India's east-west economic imbalance: Can a BJP-led West Bengal help tip the scales back?

The link is hard to quantify, especially in an era where economics is increasingly about mathematical models.

However, as pointed out by a paper on ‘The relative economic performance of Indian states during the period 1960-61 to 2023-24’ by Sanjeev Sanyal, member, Economic Advisory Council to the Prime Minister (EAC-PM), and Aakanksha Arora, joint director, EAC-PM, there is no getting away from harsh facts: the economic performance of Indian states has been vastly disparate.

West Bengal, which accounted for the third-largest slice of the country’s GDP at 10.5% in 1960-61, saw its share shrink to 5.6% by 2023-24, the most severe reduction among states. Accordingly, its per capita income went from 127.5% of the national average to 83.7% over the same period.

Another eastern state, Assam, which had an above-average per capita income in 1960-61, saw it drop in relative terms to 61.2% in 2010-11, though it improved to 73.7% in 2023-24. Likewise, Bihar; the undivided state’s relative per capita income was 70.3% in 1960-61, hit a low of 31% in 2000-01 and then stayed at around 33% after it was split into Bihar and Jharkhand.

Odisha, also in the east, saw a consistent decline on that measure over the three decades to 1990-91 (70.9% to 54.3%), but then recorded a significant turnaround, taking its figure to 88.5% in 2023-24.

The reasons for the relatively poor showing of our major eastern states vary. What is indisputable, however, is that they have lagged not just the rest of the country, but more notably, western states like Gujarat and Maharashtra.

The eastern states have been resource-rich, but appear to have been held back by a combination of adverse factors. Some states have lacked business-friendly policies. Land acquisition for industrial projects in West Bengal has been difficult, for example, as seen in the Nandigram and Singur episodes (in the latter, Tata Motors moved a car factory to Gujarat).

Eastern states have also lacked the sort of growth hubs full of local talent—such as Bengaluru and Hyderabad in the south—that could attract tech-related investment. Law-and-order has been sub-par too, though a long Maoist rebellion in eastern forest belts is said to have finally been quelled. In general, weak governance often features in investor complaints.

Now with West Bengal under the same political dispensation as the Centre and the BJP part of ruling alliances in Bihar and Odisha, can investors expect a shift in business conditions for the better? If so, the country would get a chance to address an economic divide that has not got as much attention as the gap between the north and south.

In the mid-1980s, demographer Ashish Bose coined the acronym ‘Bimaru’ for Bihar, Madhya Pradesh (MP), Rajasthan and Uttar Pradesh (UP) in a paper that outlined the slow progress of these states that were home to almost 40% of India’s population. Since then, these four states have made concerted efforts to shake off that tag, MP and UP especially.

If eastern states undergo a gear shift in favour of economic growth, it might well be time for a new acronym, Biba, which means ‘vibrant,’ for Bihar, Bengal and Assam.