The Way to Industrialization

Songs vs. Silk Handkerchiefs

As an undergraduate student of Economics in Presidency College, I was fortunate enough to have Professor Bhabatosh Dutta as one of my teachers. Few who had attended his lectures, which were a unique combination of analytical exposition and classy humour, can ever forget the sheer magic of his teaching skill. And, despite the progress made by the science of economics since his days, the wisdom that emerged from his witticisms appears to have stood the test of time.

An example of his teaching method readily comes to mind in connection with a story he related to us to exemplify the comic levels to which economic competition might descend when left to the care of dilettantes. It appears that during the British rule, there was an English company running steamer services between Goalanda and Narayanganj to connect Calcutta and Dacca. What with nationalist aspiration rearing its head, a group of natives decided to offer competition to the British company. The latter in a bid to retain its share of the market began to offer free gifts, silk handkerchiefs if memory serves me right, to its passengers. But the natives, even though capital wise much poorer, were not to be left behind either. However, they were not in a position to shower gifts that fell in the category of tangibles. To make up for this deficiency therefore, the Swadeshis decided to entertain their patrons with patriotic songs!

The story, needless to say, has a bearing on the recently concluded congregation at Haldia and the all around comparisons that are being drawn between the Bengal Leads and Vibrant Gujarat shows. Unlike the sworn enemies of the party currently in power in the State of West Bengal, this author does not believe that the government lacks a will to move towards economic prosperity. However, it does appear to him that the messages it is sending out to lure back exiled capital into the State amount to sheer naiveté.

From all indications, the Government views economic development as a vertically extended three tier structure, with agriculture occupying the bottom-most level, otherwise known as land.  Industry is located immediately above, in its precarious search of space on tree branches to build its nest. Finally services in the third tier are expected probably to float in thin air like zeppelins borne on gasbags.
Zeppelins didn’t fly of course if the gasbags leaked. The State’s opposition to SEZ’s is a case in point, even when SEZ’s cause sacrifice of Central rather than State Government revenues and hold a potential for employment generation within the State. As far as one can make out, the Government does not favour SEZ’s since they confer unfair competitive advantages on some, in preference over others. The latter probably are the small stakeholders in our industrialization drive.

If so, then the Bengal Leads extravaganza amounted to an empty exercise at best. From all indications, the State wishes large business houses to invest here, worried though it is at the same time about the annihilation of the small by the big. If small or medium enterprises are to be offered the status of an endangered species, then it is not clear at all why big business should be invited at all.

In any event, it is unlikely that big ticket investments will be lining up to oblige us with an earth shaking industrial push. Should this mean then that economic progress cannot be achieved at all? Possibly not, since Bengal’s indigenous army of SME’s already exist here and are silently marching forward.
For example, few appear to be aware of the major strides made by investors in the solar energy field in this State. As recently as January 18, a gasoline station that runs entirely on solar energy was inaugurated on the outskirts of Siliguri on the Eastern Bypass Road. The station in question is not equipped either with conventional power supply or a generator set and was designed and executed by Sulekha Works Limited, a Kolkata based organization known in the past entirely for its brand of fountain pen ink.

Technology wise, the move from fountain pen ink to a solar operated gasoline station is a giant step. More importantly, the step was neither taken in Gujarat, nor by a business organization that can match the Tatas or the Ambanis. Yet, the project is the first of its kind in India. So long as we can set our sights on meaningful goals, therefore, miracles can happen in this State as well.

The investment promises multiple benefits. First, the waiver of Central Excise duties on solar items will yield an approximate saving of Rs. 50,000.  Secondly, assuming a total investment of Rs. 4 lakhs, the permissible depreciation allowance of 80 per cent will lead to a tax benefit of 32 per cent, which translates to a sum exceeding Rs. 1 lakh for the first year. Third, generators being dispensable, the cost of Rs. 3 lakhs for a 15 KVA set including installation will be foregone. In addition, electricity charges, estimated to lie between Rs. 5,000 to Rs. 7,000 per month, can be eliminated. Generators consume around 2.5 litres of diesel per hour. Thus, with an average power cut or low voltage supply for 3 hours a day, the quantity of diesel saved each year will amount to 2,737.5 litres, of which the money value at current prices is around Rs. 1,36,875. To summarize, the total investment of Rs. 4 lakhs will be offset by savings of around Rs. 1 lakh in depreciation related tax benefits and Rs. 3 lakhs towards the cost of the generator. Also, in the absence of electricity bills and diesel costs for the generator, the minimum reduction in running expenses will fall marginally short of Rs. 2 lakhs per year.

The individual entrepreneur’s gains will be complemented by social benefits as well in the form of an environment friendly technology. Besides, projects as the one described open up new avenues for employment creation. First, production of solar facilities requires trained personnel, skilled as well as semi-skilled. Second, and this is quantitatively more important than the production related employment, these activities hold the potential for generating maintenance staff employment. One supposes that in the absence of large areas of land to set up solar panels for power plants, our solar adventure will remain limited to small scale adventures. Solar lanterns helping the birth of healthy babies in Sunderban villages or solar batteries running Xerox machines, rather than solar plants connected to national grids, will penetrate rural and semi-urban areas. And with the population in these areas forming the majority, a significant market will develop for solar products and along with it a demand for maintenance personnel. Such maintenance workers will resemble barefoot doctors rather than IIT graduates and will not be too eager to migrate to what are now perceived as more employment friendly states.

Solar energy though cannot be the only example of the potential for SME propelled industrial growth in the State, especially those that will not pose a threat to agricultural land owners. Preparing a list of such other industries should constitute the Government’s priority, for as matters stand now, they are far more likely to lead Bengal’s industry out of the mess it has found itself in than large capitalist investors arriving from beyond the State’s boundaries. Capitalist competition, especially competition between large players, is a merciless or dirty game if you will, driven by an endless quest for profit. Indeed, big capital has rarely, if ever, been known to have been attracted by anything other than the rate of return it commands, let alone opportunities to demonstrate singing abilities, in or out of tune.  

With Gujarat and possibly other states waving their silk handkerchiefs, it is high time that the Government of West Bengal engages itself in introspection. 


More by :  Dipankar Dasgupta

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