Pratim Ranjan Bose
Inequality is increasing across
the world. This is one flip side of the investment bank-led capitalist growth
pursued after the fall of Berlin Wall.
On January 6, an Indian pink
daily carried a report on growing rich-poor gap in urban India . The gap,
measured by Gini coefficient, has grown most prominently in as many as 10 states
including, Assam , Haryana,
Karnataka, Kerala, Maharashtra, Odisha, Rajasthan, Uttar Pradesh and West
Bengal and Delhi .
A Gini coefficient
is measured against a scale of 0 and 1. Higher the coefficient, wider is the
rich-poor gap. Higher inequality does not necessarily mean that the poor is getting poorer in absolute terms.
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It may quite be the case that the
average earning of the bottom 20 per cent is moving up. But, the rich 20 per
cent is definitely getting richer at a faster pace. In all probability that is exactly
the case with top four in the list, at least two of which - West
Bengal and Kerala - are ruled by Leftist ideals.
Leaving theories aside, one can
easily identify some of the reasons behind the widening rich poor gap in at
least three of the states.
Kerala is clearly fueled by the
gulf money. Haryana and Karnataka have stinking-rich landed gentry who are
getting richer in a liberalised economy. Both are dominated by a wide cross
section of India ’s
rich and corrupt politicians and are front runners in industrial growth.
Idiosyncratic features of Bengal
But, West
Bengal has none of these common features.
It doesn't have access to dollars, as in Kerala.
Leave alone private jets,
palatial bungalows and fleet of imported cars (owned by many top politicians across
the country); senior leadership in West Bengal cutting across party lines are
better known for their simple living and high socialistic ideals.
It is perhaps the only state to have
implemented land reforms policies of the country to its maximum potential by
way of enforcing land ceiling, redistributing excess land to rural poor,
offering landless farmers legal protection against eviction and the right to earn
livelihood, ensuring minimum wage for farm labour and; decentralising
administrative power to elected local bodies.
The entire process was in place
at least 30 years ago, making the State a model for empowerment of the poor
and, theoretically, bringing an end to capital accumulation by a few.
If capital formation was curbed
in villages, there were little chance for capitalists to make hay in the cities
either.
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Leftist political ideals have always
had strong influence in West Bengal ’s
electoral scene. Left Front ruled the state for a record 34 years from 1977 to
2011. They were overthrown by a party, Trinamool Congress, which is more Left
than Left Front, in terms of its election manifesto and policy implementation.
The result of this political
trend is evident in West Bengal ’s subdued business
scenario. Once the industrial capital of the country; Bengal
has turned a graveyard of industries at least 30 years ago.
And, whatever little momentum was
generated by the former Buddhadeb Bhattacharjee government, to rejuvenate the
scene, ended in a whimper; as the state was gripped by another spate of
suicidal politics, spearheaded by Mamata Banerjee’s Trinamool Congress.
Cash economy, and high real estate rates
But nothing seems to have worked
in favour of the state when it comes to bridging the rich-poor gap that has now
reached dangerous proportion.
In a State, where Chief Minister shun official residence for a Jhuggi;
an increasing number of people are definitely making money, black money,
through illegal means.
The evidence is readily available
in the Kolkata’s real estate rates. On carpet-area basis, Kolkata’s residential
property value is comparable to economically more bullish Chennai, Bangalore and Noida in
the National Capital Region (NCR)!
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| Booming real estate |
Chennai is India ’s auto-hub, Bangalore is home of top IT and biotechnology companies and Noida is one of the top commercial centres of this
country. In comparison Kolkata is a poor cousin. It is low on economic activity
as is evident in its electricity consumption, tax collection and so on.
Lack of job opportunities made
the State a net exporter of both cheap labour and skilled manpower to the rest
of the country. If Bengali farm labours are travelling to Kerala or Punjab for livelihood opportunities; Kolkata’s best
students migrate to other cities for jobs.
The contradiction doesn’t end
here. During the last four years, property prices were down in all major cities
due to lack of demand. The only exception is Kolkata. Here prices moved up on a
year-on-year basis, indicating far stronger demand-pull than the rest of the country.
But who buys these high priced
properties? Definitely they are not the tax payers. Check with the banks, there
is hardly any growth in number of loan accounts. Properties worth crores of
rupees are sold here, on cash!
They are not investing either for
housing or for tax avoidance. They are flooded with cash and parking the same
in properties. At least 40 per cent of residential properties in any housing
estate are either vacant or on rental. And, since there is an over supply of
properties, rentals are subdued. That makes the case even more difficult for a
tax payer to invest in real estate on loan and grow his wealth. Because his
EMIs are a few times of the rentals earned.
The situation is same across the
urban areas of West Bengal . Travel along the
length and breadth of this highly urbanised State, and you will find apparently
sleepy towns or non-descript urban areas commanding as high property prices as
in industrial centres of Pune or Hyderabad .
