In the early decades after Independence, West Bengal stood among India’s most prosperous regions. Today, it finds itself near the bottom of the national economic table. The story of this reversal is neither sudden nor accidental. It is the outcome of a long sequence of political, industrial, and policy decisions that gradually eroded the state’s economic base.
Data from the Economic Advisory Council to the Prime Minister (EAC-PM) reveals the scale of the shift. In 1960–61, West Bengal ranked third in India in per capita income. By 2024, it had fallen to 24th. The average resident of the state now earns around 16.3 per cent less than the national average, a stark indicator of the depth of the West Bengal economic decline.
When Bengal set the pace
In the decades following Independence, West Bengal was not merely competitive; it was dominant. With a relative per capita income of 127.5 per cent in 1960–61, the state significantly outperformed the national average. Only Maharashtra and Delhi operated in a comparable economic league.
This advantage was built on a formidable industrial ecosystem. The Kolkata port served as eastern India’s primary trade gateway. Jute manufacturing, engineering firms such as Jessop and Braithwaite, and a dense network of ancillary industries made Bengal the default destination for industrial investment. For much of the 1950s and 1960s, capital flowed naturally into the state.
The turning point of the late 1960s
The downward trajectory began in the late 1960s and accelerated over the next two decades. By 1980–81, West Bengal’s relative per capita income had slipped below the national average, falling to 96.9 per cent. This moment marked a decisive break from the past.
Economists and policy analysts note that while national policies played a role, the most damaging forces were internal. The period saw the rise of militant trade unionism, frequent industrial shutdowns, and practices such as gherao, which created an environment of uncertainty for employers. Industrial profitability became politically suspect, and public hostility towards private capital hardened.
Predictably, investment began to move elsewhere. Mumbai, Gujarat, and later southern states absorbed industries that once would have expanded in Bengal. The West Bengal economic decline was no longer theoretical; it was visible in shuttered factories and stagnant wages.
Missing the liberalisation moment
India’s economic liberalisation in 1991 reshaped the country’s growth map. States that moved quickly to attract private and foreign investment benefited disproportionately. Karnataka, Andhra Pradesh, and Tamil Nadu positioned themselves as hubs for information technology, manufacturing, and global supply chains.
West Bengal did not. Even as overt labour militancy declined, the state’s reputation as an unfriendly destination for industry persisted. Policy inertia and ideological caution prevented a decisive reset. As a result, the economy remained heavily dependent on low-growth sectors, particularly agriculture and informal services.
The rankings reflect this stagnation. Between 1990 and 2010, West Bengal slipped further, moving from 15th to 21st place among Indian states in per capita income. The West Bengal economic decline continued quietly but steadily.
Singur and the cost of lost confidence
Few events illustrate the state’s industrial challenges as clearly as the Singur episode. In 2008, Tata Motors’ decision to establish its Nano car plant in West Bengal was widely seen as a turning point. It signalled renewed investor confidence and the possibility of large-scale re-industrialisation.
That opportunity did not last. Political agitation over land acquisition forced Tata Motors to relocate the project to Sanand in Gujarat. The message to investors was unmistakable: large industrial projects in Bengal carried high political risk.
The consequences extended beyond a single factory. Gujarat gained not only the plant but an entire automotive ecosystem. West Bengal, meanwhile, suffered what many economists describe as a second phase of deindustrialisation. More than a decade later, the reputational damage remains unresolved, reinforcing the broader West Bengal economic decline.
Where the state stands today
By 2024, the cumulative impact of six decades of choices had become impossible to ignore. West Bengal, once among India’s wealthiest states, now sits near the bottom of the income rankings. While states such as Tamil Nadu have surged ahead, with relative per capita incomes exceeding 150 per cent of the national average, Bengal has moved in the opposite direction.
The data suggests a structural reversal rather than a temporary slowdown. Industrial capacity, private investment, and job creation have not kept pace with population growth. Political stability alone has not translated into economic renewal.
A long shadow of policy decisions
The West Bengal economic decline is best understood as a long-term process shaped by ideology, governance priorities, and missed opportunities. For decades, political consolidation took precedence over industrial competitiveness. Once capital exited, rebuilding confidence proved far harder than retaining it in the first place.
As Deshwale has consistently reported, economic recovery is rarely achieved through short-term interventions. For West Bengal, any reversal will require sustained policy clarity, credible assurances to investors, and a willingness to confront the legacy of past decisions.
The numbers, drawn from official national data, leave little room for dispute. The question now is whether the state can break free from this trajectory, or whether the next decade will simply extend one of India’s most dramatic economic reversals.
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