Strategy for economic reform in West Bengal

Abstract

During the last two decades West Bengal has led the rest of the country with regard to agricultural performance and implementation of panchayat institutions. But these developments have begun to level out. At the same time the state has fallen behind in other sectors – industry, higher education and state of public finances, particularly – to an extent that is seriously worrying. This paper reviews performance of these different sectors, discusses possible explanatory factors, and makes a number of suggestions for policy reforms. With regard to industrial revival, it stresses public investment in transport and communication, measures to improve higher education, foster industry-university collaborations, and help small-scale industries overcome specific market imperfections (access to credit, technology and distribution channels). In public finance, emphasis is placed on raising tax revenues (especially with regard to the service sector), limiting losses of public sector undertakings, and widening the scope of land taxes and user fees. In the agricultural sector, the need for a greater role of the government with regard to biotechnology, extension services, irrigation and flood control is emphasised, along with suggestions for encouraging and regulating contract farming with MNCs. Finally the article urges greater empowerment of panchayats with regard to social service delivery and agro-business development, and administrative reforms to enhance accountability of state government employees