September 9, 2008

Issues regarding Industrialisation in West Bengal Industrial land Use

The dismantling of the industrial licensing regime accompanied by various
other liberalization policies from the early 1990s has given the State an opportunity to
boost industrial growth, private investment and employment generation and at the
same time, has created an environment of competition among different States. This
has put a tremendous responsibility on the State Government to adopt appropriate
steps in order to bring about rapid industrialization in West Bengal. Aware of the
opportunities for industrial growth likely to be created in West Bengal, the
Government of West Bengal has been pursuing policies for overall economic
development of the State with a view to achieving growth with equity and social
justice. The State’s Industrial Policy was announced in 1994 with an aim to achieve a
faster industrial development. It encourages private sector investment and envisages
the role of Government as a facilitator of this process.

It should first be noted that the State Government’s policies for land reform
from the late 1970s have made a significant impact on the stagnant food production
scenario. The average annual growth of food output1 during 1980-95 was 5.03 %
compared to 1.22 % during 1970-80. However, the rate of growth of agricultural
output over time has been affected by increasingly dwindling size of per capita
holding of farm land which has come down from 1.20 hectares in 1970-71 to 0.82
hectares in 2000-012, and is thus proving to be economically unviable to sustain a
family. The average size of land holding appears to be one of the smallest amongst the
states and much below the national average of 1.41 hectares.

The recent growth path of the West Bengal economy depicts a picture of
falling share of agriculture in total SDP (State Domestic Product)3 from 27.48% in
1999-2000 to 21.82% in 2005-06 followed by a relatively steady growth of secondary
sector from 14.85% to 16.93%. The share of the tertiary sector has increased from
52.27% to 56.17% over the same period. At the same time, it is felt that the increase
in the services sector cannot be sustained over a long period without an increase in
manufacturing activity.

The last decade had witnessed a steady growth of SDP in the State with all the
key sectors including infrastructure having recorded a significant growth over the last
10 years. The SDP1 recorded a compound annual growth of 7.07 % during 1993-94 to
2003-04 as against the all India GDP growth of 6.23 %. However, in the last two
years, the rate of growth of the State has fallen slightly behind the all-India rate. The
rural economy has witnessed a phase of distinct shift in occupational pattern and life
style which is reflected in the pattern of per capita consumption of non-food items and
also an increasing aspiration towards school and higher education.

The 2001 census reveals that there has been a shift in the occupation pattern of
the main workers in relation to 1991 census data thereby reflecting diversification in
economic activities in the rural economy. The share of cultivators in total main
workers decreased from 30.2 % in 1991 to 20.85 % in 2001. While the share of
agricultural labourers has remained more or less static around 22.7 %, the same for
other workers has increased from 44.3 % to 52.7 % during the same period.

Growth of Industry in West Bengal, post 1991

From 1991 to 2006, 1,439 projects in the medium and large industry sector
involving an investment of Rs. 32,632 crores have been implemented in the State.
The number of industrial approvals granted by the Secretariat of Industrial Approvals,
Govt. of India, from January 2000 to December 2006 stood at 2858 with a proposed
investment of about Rs. 83,858 crores
It may be mentioned that for most of the industrial projects implemented in the
State, land for industries has been mostly purchased by the entrepreneurs directly
from the landowners. The State Government has in recent times also attempted to
carry out direct purchase of land for setting up industrial clusters. The process of
obtaining land through direct purchase has shown a mixed outcome.

The process of direct purchase adopted by the State Government was to set up
a consultative process involving local representatives and local district officials, to
identify land, and develop a consensus on the price of the land. The actual process of
purchase began after such a consensus was reached at. This process yielded the
desired results in the case of the Food and Poly Parks at Sankrail in Howrah district,
the Plasto-Steel Park at Barjora in the Bankura district and industries in Khargapur.

However, the same process ran into problems in the case of the Foundry Park and
Rubber Park in Howrah district due to resistance from various private interests which
had already purchased some of the identified lands across the project area and along
the roads. The inability to buy these plots through direct purchase meant that the road
frontage of the industrial park and contiguity of the plots were adversely affected.
Finally, in order to complete the process of arranging the land, the Government had to
take recourse to the LA Act, to acquire the intervening plots and plots abutting the

However, the State Government’s assistance in the form of acquisition is
required in the case of large projects, where the requirement of land is large.
Examples are the Tata small car project, and the various steel plant projects in the
pipeline. Similarly, in today’s competitive environment, the Small and Medium
Enterprises (SMEs) need to reduce their cost of operation, thereby helping them to
function in a competitive manner and at the same time comply with environmental
norms. Therefore, setting up of small industrial clusters for SMEs, with shared
common facilities, enhances their competitiveness. Government has to step in to
acquire the land and set up these clusters with the necessary common facilities and

At the same time, many of the existing SMEs may run into environmental
problems in their existing locations, which have become urbanized. Since these
industries would need to relocate to new, environment friendly industrial parks and
obtain environment clearance, it becomes necessary for the State Government to assist
them in the acquisition of land.

