There was a time when West Bengal was the nerve center of India’s socio-economic trajectory – when the intellectual, cultural, and financial arteries of the nation pulsed through the streets of Kolkata.
The city was not only the capital of British India for nearly 140 years; it was also the economic capital in independent India’s formative years. So prominent was West Bengal’s role that in the early decades post-independence, it commanded a formidable share in the national GDP and shaped India’s developmental discourse. But cut to 2025, and the picture stands in contrast – what was once a thriving industrial and cultural giant has been reduced to a state struggling to find its economic footing.
In 1960–61, West Bengal held an impressive 10.5% share of India’s GDP, ranking third in the country. Today, that number has nearly halved to just 5.6% in 2023–24. This isn’t a sudden drop, it has been a consistent, decades-long slide, revealing deep structural issues that have gone unaddressed. Some may argue that West Bengal still ranks sixth in terms of absolute GDP, so where lies the crisis?
The answer becomes clear when one examines per capita income, a truer measure of economic prosperity. Back in 1961, West Bengal had the highest per capita income among all Indian states at ₹442, ahead of even Maharashtra (₹403), Punjab (₹374), and Gujarat (₹372). It stood at 127.5% of the national average. But fast forward to 2023–24, and its relative per capita income has dropped to 83.7% of the national average, falling below even traditionally lagging states like Rajasthan and Odisha, as illustrated in a recent paper by the Economic Advisory Council to the Prime Minister (EAC-PM).
The same paper notes a clear pattern: the western and southern regions of India – particularly Maharashtra, Tamil Nadu, and Gujarat – have outpaced others in economic and industrial growth over the decades. In contrast, West Bengal, despite being mineral-rich and strategically located, has witnessed not just stagnation, but significant de-industrialization.
To understand this decline, consider – : in 1947, Bengal contributed nearly 25% of India’s manufacturing GDP. Today, it contributes less than 3%. Once among the richest states in terms of per capita income, West Bengal now finds itself categorized among the bottom-most states, as pointed out by the Union Finance Minister in her address on May 15.
Worryingly, the state’s debt-to-GDP ratio stands at 39%, one of the highest in the country. This level of debt is not just unsustainable, it’s alarming. The per capita debt is at an all-time high, raising concerns about a looming debt trap that could further restrict the state’s developmental capacity.
While Maharashtra and Tamil Nadu (once West Bengal’s industrial peers in the 1960s) have continued to modernize and diversify their economies, Bengal has lost its industrial muscle. And this has happened despite its enviable geographic and natural advantages.
Today, West Bengal is no longer just a state facing an economic slowdown; it is a state whose continued stagnation threatens to pull down broader national ambitions. As the EAC-PM paper warned, the state’s long-term underperformance is not just a regional issue but a national concern, especially given Bengal’s pivotal location in India’s Act East policy and trade connectivity to Northeast India and Southeast Asia.
But, the sleeping dragon must awaken. Because this is no longer just about West Bengal’s revival, it’s about India’s growth story, too. Without Bengal rising, India’s aspirations for inclusive development and regional balance risk becoming nothing more than unfulfilled dreams.
Why West Bengal’s Revival Is Crucial for India’s Growth and Strategic Interests
Today, West Bengal stands as India’s fourth most populous state, home to nearly 8% of the country’s population. But its importance extends far beyond its borders.
The state’s geographical and economic position holds the key to unlocking the developmental potential of India’s eastern corridor – including Bihar, Jharkhand, Odisha, and the entire Northeast. In fact, as stated by the Economic Advisory Council to the Prime Minister (EAC-PM) in its report “Relative Economic Performance of Indian States: 1960–61 to 2023–24,” the stagnation of eastern India remains a matter of pressing concern.
The report uses two key parameters – a state’s share in national GDP and its relative per capita income – to show how far West Bengal has slipped from its once-commanding position. But within this sobering data lies a crucial opportunity – if West Bengal rises, it can carry the rest of eastern India with it.
Strategically positioned on the Bay of Bengal, West Bengal could become a vibrant economic and logistical hub—not just for domestic trade, but also for international connectivity. Its ports – Kolkata and Haldia – are natural gateways to the landlocked states of Jharkhand, Bihar, Odisha, and the Northeast, via road, rail, and inland waterways. The state is also the employment and service nucleus for this entire region, with Kolkata acting as the nerve center for jobs, education, and healthcare.
But the reality today is far from ideal. Poor port efficiency and sluggish infrastructure have already started affecting trade flows – Odisha’s steel exports, Assam’s tea trade, and even essential freight movement are impacted when West Bengal’s logistical arteries clog. The ripple effects are both economic and geopolitical.
At an international level, West Bengal’s relevance becomes even more pronounced. The state shares borders with Bangladesh, Bhutan, and Nepal, making it central to India’s regional diplomacy and trade. Projects like the Chilahati–Haldibari rail link and the Kaladan Multi-Modal Transit Transport Corridor, which connects India to Myanmar and further to Southeast Asia, all run through West Bengal. In the near future, India’s access to Thailand, Laos, Cambodia, Vietnam, and Singapore could be channeled through Bengal. But without robust infrastructure and economic strength in the state, these grand foreign policy ambitions risk stalling.
West Bengal’s ports, especially Kolkata and Haldia, are vital exit and entry points for landlocked countries like Nepal and Bhutan. If Bengal can enhance its inland connectivity and modernize its logistics, it would not only deepen India’s trade links with South Asia and ASEAN, but also accelerate the development of the Northeastern states, often seen as isolated from India’s growth story.
