Strategy for Economic Reform in West Bengal

During the last two decades West Bengal has led the rest of the country with regard to agricultural performance andimplementation of panchayat institutions. But these developments have begun to level out. At the same time the state hasfallen behind in other sectors – industry, higher education and state of public finances, particularly – to an extent that isseriously worrying. This paper reviews performance of these different sectors, discusses possible explanatory factors, andmakes a number of suggestions for policy reforms. With regard to industrial revival, it stresses public investment in transportand communication, measures to improve higher education, foster industry-university collaborations, and help small-scaleindustries 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 sectorundertakings, and widening the scope of land taxes and user fees. In the agricultural sector, the need for a greater role of thegovernment with regard to biotechnology, extension services, irrigation and flood control is emphasised, along withsuggestions for encouraging and regulating contract farming with MNCs. Finally the article urges greater empowerment ofpanchayats with regard to social service delivery and agro-business development, and administrative reforms to enhanceaccountability of state government employees.[...]