[Bengal was India's most industrialized state still the 1950s. Then its industries got into trouble, their workers were unionized by communists. They won elections in 1977, and have been in power ever since. Industrialists have withdrawn from the state and set themselves up in more friendly states in the west and south. Recently, however, the communist government has tried to attract private industry. Its most conspicuous success in persuading the Tatas to make a small car in India has run into trouble over land acquisition, which has been strongly resisted by people who would lose their land and their jobs. I wrote this critique of West Bengal government's attempts to attract industry in the Calcutta Telegraph of 3 January 2007.]
CAN BENGAL INDUSTRIALIZE?
CAN BENGAL INDUSTRIALIZE?
Being a west Indian, I never met a Bengali till I was through my teens. My image of Bengal was shaped by Rabindra Nath Tagore, Bipin Chandra Pal, and Satyajit Ray. I used to think that the Bengalis were the most talented Indians. When I went abroad, I met my first Bengalis, and the awe in which I held them depreciated; especially after I went to Germany and found even children speaking German, I came to think that Germans were more intelligent than Bengalis.
But then I made some good Bengali friends. So I was pained when West Bengal began after 1965 to make news for all the wrong reasons: strikes, bandhs, gheraos, processions, and economic paralysis. My Bengali friends were, of course, overjoyed that revolution was round the corner. Slowly, though, these disruptions passed out of the news although they continued: West Bengal ceased to matter to the rest of India.
Today, I find West Bengal again in the news – not for the bandhs and processions which continue, but for Singur. The lineup is, however, different. Whereas the communists were the villains of the 1970s and 1980s, angels are on their side today; so also are capitalist devils. Everyone takes it for granted that Ratan Tata’s plan to make people’s cars in Singur is a Good Thing, that it is heroic of Buddhadev Bhattacharya to vanquish all opposition to it, and that Mamata Banerjee is a crazy Luddite.
Ratan Tata is one of the most respected men of my generation. But I find some of his recent actions uncharacteristic. Throughout independent India’s history, the Tatas kept a distance from the government. In the licence-permit raj, the right to expand or diversify became a favour from the government for which businessmen had to fight and bribe. Most of them did both. But the Tatas stuck to their knitting, and did what they could without courting politicians, begging for favours and oiling political wheels. They dominated the truck and bus industry, made TISCO the least-cost steel producer, and built up TCS outside the control net. They did not bend their knee to anyone – not to Indira Gandhi, nor to Rajiv, nor to George Fernandes. When I joined government in the 1990s, controls were still in place. Many industrialists came to pay court or nudge files along; never anyone from the Tatas. For that I respected them – and so did many of my fellow-Indians.
Singur is the first project on which the Tatas have relied on a government – this time the government of West Bengal – and sought its favours. This is not necessarily improper – not unless they raise their contributions to CPI(M) immoderately – but it is unusual; this is precisely the sort of thing they eschewed when it was so much more common and so necessary for success.
What made them change? My guess is that after the passing of central controls, competition has intensified, corruption has seeped from the centre to the states, and in the dirty new world that has arrived, the Tatas have decided that the West Bengal government is the lesser evil. With the opening up of the economy, it has become easy to import automobile components. And for the smaller manufacturers, accessing the export market has become essential if they are to reach the necessary minimum scale. So the entire automobile industry is rushing to the coast. Tamil Nadu and Gujarat are the favoured locations. Tamil politicians are reputed to be economically rational; and the BJP, of which Narendra Modi is the satrap in Gujarat, is equally realistic about the relationship between power and political prosperity. Ratan Tata has publicly rued that the Tatas were kept out of the aviation industry while sundry upstarts approached politicians and obtained licences. It must hurt because both JRD and Ratan have been amateur flyers and because Air India, the Tatas’ pioneer airline, was snatched away by the government. Ratan Tata presumably found Tata Motors losing out because it would not bribe the politicians of the coastal states; he made a bargain with the government of West Bengal that he found acceptable. I would like to know, though, what the bargain is.
