Lost in narratives, a true picture of Bengal's growth

As another round of assembly elections in West Bengal approaches, discussions around the state of its economy have inevitably resurfaced.

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Whatever one's political views, the dominant narrative about the state's economy is laced with nostalgia — a glorious past followed by a steady decline relative to the rest of the country since the 1960s.

Yet, there is a puzzle: Our research with Boston University economist Dilip Mookherjee shows that in terms of the growth rate of real net state domestic product (NSDP) per capita — a standard measure of a state’s economic prosperity — over the entire period for which we have comparable data (1960 to 2024), West Bengal has had very similar performance to that of the rest of India.

Only a careful analysis can bring out the true picture. Otherwise, one can pick numbers and make the state's performance look better or worse.

For example, if we take nominal numbers and restrict attention to 17 major states in terms of population (and taking the pre-split units for the four major states that split up later), West Bengal ranked fifth in the 1960s, falling to the 12th spot in recent years, beaten even by states such as Rajasthan and Odisha, which were typically behind earlier.

However, nominal income reflects both output and prices, and without adjusting for price levels, this could give a misleading picture. If we adjust for prices at a disaggregated level and look at real income, West Bengal’s rank does not show such a dramatic decline, and the state turns out to be slightly below average (10th or lth) most of the time, with some dips during the 1970s, 1980s, and 1990s.