers in the state's electricity board resorted to a strike for 48 hours. Despite assurances by the leaders of the state, the trade unions proved that they have no intention of changing their attitude.

Most of these workers belonged to the maintenance department and lack of repairs led to heavy power-cuts in the districts of Midnapore, Hooghly and South 24 Parganas, where many factories of multinational companies are located.

Their demand: the pay structure for electricity workers is lower than that of the state government employees.

The trade union leaders are confident that this would not send wrong signals to prospective investors in West Bengal as they would not resort to "destructive agitation".

The state finance minister also feels the same since he had already approved the employees' pay structure submitted to him by the power department.

An entrepreneur in Calcutta asked a simple question: ''Are machines in factories expected to run without power? The strike in an essential sector is an indication that things in West Bengal are not going to change in a jiffy.''

How did the Leftist trade unions take the bonhomie of their Marxist bosses with the capitalists ?

They point out that for the last 10 years, there had been no militant trade unionism. On the other hand, the management pressurises the workers to accept their demands.

According to Niren Ghosh, state Centre for Indian Trade Unions president and a state CPI-M secretariat member, "The way the central government and the managements have been exploiting the workers in this state, they seem to have reached hell."

A sharp question for Basu and Co was posed by the state secretary of the CPI, a powerful constituent of the ruling Left Front. Asked Manju Majumdar: "The 64 coal mines of Eastern Coalfields might be closed down. What do we tell the workers? Should we tell them not to agitate since that will affect industrialisation in West Bengal?"

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