As West Bengal approaches the 2026 state assembly elections, political anticipation is building across the region, from Darjeeling’s tea plantations to Hooghly’s manufacturing zones and the southern coastal areas.
Amid the Trinamool Congress (TMC)’s emphasis on themes like ‘Mother, Land, People,’ research indicates that a former leading economic region in India has entered a period of increasing debt and downturn. This follows extended governance by the Left Front and now 15 years under the TMC led by Mamata Banerjee.
Structural Challenges Persist Since 2011
A financial analysis from Finskeptics [pdf] initially suggested optimism for economic revival, but evidence reveals that underlying issues have intensified rather than resolved.
Although the administration has effectively implemented extensive social welfare programs offering short-term support to low-income groups, the core drivers of economic growth are faltering. This approach prioritizes redistribution over strengthening key areas such as heavy manufacturing and information technology.
Broader metrics reflect these effects: The state’s contribution to India’s overall GDP has decreased, average income per person lags behind the national figure, and numerous businesses have relocated elsewhere.
Investor sentiment has weakened due to unofficial expenses, political involvement in workforce matters, infrastructure deficiencies, and plant shutdowns, all undermining the industrial framework.
Historical Downturn of a Manufacturing Hub
In the past, West Bengal served as a central point for India’s industrial activities. Post-independence, it accounted for about 10% of the national GDP, hosting major engineering firms, jute processing facilities, and serving as the eastern commercial hub. However, over seven decades, a mix of misfortunes and flawed decisions has diminished this base, including impacts from partition, policies equalizing freight costs that reduced mineral advantages, and intense labor activism during Left rule.
Termed the ‘Bengal Curse,’ the state’s ranking among India’s wealthiest dropped from third in 1960 to 24th by 2024.
Data from the Economic Advisory Council to the Prime Minister shows the GDP share falling from 10.5% in 1960-61 to 5.6% in 2023-24, the most significant reduction among major states. Relative per capita income declined from 127.5% of the national average to 83.7%. Regions like Odisha, previously trailing, now surpass West Bengal.
This ongoing slide, known as the ‘Bengal Curse,’ stems from repeated policy shortcomings across administrations. The Left era solidified deindustrialization, and the years since 2011 have not achieved the anticipated recovery.
Present Fiscal Strain: Prioritizing Welfare Over Expansion
Under TMC leadership, the state’s finances have grown more precarious, with reliance on loans for routine operations instead of income-generating investments. Debt levels have risen sharply, and insufficient local tax collection has increased dependence on central funds.
Outstanding debt exceeds ₹7.7 lakh crore, with persistent high fiscal shortfalls. Social spending has grown, particularly near elections, but investments in infrastructure remain inadequate.
While the leadership promotes its people-focused policies, the underlying figures raise concerns. Incoming funds are largely absorbed by loan interest, employee compensation, and retiree benefits, limiting resources for new infrastructure like highways, crossings, or energy facilities that could draw enterprises and employment.
Critical measures show imbalances, including sluggish growth in self-generated taxes, a low ratio of credits to deposits, and limited foreign capital inflows. Factory shutdowns and business exits signal a diminishing economic foundation. The micro, small, and medium enterprises sector, while numerous, consists mainly of small-scale operations with restricted potential for growth or job generation.
Debt and Fiscal Patterns: Escalating Liabilities
West Bengal’s debt figures are striking. Upon TMC’s assumption of power in 2011, the total stood at approximately ₹1.92 lakh crore. Projections indicate it will reach ₹7.7 lakh crore by the close of the 2025-26 financial year. This represents a