I wondered, earlier, about the Tatas’ bid for Corus. The Birlas were the first to go international; today, every Tom, Dick and Harry is buying companies abroad. But the Tatas stuck to their domestic base through the worst years of controls; why are they trying to acquire a foreign company three times the size of Tata Steel? I attributed the decision to the forthcoming consolidation of the world steel industry, of the emergence of big players like Mittal-Arcelor and their likely entry into the Indian market space. But then I realized that the Tatas were not far behind in acquisitions abroad; their companies too have been spreading out since it was allowed. So I now wonder if it has something to do with the competitive corruption emerging between Indian states – whether the Tatas are winning beachheads in markets abroad where industry is freer and governments cleaner.
Coming to West Bengal, it has always struck me how top-down development in this state is. If you look at India’s most developed states – Tamil Nadu, Maharashtra, Gujarat – most industry there is indigenous and small-scale. All the businessmen whom the West Bengal government favours are big and non-Bengali. In the 1980s and 1990s, they were foreign; Indian industrialists were not welcome. Even now they are generally foreign, like the Salims. The Tatas are the first Indian group to have found favour; and they are different. They treat their workers well, and are friendly to trade unions. They are more congenial to communists.
In particular, I have been struck by Buddhadev’s studied neglect of Mukesh. He is sitting on huge reserves of gas of the Krishna-Godavari coast, and is looking for somewhere to land it and sell it. He tried UP, but the split with Anil wrecked that plan. He has been courting Tamil Nadu, so far without success. All that gas would transform the industrial future of West Bengal. What makes Buddhadev hesitate? The spectre of CITU descending on Calcutta with hundreds of thousands of coal miners?
So I am tempted to formulate the following laws of development under communism. The communist state is a slave of its trade unions. It is forced to rely on big industrialists because small industry cannot survive organized, militant trade unions. Amongst big industrialists it prefers foreign ones who would have no constituency in this country. If it cannot get them, it will settle for Indian ones, but only if they accept CITU. And competition in product markets weakens the bargaining power of trade unions; so it would prefer firms that have a monopoly or a niche market.
These are stringent requirements; if the West Bengal government sticks to them, it may attract Tata Motors, but it will achieve little overall industrialization of the state. If I am right, Buddhadev will face increasingly obstinate opposition within the CPM family, will win ever greater admiration from the bourgeoisie, and will be largely ineffective. It is not his fault; it is the party he belongs to. He should bend it to his will, or split it.
But then I made some good Bengali friends. So I was pained when West Bengal began after 1965 to make news for all the wrong reasons: strikes, bandhs, gheraos, processions, and economic paralysis. My Bengali friends were, of course, overjoyed that revolution was round the corner. Slowly, though, these disruptions passed out of the news although they continued: West Bengal ceased to matter to the rest of India.
Today, I find West Bengal again in the news – not for the bandhs and processions which continue, but for Singur. The lineup is, however, different. Whereas the communists were the villains of the 1970s and 1980s, angels are on their side today; so also are capitalist devils. Everyone takes it for granted that Ratan Tata’s plan to make people’s cars in Singur is a Good Thing, that it is heroic of Buddhadev Bhattacharya to vanquish all opposition to it, and that Mamata Banerjee is a crazy Luddite.
Ratan Tata is one of the most respected men of my generation. But I find some of his recent actions uncharacteristic. Throughout independent India’s history, the Tatas kept a distance from the government. In the licence-permit raj, the right to expand or diversify became a favour from the government for which businessmen had to fight and bribe. Most of them did both. But the Tatas stuck to their knitting, and did what they could without courting politicians, begging for favours and oiling political wheels. They dominated the truck and bus industry, made TISCO the least-cost steel producer, and built up TCS outside the control net. They did not bend their knee to anyone – not to Indira Gandhi, nor to Rajiv, nor to George Fernandes. When I joined government in the 1990s, controls were still in place. Many industrialists came to pay court or nudge files along; never anyone from the Tatas. For that I respected them – and so did many of my fellow-Indians.