There has been a significant investment in the IT and ITeS sectors in West
Bengal. Major players such as Infosys, Wipro, ICICI Bank, ITC Infotech and foreign
companies have evinced interest in setting up IT and ITeS facilities, and most of them
wish to locate in the Greater Kolkata area. Since it is accepted that this sector is also
an engine of growth and employment, the State Government also has to arrange land
in the Greater Kolkata area for this sector.

The projects in pipeline involving large investments in manufacturing sector
for setting up modern and environment friendly production facilities will require large
tracts of land. Moreover, it is always not possible for every industry to locate in a
particular site. Decisions regarding location are based on a number of factors. In
addition to availability of land, quality infrastructure in terms of road and rail
connectivity (as well as proximity to a port for many industries), adequate supply of
water and power, as well as proximity to markets and urban centers are required for
successful implementation of projects within a definite time frame. In order to avoid
the complicated process of purchase of land from a large number of owners and
compliance with existing land laws of the State especially pertaining to land ceiling it
may be necessary for the State Government to acquire the land required to set up

In the last few years, the State Government has been assisting entrepreneurs to
obtain land through the process of acquisition as well as direct purchase. The State
Government acquired 2102.39 acres along with direct purchase of 1934 acres of land
for setting up industries in the last three years.

In West Bengal, the net sown area1 is 62 % of total reported land area while
another 13.48% in under forest, and 18.52 % is already under non-agricultural use.
The total land in the categories of barren and uncultivable land; permanent pasture
and other grazing land; land under trees and groves not covered in net sown area; and
culturable waste land together add up to 1.42%, (of which culturable waste alone is
0.40 %). For the country as a whole, the percentage of net sown area is 46.07%, while
the percentage of land under categories of barren and uncultivable land; permanent
pasture and other grazing land; land under trees and groves not covered in net sown
area; and culturable waste land together add up to 15.41% (of which culturable waste
is 4.46%).

To minimize usage of agricultural land for industrial use and to achieve a
balanced and sustainable industrial growth, the State Government is seeking to
implement a policy for location of industries in a manner so as to maximize use of
uncultivable land, locate industries in backward areas of the State, develop industrial
clusters thereby using common infrastructure and optimizing available resources. The
State Government is conducting a field survey on the vested land available as per
records and assessing its viability for industrial usage keeping in view its size,
location, contiguity and availability of infrastructure. The State Government is also
trying to use the land locked up in closed and sick industries keeping in view the legal
issues and other complications.

A Policy for Location of Industries:

In pre-independence times, the industrial development in West Bengal centered
around Howrah, Hooghly, Asansol and Barrackpore due to connectivity through rail,
road and river and availability of raw materials. In North Bengal, industrial
development has been mostly confined to tea industry and some food processing
activities in Darjeeling and Jalpaiguri. Thereafter, industrial growth has concentrated
first in Durgapur and then in Haldia. That Haldia would develop as one of West
Bengal’s largest industrial areas was clear once it was decided, in the late 1960s, to
set up the Haldia Dock Complex. Proximity to a port has always been a major factor
in deciding location of large industries.

In order to facilitate planned industrial development, some industrial parks
have in the meanwhile already been developed by the State Government such as
Kolkata Leather Complex; Shilpangan in Salt Lake for light engineering goods;
Paridhan - the Garment Park in Beliaghata, for apparel and garment manufacturing
units; Manikanchan SEZ in Salt Lake for gems and jewellery units; Food Park and
Poly Park in Sankrail in Howrah district; and the Plasto-Steel Park in Barjora in
Bankura district. It is estimated that more such planned industrial parks are required
to accommodate medium sized industries of the State. Growth Centres, i.e., large
industrial estates, have been set up at Kalyani, Kharagpur, Falta, Uluberia, Haldia,
Bishnupur, Raninagar, Dabgram, Malda, Cooch Behar, Jalpaiguri and Bolpur.
Similarly, the MSE&T Department has set up industrial estates in different parts of
the State for the small-scale industries. More such parks are planned by the C&I
Department and the MSE&T Department.

In order to create a balanced and sustainable industrial growth in the State and
maximize the use of uncultivable land in the State, it is felt that some parts of the
State can be identified as industrial growth poles, because of factors such as
availability of non-agricultural land, historical industrial presence, and availability of
good infrastructure. This will mean optimal use of the existing industrial
infrastructure, and upgradation of infrastructure where required, and facilitate/create
new industrial infrastructure for projects in backward areas.

It is proposed by the State Government that these focal areas of industry can
be: (i) Haldia; (ii) Asansol-Durgapur and contiguous areas of Bankura and Purulia
across the Damodar river; (iii) Howrah-Hooghly; (iv) Barrackpore; (v) Kharagpur-
Jhargram; (vi) Siliguri-Jalpaiguri; and (vii) Kalyani. At the same time, it is also
proposed to develop small industrial clusters in all districts of the State to meet the
requirements of the SME sector and to create employment opportunities in all
1 Estimates of Area & Production of Principal Crops in West Bengal, 2002-03
2 Agricultural Census Report, 2000-01
3 Annual Review of West Bengal Economy,2004-05,CMIE
4 Annual Review of West Bengal Economy:2003-04
5 Annual Report, Commerce & Industries Department, Govt. of West Bengal
6 Status on Land, published by the Land &Land Reforms Department, Govt. of West Bengal

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