Industrialising West Bengal? : The case of institutional stickiness
While there is a clear policy shift towards large-scale industrialisation in the state of West Bengal (WB) during the early 1990s, not much improvement can be discerned in the performance of its manufacturing output. Moreover, contrary to the wider Indian experience, more than half of West Bengal's manufacturing output is still produced by small initiatives in the unorganised sector. We argue that it is the peculiarity of institutional behaviour that determines policy outcomes in the state. The rigidities in the political, as well as the economic, institutions in the state are prompting us to look at WB as a classic case of 'institutional stickiness' leading to 'path dependency'. Clearly, the right institutions for creating a more enabling environment for industry do not exist. Not only that, but their growth or emergence is frustrated by an overarching institution - 'the party' - which seems to keep encroaching upon every sphere. All this results in a veritable decline of organised manufacturing, alongside a corresponding growth of the unorganised sector in the state. Apart from secondary sources, this paper is based on information collected from selected stakeholders including business associations, firms, trade unions and bureaucrats.
Deepita Chakravarty & Indranil Bose, 2009.
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Last modified: 26th November 2009