Rich Kerala, poor Bengal and the role of the party

Four decades ago, West Bengal was among India's most industrialised state economies.

- Pramit Bhattacharya

One in seven factory workers in India was from Bengal. Its per capita income was higher than the national average, and among the top 10 states. Among major states (population above 10 million), only four (Punjab, Maharashtra, Haryana, and Gujarat) had higher per capita incomes than Bengal.

Since then, Bengal's economic fortunes have witnessed a stark reversal. Between 1981 and 2021, Bengal's share in the national economy declined 3.3 percentage points to 5.8%. Its share in the industrial workforce fell nearly 10 percentage points over the same period to 4%. Its per capita income put it among the bottom 10 states in 2021.

Much of the blame for Bengal's decline has fallen on the Communist Party of India (Marxist). The CPI(M) enjoyed an uninterrupted stint in power for more than three decades there. During its reign, trade unionism grew while capital flew. The CPI(M)'s efforts to woo industrialists during the fag end of its reign proved unsuccessful, and only served to hasten its electoral decline.

Surprisingly, the other key CPI(M) bastion hasn't suffered the same fate. Over the past four decades, Kerala has moved up the league tables even as Bengal declined. In 1981, Kerala's per capita income was below the national average. By 2021, its per capita income was 53% higher than the national average. Among major states, only five states (Haryana, Telangana, Karnataka, Tamil Nadu, Gujarat) had higher per capita incomes than Kerala in 2021.

Income growth in Kerala picked up in the post-1991 era. The penetration of cars and white goods rose sharply across the state.

The share of households with private cars in Kerala (24%) was the highest among major states in 2019-21, according to National Family Health Survey data. The share of households with refrigerators (76%) was the second-highest among major states. 40% of households in Kerala belong to the top wealth quintile of the country; the same figure for Bengal is just 8%.