West Bengal's Approach To Industrial Development Under Mamata Banerjee Is Difficult To Identify, Harder To Appreciate
From booting out prized investment in automobiles to displacing thousands for a difficult coal asset, West Bengal is following a mysterious path for industrial development.
Gas brought new opportunities to the region. But the state has to gear up to capitalise on it.
Matix Fertiliser was one of the many significant investments attracted by the former Buddhadeb Bhattacharjee government (2000-2011) in West Bengal. After the Tata Nano relocation in 2008, many dropped investment plans in the state. Some plans materialised. Some facilities - like Matix and India’s first greenfield private airport at Andal – came up but idled.
The Rs 4,700 crore fertiliser plant at Panagarh was practically ready by 2012. The company planned to use coal-bed methane (CBM) from nearby fields as feedstock. But things didn’t go according to plan. First, CBM production fell short of projection, and then creditors initiated recovery proceedings against Matix.
The gap is finally filled by the Urja Ganga pipeline project kicked off by the Narendra Modi government in 2016, to extend the natural gas grid to eastern India. The pipeline reached Durgapur in February 2021. In September, Matix settled its debt and commissioned the plant.
Pipeline of hope for Bengal
Natural gas is the latest hope to the gloomy industrial and (quality) employment scenario in West Bengal. With electric vehicles (EV) set to take care of the demand for cleaner auto-fuel; gas should help improve industrial viability by replacing demand for costly naphtha and polluting coal.
The intervention will benefit the entire region, including Eastern Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal. Two gas-based urea manufacturing facilities have already started operating in UP and West Bengal. Two more are in an advanced stage of construction in Barauni (Bihar) and Sindri (Jharkhand).
The full potential will unfold in a year or two. India doesn’t produce enough natural gas. Currently, liquefied natural gas (LNG) is imported through West coast terminals and pumped into the grid after regasification.
Urja Ganga is creating a V-shaped network that connects the national grid in UP. One arm of the ‘V’ will end in Haldia in coastal West Bengal. The other arm will connect Dhamra Port in Odisha, where the Adani group is building an LNG terminal in a joint venture with French energy major Total. The terminal will be operational in July 2022, augmenting gas supplies.
With a beeline of ports, huge investments in the mining and metals segment plus, IT and education hub in Bhubaneswar; Odisha is now the poster-boy of the East in attracting investment. They will not miss the emerging opportunity.
Eastern UP is aspiring for growth. Even a laggard Bihar threw its hat for expressways. Will West Bengal join the race to reinvent its lost economic might?
To do that, West Bengal must admit its mistakes in winning a political war over crucial investments, like Tata Nano or Infosys IT-SEZ.
Doesn’t matter if Nano, as a product, was a failure. The exit of ancillaries that Nano brought along came in West Bengal’s way in attracting investments in the promising EV sector. Ola ‘Future Factory’ of electric two-wheelers went to the automobile hub of Tamil Nadu.
Infosys is now building a second campus in Bhubaneswar. Fast widening IT space in the city attracted quality investment in private education. Engineering students from Kolkata now make a beeline for distinctly costlier private colleges in Odisha, for better placement.
The damage to the ecosystem is unimaginable. India is witnessing a start-up boom. A total of 42 start-ups attained unicorn status in 2021 alone. They are the new movers and shakers of the market. Kolkata is probably the only metropolis that is not home to a single unicorn. It doesn’t invest in start-ups either.
Buddhadeb Bhattacharjee might have had his failures. But his policy focus on state facilitation for the industry was not wrong. He created the right vibe and investments came in waves. The flow has dried to a bare minimum since.
Almost all big-ticket investments, which were completed in Mamata Banerjee-rule, started in the Bhattacharjee era. Many key infrastructure projects – like additional metro lines in Kolkata and widening of the North (Siliguri)-South (Kolkata) National Highway – initiated in the past, remained incomplete.
Huge infrastructure gap
The infrastructure gap is huge. Leave alone expressways and bullet trains; 75 years since Independence, 580 km road travel from Kolkata in the South to Siliguri in the North, is a back-breaking 15-16 hours journey. The highway widening project initiated nearly two decades ago is not yet complete.