The security and migration dimension must also be considered. A thriving Bengal could reduce cross-border illegal migration and associated tensions, creating a more stable demographic and social environment. Moreover, in the wake of China’s expanding influence in Nepal, Bangladesh, and India’s Northeast, West Bengal’s development is no longer just an economic imperative- it is a geopolitical necessity. A strong and stable Bengal can anchor India’s eastern flank and act as a bulwark against external strategic pressures.
Given this context, the question must be asked: If Bengal is so critical to India’s future, why has it lagged behind for so long?
The answers lie deep in history. From the British era, West Bengal was the economic crown jewel of India. Kolkata was once synonymous with progress—boasting some of the best infrastructure, education systems, banking institutions, and globally recognized industries, especially in textiles and jute.
But 1947 changed everything.
Just like Punjab, West Bengal was torn apart by Partition. The division with East Bengal (now Bangladesh) unleashed waves of communal violence and dislocation. Over 4 million Hindu refugees poured into the state from East Pakistan, straining resources and governance. The demographic pressure was overwhelming, but the economic consequences were equally devastating.
Take the jute industry, once the pride of Bengal. While the processing and export hubs remained in India, over 75% of the jute-growing areas went to East Pakistan. What use were the factories and mills in West Bengal, if the raw material had to be imported across hostile borders? The industry collapsed, taking with it a vast swathe of jobs, infrastructure, and economic confidence.
This loss marked the beginning of a slow economic unraveling – a trajectory from which the state is yet to fully recover.
How Policy, Politics, and Ideology Pulled West Bengal Backward
For West Bengal to reclaim its lost glory and fulfil its geographic and economic potential, what it needs is not just vision but an enormous financial push. However, any discussion on Bengal’s sluggish development must account for the historical policy missteps and political choices that have consistently undercut its progress.
One of the most damaging of these was the “Freight Equalisation Policy” introduced by the Central Government in the 1950s. On paper, this policy aimed to promote balanced regional development by subsidising the transportation of raw materials, particularly coal and steel, across the country. But in practice, it stripped states like West Bengal of their inherent industrial advantage. As a mineral-rich, resource-proximate region, Bengal should have naturally attracted industry. Instead, thanks to freight equalisation, industries now had no cost incentive to be located near raw material sources, and they began drifting toward other parts of India, particularly Maharashtra and Gujarat. This was a foundational blow to Bengal’s industrial ecosystem.
But it wasn’t just policy; the socio-political conditions was equally turbulent. The rise of militant trade unions, especially from the 1960s onward, further drove businesses away. The industrial climate turned hostile, with frequent strikes, shutdowns, and labour unrest. Industries began shutting shop, either scaling down operations or exiting the state entirely. Investors became wary, and new entrants chose more stable destinations. Bengal, once the industrial hub of India, slid into a period of prolonged stagnation.
Amid this economic despair, Naxalism was born. In 1967, the small village of Naxalbari in North Bengal became the epicentre of a violent agrarian movement aimed at overthrowing the existing feudal order. What began as a peasant uprising quickly evolved into a nationwide armed insurgency against the state. While the Naxal movement spread to other states over the decades, its roots in Bengal are a grim reminder of what sustained economic neglect and disenchantment can lead to. Even today, Left-Wing Extremism remains one of India’s most pressing internal security challenges.
Then came another long chapter that sealed Bengal’s fate further- the Left Front rule from 1977 to 2011. While the Left came to power on the promise of social justice and land reforms, their tenure soon devolved into economic mismanagement and ideological rigidity. The government’s anti-capital stance, suspicion of private enterprise, and excessive bureaucracy made West Bengal an investor’s nightmare. The infamous slogan “Industry is not our priority” echoed the sentiment of the era.
The result? A massive industrial flight. Major corporations exited the state. Bengal’s economy became dependent on services and remittances from its diaspora. Job creation stagnated. The youth began migrating in large numbers, and Bengal was left watching other states race ahead.
The political shift in 2011, when Mamata Banerjee’s Trinamool Congress (TMC) came to power, was seen as a ray of hope. The expectation was that the TMC would reverse the anti-development legacy of the Left, rebuild trust with industry, and usher in a new era of economic revival.
But more than a decade later, those hopes remain largely unfulfilled.
While there have been attempts at infrastructure development and some progress in social welfare schemes, West Bengal’s core industrial and economic base remains weak. Investors continue to view the state as a politically volatile and bureaucratically challenging destination. The Singur-Tata Nano debacle under the TMC government is still cited as a case study in how not to handle industrialisation. Land acquisition remains a contentious issue, and major projects have either stalled or fled.
Economists argue that West Bengal today needs aggressive reforms, infrastructure modernisation, and policy stability to even begin closing the gap with more developed states. But without a consistent political will, Bengal remains stuck in a limbo – rich in potential but poor in performance.
The Last Bit, Bengal’s Destiny Is India’s Opportunity
In conclusion, the story of West Bengal is a story of missed opportunities and of how policy, politics, and ideology can together dim a state’s promise. It is also a story of latent power.
West Bengal is strategically located, culturally rich, and intellectually vibrant. It can still be the gateway to Southeast Asia, the engine of growth for the East, and a bulwark against external threats. But only if it is given the chance, and if its leaders are willing to rise above short-term politics and reignite the fire that once made Bengal the pride of India.
India cannot afford a weak Bengal. Will Bengal rise again, or continue to be a sleeping giant shackled by its past and limited by its present?