There is something really
distinct behind this inexplicable prosperity of a section of population in West Bengal .
Managing illegalities?
I have not come across any study on
the rising inequality in West Bengal . I can only
hazard a guess.
Debabrata Dutta in an article in
Economic and Political Weekly (EPW), blamed the former Left Front government
for introducing an informal system of governance that allowed many to operate out
of the loop of the formal economy. The phenomenon, termed as “managing
illegalities”, is considered instrumental behind the State’s abnormally low revenue
collection ratio vis-à-vis Gross State Domestic Porduct.
It was initiated in the garb of helping
the poor. So, auto-rickshaws were allowed to ply illegally. Hawkers occupied
the pavements, blocking way of costly showrooms or super luxury hotels. Illegal squatters set up shops or houses on prime properties.
Sooner or later, it became the
mainstay of the economy. The party leadership down the line had become the
epicentre of all illegal power giving rise to a hierarchy of nouveau riche, thriving
on the business of managing illegality.
The protected Eastern
Kolkata wetlands were converted into prime real estate. The city’s
wide pavements, once encroached by the poor, became lucrative commercial spaces
changing hands for lakhs of rupees. From health, housing to transport, strong
cartels were at play everywhere.
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| On Migration? |
Some people were getting richer
quickly and the poor had the option open to either work for the cartel or move
away. Most of the poor opted to serve the cartel, further helping the
managers of illegalities to strengthen control of politics.
Villages witnessed a spree of consolidation
of the same farmland - that was once redistributed - by virtue of lease
agreements. There emerged a new set of cash rich landed gentry. They are more
powerful than the erstwhile landlords or Zaminders and operate completely out
of the ambit of law.
One may argue if the new wave of
capital accumulation in villages is triggering rural-urban migration leading to rapid urbanisation and widening of the rich-poor gap in cities.
In 2006, when Mamata Banerjee was
protesting acquisition of 1000 acre farm land for Tata Nano at Singur; large
tracts of land in the region were quickly changing hands. 'Nano' left Bengal in 2008 but, Singur, once a nondescript village, witnessed
a marked rise in real estate construction in last five years.
To cut a long story short, behind
the humble lifestyle of the top Left leadership, there emerged a vicious system
that shook the very foundations of equality, once pursued and implemented by
the same politics.
Left Front is out of power but, it
is doubtful if there is any abetting of the growth of informal economy. On the
contrary it might have become a bit too big for the comfort of formal economic
activities.
The evidence was readily
available in the recent growth of ponzi schemes in West
Bengal . The operators not merely mopped up lakhs of crores from
unsuspecting investors but, used the funds in owning vast tracts of land across
the State through fictitious ventures. They are today the biggest financier to
the State politics and, directly or indirectly, control majority of the media
houses.
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Picture courtesy: India Poperty, India Today, Rediff, Business Line
To the best of my knowledge, Bengal is not the only state to have implemented land reforms policies. The first-elected communist government in Kerala introduced land reforms Act and was efficiently followed up by successive governments though it was not succeeded by agrarian reforms which is considered to be an imperative for its fruition. Initially, successive governments in Kerala were keen to tap the maximum potential of the law by way of enforcing land ceiling, redistributing excess land to rural poor, offering landless farmers legal protection against eviction and earn livelihood, ensuring minimum wage for farm labour. Also, the state has a track record on decentralisation front. Steps taken by several Left governments in the state to devolve administrative power to elected local bodies have always been grabbed attention of the world and many experts and people's representatives across the world visited Kerala to study the Kerala experiment and learn its experience on decentralisation front.
ReplyDeleteI think as a bengali I must say the root idea of the blog post caused much discomfort. A state historically known for its revolutionary ideas, now being reduced to a play ground or a hot bed of frauds and illegal doings is cause for no merriment. It pains me. But perhaps it's time for greater reflection. While statistics always behaves like a bikini ie shows more than its supposed to hide, the point about the widening rich poor divide is well taken. What I also realised was the the people of our state have warmed to the idea of quick money. We can't fault them at an economic level. There are studies to show that prolonged periods of unemployment do bring out the worst in even the most up right of societies. But that's beside the point. I like these lawlessness and illegalities. I believe that human nature is truly revealed when the odds of becoming bad are better than staying good and when the incentive to do good is absent. If Bengal is what it is shown doing today, we must accept that the glory days of being the intellectual capital etc were anomalies. If not the whole state, a majority is weak and desperate. We elected the left front government and the same people chose to repose our faith in a narrow minded trinamool. If we were up against arms when centre meted out step motherly treatment we are same ones who berated marwaris in public but sucked up to them in private. A divided house has always been easy to destroy and I as a bengali am taking responsibility. No offence.
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