Cities are engines of capitalist growth. Almost all major states have multiple growth centres. UP is creating metro connectivity in five cities. In West Bengal, urban infrastructure begins and ends with Kolkata. No mass rapid transport system except Kolkata Metro (single line) and Kolkata suburban railway. Both were created decades ago.
Even Kolkata is suffering from inadequate infrastructure. Bhattacharjee started construction of a bypass, to the existing EM Bypass, in the East. The work was stalled by an anti-land acquisition stir spearheaded by Banerjee in Opposition. As Chief Minister, Banerjee didn’t revive the project. Traffic now crawls on the overloaded and poorly maintained EM Bypass.
It is a pity that at a time when India is witnessing an infrastructure and connectivity rush, a key border state, home to nearly seven per cent of the country’s population, is suffering from low connectivity.
UDAN-regional air connectivity scheme launched by the Modi government has revolutionalised air travel in India but not in West Bengal. For all practical purposes, the state still has only two airports.
Some central projects, like Ganga Jalmarg, are moving. But the state took limited interest in tapping the opportunity in either enhancing cheaper multi-modal connectivity within state or attracting investment in modern barge making and repairing.
Investors don’t throw cash simply because politics wanted them to. They want to see the prospect.
The recent visit of energy and logistics tycoon Gautam Adani to Banerjee led to media speculation about possible Adani Group investments in seaport and/or LNG terminal.
Not many cared to notice that mega ports in Odisha and Andhra Pradesh and fast-improving connectivity to the hinterlands are limiting the traffic potential to such investment in West Bengal. Adani Group itself owns two large ports there.
Official job creation figures may paint a rosy picture about the state. However, most of those opportunities are of sustenance level or poor quality. The state has one of the lowest fertility rates in India. Children from smaller families aspire for more. They are rushing out to other states for better opportunities.
Those from the less privileged section ride on politics to extract extra benefits. The middle and upper-middle-class have little hope left. They are sending children out early. As in 2011, Kolkata had the lowest ratio of 20-29 years among metros.
For trend reversal, Banerjee must push industrialisation faster than ever. The ‘hands-off policy’ on land acquisition for industry, be scrapped as it failed to impress investors. The state must align itself with the industrial corridor development plans of the centre.
Otherwise, investment summits will remain a political fanfare. Investments may come in ones or twos, but their scope and size will be limited.
Banerjee is yet to show any such intent, except for her recent fascination for developing captive Deocha Pachami opencast coal block, touted as India’s largest. The West Bengal government claims it will be a game-changer.
For a state with limited land resources, open cast coal mining is not ideal as it requires incremental quantities of land to keep the production going.
But that apart, the block is not easy to mine. A preliminary survey by Coal India (CIL), some 15-20 years ago, found that the reserve has four coal seams of lowest grade thermal coal. But there were major issues to its viability.
The seams are covered under thick layers of ‘very hard’ basalt rock. Basalt is formed by the rapid cooling of lava. It means part of the coal inside may be burnt. The stripping ratio (amount of overburden to be removed per tonne of fuel) is estimated at 1:4-1:8.
In contrast, the prolific low-quality thermal coal reserves in Odisha and Chhattisgarh have soft sedimentary rock cover, and the stripping ratio is less than 1:2.
Hard rock (which is costlier to break), low-quality coal and high stripping ratio made Deocha Pachami unviable, and CIL handed it over for captive allocation during the UPA era. The allocation was made to government utilities from six states. All but West Bengal left.
If the viability of the mine was doubtful in the past, it could prove a misadventure now due to disruptive renewable technologies and policy focus to reduce the use of coal. Incidentally, the reserve area has maximum solar potential in an otherwise low potential state.
To cut the long story short, Deocha Pachami cannot be a game-changer for West Bengal. But Banerjee is adamant. She has lined up a mammoth Rs 10,000 crore compensation package to evict the villagers. According to a recent report by “Down To Earth”, 21,000 will be displaced, out of which 9,034 will be Adivasis from the Santhal community.
A higher social cost than the lost automobile project in Singur but for limited or questionable gains.
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