With the West Bengal Assembly elections just round the corner, the state stands at a decisive political moment. Beyond slogans or symbolism, elections are about governance, performance and the economic future of millions of citizens. It merits a study as to how a state that once stood among India’s foremost economic powerhouses has gradually slid into stagnation under decades of poor governance, first under the Left Front and then under the All India Trinamool Congress government.
For voters in Bengal, the persistence of longstanding economic problems raise an unavoidable question: How did a state that once drove India’s industrial growth end up struggling to retain investment, jobs and opportunity?
At this moment, a new report titled “Structural Stagnation of West Bengal’s Economy: A Review of Economic, Fiscal and Developmental Trends”, edited by Dr. Vidhu Shekhar (Faculty, SPJIMR Mumbai; Ph.D. Economics, IIM Calcutta; B.Tech, IIT Kharagpur) and Dr. Milan Kumar (Faculty, Indian Institute of Management Visakhapatnam; Ph.D., IIM Calcutta), has entered the public domain.
The report offers a detailed examination of the glaring dilapidation of Bengal’s past economic dominance and presents a data-driven, academically grounded critique of governance outcomes across successive political regimes, including the prolonged rule of the Communist Party of India (Marxist)-led Left Front and the subsequent government led by the All India Trinamool Congress. Drawing on official economic data, the study evaluates how policy choices, fiscal priorities and structural constraints have shaped the state’s development trajectory over several decades.
Industrial pride to economic decline
There was a time when West Bengal symbolised India’s economic dynamism. The Hooghly industrial belt was lined with jute mills and engineering units. Kolkata was the commercial capital of eastern India. Manufacturing, port trade and finance created a vibrant ecosystem of enterprise. In 1960–61, West Bengal accounted for about 10.5% of India’s GDP, making it one of the largest contributors to the national economy. Today the story is dramatically different.
By 2023–24, Bengal’s share in national GDP has fallen to just 5.6%. In simple terms, the state that once drove India’s industrial growth now contributes barely half of what it once did. This collapse did not happen overnight. Historical shocks such as Partition and misguided national policies such as freight equalisation weakened Bengal’s industrial base. But what followed was far worse: decades of political mismanagement that drove away investment and enterprise.
The Left Front institutionalised militant trade unionism that pushed industries out. The TMC promised change but instead presided over the continuation of economic stagnation.
Fifteen years of TMC rule: Promises without growth
When the Trinamool Congress came to power in 2011, it promised a new dawn for Bengal’s economy. After fifteen years in office, evidence suggests that the promise has not translated into structural revival. Essentially, while welfare programmes have expanded, core economic fundamentals – investment, industrial growth and fiscal sustainability – remain deeply fragile.
One of the most alarming indicators is the state’s debt burden. West Bengal’s public debt is estimated to have reached ₹7.06 lakh crore by FY25, nearly four times higher than what it was when the TMC took power. The debt to GSDP ratio now stands at around 38.9%, among the highest for major states in India. This means that future generations of Bengalis will be saddled with an enormous fiscal burden.
A Debt driven model of governance
The fiscal situation becomes even more troubling when one examines how the state spends its money. Interest payments alone now consume more than 20% of the state’s revenue receipts. In other words, a large portion of taxpayer money is being used simply to service past borrowing. Fiscal deficits have remained persistently high, and the state continues to borrow even to finance routine expenditure rather than long term infrastructure or industrial investment.
At the same time, expenditure patterns reveal a worrying imbalance. Nearly 46% of the state’s budget is directed toward social services and welfare spending, while allocations for sectors such as industry, MSMEs and information technology remain comparatively small. Welfare measures may provide short term relief, but an economy cannot survive on redistribution alone. Without industrial expansion and private investment, jobs will simply not be created.
The great industrial exodus
Perhaps the most telling statistic about the state’s woes concerns the flight of companies from Bengal. Between April 2011 and September 2025, more than 6,600 companies shifted their base of operations out of West Bengal. It is a clear signal of declining investor confidence. Investors look for stable governance, predictable policies and supportive infrastructure. When companies begin leaving in such large numbers, it reflects deeper structural problems in the investment climate.
Even in terms of foreign investment, the situation is equally troubling. Despite being one of India’s most populous states, West Bengal attracts less than 1% of the country’s total foreign direct investment. A state with Bengal’s history and strategic location should have been a magnet for investment. Instead, it has become a marginal player.
A State exporting its workforce
The human cost of this economic stagnation is visible in migration patterns. Today, over 22 lakh workers from West Bengal are employed outside the state. Large numbers of young people are leaving their homes and families in search of work in other states. This is a “silent referendum” on the state’s economic conditions. When young people cannot find opportunities at home, they are forced to leave everything behind and migrate. A state that once attracted labour from across the country is now exporting its workforce.
Sectoral distress and infrastructure deficit
The economic distress is visible across sectors. The tea industry in North Bengal, once a pillar of the regional economy, has been facing declining production and financial stress. Plantation workers continue to struggle with low wages and poor living conditions.
Infrastructure investment, which should have been a catalyst for industrial revival, remains inadequate. Spending on physical infrastructure is below the national average, constraining logistics, connectivity and industrial competitiveness. Without modern infrastructure, large scale industrial investment simply cannot take root.
A stark warning for Bengal’s future
What emerges from a cursory glance at the state’s fiscal, economic and social standing goes beyond a critique based in numbers. It is a warning about the consequences of prolonged economic stagnation. Rising debt, declining investment and large scale labour migration together paint a troubling picture of Bengal’s economic future.
West Bengal’s decline is not inevitable. The state still possesses enormous strengths: a strategic geographic location, access to eastern markets, a talented workforce and a deep entrepreneurial tradition. But potential alone is not enough. It requires governance that prioritises growth, investment and job creation.
The choice before the people of Bengal
The upcoming Assembly elections therefore represent far more than a political contest. They are a referendum on Bengal’s economic future. For decades, the state has moved from the economic mismanagement of the Left to the stagnation of the TMC. The result has been declining industrial presence, mounting debt and shrinking opportunities for the youth.
The people of Bengal now face a fundamental choice. Do they continue with a governance model that has presided over economic decline and investor flight, or do they choose a new path that prioritises industrial revival, infrastructure development and employment generation?
Bengal once led India’s industrial revolution. There is no reason why it cannot lead again. But for that to happen, the state must first confront a hard truth: Economic stagnation cannot be hidden behind political rhetoric forever.
And the Bharatiya Janata Party’s ‘Double Engine Sarkaar’ has a proven track record of taking several states – from economic stagnation to an economic success story.
Author: Kritant Mishra, Public Policy Professional
