August 15, 2022

Now Lobbying for a Poor Indian State

It was the public works minister, reminding Mr. Mitra that his department needed $32 million to cover bills that had gone unpaid since the state’s previous government declared a spending freeze last December.

“I’ll speak to the finance secretary,” Mr. Mitra told his colleague, Subrata Buxi. “It will be done by 4 today.”

If only Mr. Mitra, an economist trained at Duke University, could solve all of West Bengal’s financial problems so easily.

Mr. Mitra, 63, whose party won a landslide victory last month against a communist coalition that had ruled the state for 34 years, is the point man for one of India’s biggest domestic economic challenges.

West Bengal, with a population of 91 million, was once seen as an industrial model for the rest of the nation. Fifty years ago, the state had India’s highest per-capita income, and its biggest city, Kolkata, formerly Calcutta, was the nation’s de facto business capital.

But in recent decades, the city’s and state’s growth rates have lagged behind the rest of the country’s.

The communist government’s restrictive economic policies, authoritarian rule and penchant for strikes prompted many businesses to leave. The country’s largest bank, the State Bank of India, moved its headquarters to Mumbai, the current financial capital. In a 2009 World Bank report, Kolkata ranked last among 18 Indian cities based on ease of doing business.

But in an election last month, voters replaced the ruling Communist Party of India (Marxist) and its allies with a young political party, the Trinamool Congress, that made reviving the state’s economy a central plank of its platform.

“We are very hopeful,” said Rana Sinha, chairman of the Kolkata-based eastern region of the trade group Confederation of Indian Industry.

But success will require more than replacing a communist government with favorable business talk. Mr. Mitra spent 18 years in New Delhi at the helm of the Federation of Indian Chambers of Commerce and Industry, the nation’s premier business lobbying group. But his new boss, Mamata Banerjee, is a firebrand politician who has sometimes made the corporate community wary.

Ms. Banerjee, West Bengal’s new chief minister — the equivalent of an American governor — built a large populist following by opposing controversial industrial projects that had been backed by the previous government. Critics say she was often an absentee manager of the national railways, which she oversaw the last two years as a federal minister, because she was focused on winning in West Bengal.

What is more, she and Mr. Mitra have inherited a state debt of 2 trillion rupees ($44 billion), among the highest in the country relative to the size of its economy.

The state’s potential revival is not important just for its own sake. Most of India’s poorest people live in a dozen northern and eastern states, including West Bengal. Economists and political analysts say that if India is to start approaching its potential, state governments must take the lead in providing their people with better financial opportunities and social services.

Now that Ms. Banerjee has been elected, her supporters promise that her full attention will be devoted to the state. Her campaign to overthrow the communists attracted support from across Bengali society, including former communists, police officers, writers and at least some business executives. One, Sabeer Bhatia, a founder of the American company Hotmail, volunteered to improve the party’s communications department.

But perhaps the business person she will need to rely on most is her finance minister, Mr. Mitra.

Article source: http://www.nytimes.com/2011/06/11/business/global/11bengal.html?partner=rss&emc=rss

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