Singur is the first project on which the Tatas have relied on a government – this time the government of West Bengal – and sought its favours. This is not necessarily improper – not unless they raise their contributions to CPI(M) immoderately – but it is unusual; this is precisely the sort of thing they eschewed when it was so much more common and so necessary for success.
What made them change? My guess is that after the passing of central controls, competition has intensified, corruption has seeped from the centre to the states, and in the dirty new world that has arrived, the Tatas have decided that the West Bengal government is the lesser evil. With the opening up of the economy, it has become easy to import automobile components. And for the smaller manufacturers, accessing the export market has become essential if they are to reach the necessary minimum scale. So the entire automobile industry is rushing to the coast. Tamil Nadu and Gujarat are the favoured locations. Tamil politicians are reputed to be economically rational; and the BJP, of which Narendra Modi is the satrap in Gujarat, is equally realistic about the relationship between power and political prosperity. Ratan Tata has publicly rued that the Tatas were kept out of the aviation industry while sundry upstarts approached politicians and obtained licences. It must hurt because both JRD and Ratan have been amateur flyers and because Air India, the Tatas’ pioneer airline, was snatched away by the government. Ratan Tata presumably found Tata Motors losing out because it would not bribe the politicians of the coastal states; he made a bargain with the government of West Bengal that he found acceptable. I would like to know, though, what the bargain is.
I wondered, earlier, about the Tatas’ bid for Corus. The Birlas were the first to go international; today, every Tom, Dick and Harry is buying companies abroad. But the Tatas stuck to their domestic base through the worst years of controls; why are they trying to acquire a foreign company three times the size of Tata Steel? I attributed the decision to the forthcoming consolidation of the world steel industry, of the emergence of big players like Mittal-Arcelor and their likely entry into the Indian market space. But then I realized that the Tatas were not far behind in acquisitions abroad; their companies too have been spreading out since it was allowed. So I now wonder if it has something to do with the competitive corruption emerging between Indian states – whether the Tatas are winning beachheads in markets abroad where industry is freer and governments cleaner.
Coming to West Bengal, it has always struck me how top-down development in this state is. If you look at India’s most developed states – Tamil Nadu, Maharashtra, Gujarat – most industry there is indigenous and small-scale. All the businessmen whom the West Bengal government favours are big and non-Bengali. In the 1980s and 1990s, they were foreign; Indian industrialists were not welcome. Even now they are generally foreign, like the Salims. The Tatas are the first Indian group to have found favour; and they are different. They treat their workers well, and are friendly to trade unions. They are more congenial to communists.
In particular, I have been struck by Buddhadev’s studied neglect of Mukesh. He is sitting on huge reserves of gas of the Krishna-Godavari coast, and is looking for somewhere to land it and sell it. He tried UP, but the split with Anil wrecked that plan. He has been courting Tamil Nadu, so far without success. All that gas would transform the industrial future of West Bengal. What makes Buddhadev hesitate? The spectre of CITU descending on Calcutta with hundreds of thousands of coal miners?
So I am tempted to formulate the following laws of development under communism. The communist state is a slave of its trade unions. It is forced to rely on big industrialists because small industry cannot survive organized, militant trade unions. Amongst big industrialists it prefers foreign ones who would have no constituency in this country. If it cannot get them, it will settle for Indian ones, but only if they accept CITU. And competition in product markets weakens the bargaining power of trade unions; so it would prefer firms that have a monopoly or a niche market.
These are stringent requirements; if the West Bengal government sticks to them, it may attract Tata Motors, but it will achieve little overall industrialization of the state. If I am right, Buddhadev will face increasingly obstinate opposition within the CPM family, will win ever greater admiration from the bourgeoisie, and will be largely ineffective. It is not his fault; it is the party he belongs to. He should bend it to his will, or split it.
