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The Truth about Bengal's De-industrialisation In 1947, Bengal was the most industrialised province in India, with one-fourth of all registered factories, and 24-27 percent of industrial output. But these figures hide some important truths: a) Bengal's key industries largely produced raw materials and inputs: jute, coal, iron & steel, and tea. b) They were overwhelmingly owned by non-Bengalis, and c) The condition of the working class was abysmal. The largest of the capitalist groups were British expatriates who operated through managing agencies - Andrew Yule, Bird & Co., Williamson Magor, McLeod & Co., Begg Dunlop, etc. As late as 1955, more than two-thirds of India's diversified business groups were British owned conglomerates with headquarters in Calcutta. The second big group was Marwari trading capital - Birlas, Goenkas, Bangurs, Khaitans, Kanorias, Jalans, Bajorias, etc. British control was finally dismantled after the Hazari Reports of 1964 and 1966, and the Monopolies Inquiry Commission of 1965. This accelerated the transfer of corporate control from the British to the Marwaris - something that had already started in the early 1950s. The buyouts were financed by private banks, share market manipulations, and even funds diverted from worker PFs. The focus was on arbitrage earnings, rather than expanding production. What broke Bengal's back, however, was the Freight Equalisation Act of 1956. Before 1956, it made sense to set up factories close to the source of coal, and iron ore. And that gave Bengal its unique advantage, since it was the hub of the mineral wealth of the eastern states. But the Freight Equalisation Act brought in by the Nehru government removed that advantage, by subsidising the flow of raw materials to other states. This meant that factories could be set up elsewhere and didn't need to be concentrated in Bengal. Within a few years, Maharashtra was receiving many more industrial licences than Bengal, and by 1964, well before the Left came to power, Bombay's factories were employing 13.5 lakh workers, compared to Bengal's 8.8 lakh. What about workers? Bengal's jute, steel and mining companies were notorious for exploiting workers. This became a cause of struggle under the national movement as long as their employers were British. But even after the transfer of ownership, the conditions of Bengal's working class continued to be terrible. Even in the early-70s, their wages were about a third less than what workers earned in Maharashtra, and surveys showed they suffered from chronic work-related ailments. That was the ground on which Bengal's militant labour movement arose and then intensified from the mid-1960s. The Left and socialist parties rode on the anger and frustration of industrial workers, miners, and of course, share-croppers. The 1967 United Front govt, brought SUCI's labour leader, Subodh Banerjee, to the labour minister's chair. He would come to be known as 'gherao minister.' Gheraos increased dramatically, and industrial stoppages rose from 179 in 1965 to 894 in 1969. The Left's political obligation was towards workers - not their employers. This accelerated the flight of capital that had already started two decades earlier. Equally important was the collapse of the global demand for jute, which was once the mainstay of Bengal's industry. Along with that the nationalisation of coal by Indira Gandhi also removed another important magnet for private capital in the region. The end of the licence-quota raj after the mid-1980s, caused a massive migration of capital from pro-worker states to pro-employer states. The Left Front's initial strategy was to implement land reforms, and generate capital formation in agriculture. While there is no doubt that Operation Barga was the most successful example of land reforms in India, the LF completely failed in its programme to create rural industries. This was despite the CPIM's trade union, CITU, becoming largely an industrial peace broker, shedding its old militant stance. By 1991, the number of stoppages had dropped to 192 (from 894 in 1969) out of which only 32 were because of workers' strikes. Most of the industrial stoppages were because of employers locking their factories and leaving. By 2003, mandays lost in West Bengal due to lockouts by owners was 16x that of what was lost due to workers' strikes. Of course, this was because other states were much more capitalist-friendly than West Bengal, and were much more open to implement anti-worker 'labour-reforms.' The biggest example of that was the suppression of the long textile workers' strike in Mumbai. The Left Front, under Buddhadeb Bhattacharjee tried its best to compete with other states to present a business-friendly image. It succeeded as well, in attracting capital into real estate, establishing SEZs across the state, and even getting the Tatas to invest in Singur. The rest, of course, is history. The question remains - why did the Bengalis not develop their own capitalist class? That is an entirely different story.