The Bharatiya Janata Party (BJP) has won a majority mandate in West Bengal, ending 15 years of Trinamool Congress (TMC) rule. The economic policies of the TMC years saw a steady increase in welfare and transfer programmes (94 social welfare schemes since 2011), with clear populist imprints. While no serious observer can deny that these financial doles became important to many families, especially women and girls, they came at a cost.

Over the years, the penchant for populism, buoyed by repeated electoral success, narrowed the imagination of governance. The citizen was increasingly imagined as a beneficiary waiting to be compensated, not as a worker to be productively employed, an entrepreneur to be enabled, or a taxpayer whose future income depended on real economic growth. The result was a brand of politics rich in guarantees but poor in economic transformation and capital asset creation. A large part of Bengal’s electorate, thus, grew impatient with policies that did not sufficiently expand opportunities for them. Should the new government miss this signal, it may fall back on the same political-economy model it has defeated.

To be clear, the BJP is not inheriting a failed State. Bengal remains India’s sixth-largest economy, with GSDP at ₹21.32 lakh crore, almost five times the 2010-11 level. In FY25, its GSDP grew 6.80 per cent, slightly above the national estimate of 6.37 per cent. It has also built a visible social floor. The infant mortality rate, at 17 per 1,000 live births, is well below the national average of 25. Multidimensional poverty, estimated at 11.89 per cent as per NITI Aayog’s 2023 report, compares favourably with the national rate of 14.96 per cent.

However, these numbers mask underperformance on other, more structural, counts. Bengal’s per capita NSDP in FY25 was ₹1.63 lakh, well below India’s per capita net national income of about ₹2.05 lakh. Its large MSME base (around 89 lakh units employing 1.36 crore people) remains substantially informal and low in productivity. The debt-GSDP ratio of 38.4 per cent positions it above the median State, while its own tax and non-tax revenue mobilisation remains below the median. The State received only $1.79 billion in FDI equity inflows from October 2019 to December 2024, compared with $13.84 billion for Tamil Nadu.

The State’s economic structure is heavily service-oriented (58.3 per cent of GSVA), while industry contributes only 21.6 per cent and agriculture 20.1 per cent. A large services share is not necessarily a weakness, but Bengal has neither become a high-wage services economy on the scale of Bengaluru, Hyderabad, or Pune, nor rebuilt a manufacturing base capable of absorbing marginal labour into more productive work. It has therefore remained caught between a still-large agrarian base, a thin industrial sector, and services that have not generated enough upward mobility. That is the macroeconomic challenge the new government must confront.

Foremost, Bengal needs a new industrial policy. Almost every other challenge the State faces, from fiscal stress to unemployment to agrarian stagnation, has a partial solution in a serious re-industrialisation drive. On that account, the new government needs to begin with the most urgent constraint — land.

The districts closest to markets, ports, labour pools, and suppliers are also where large contiguous land is hardest to get, due to fertile farmland and fragmented landholdings. Farther west, though land pressure eases, connectivity, skills, urban services and supplier networks are thinner. Bengal’s new industrial policy, therefore, cannot treat the State as one economic geography. It must treat different regions differently.

In the older industrial and peri-urban belts, more intensive use of existing industrial space should be prioritised through the redevelopment of closed and underused factories, vertical MSME estates, common testing and effluent facilities, and negotiated pooling to bring fragmented ownership together without coercion, at fair market prices. In the western districts, the government will need freight links, reliable power, worker housing, training institutions, supply networks, and functioning towns.

Bengal has often announced industrial destinations before creating the conditions for industry. The new government should reverse that order.

Land value-sharing

It is probably true that the Singur wound, now nearly two decades old, still shapes investor psychology as well as political behaviour. The new government must therefore move from land acquisition to land value-sharing. In peri-urban and older industrial belts, long leases, annuity payments, serviced plots, and continuing stakes for landowners may be more effective than one-time compensation.

The political test will be whether it can persuade landowners, farmers, and local communities to see industrialisation as a source of future income rather than dispossession. TMC, as a responsible opposition, must refrain from regressive politics on land deals that can transform Bengal’s industrial landscape and brand image.

The industrial policy must also focus on a few clusters where land, infrastructure, skills and administrative authority can easily align. These could include food processing linked to agriculture, petrochemicals and downstream industries around Haldia, engineering and auto components in the Asansol-Durgapur belt, labour-intensive manufacturing in older industrial districts, and logistics hubs in north Bengal. Kharagpur can support electronics and precision manufacturing if industry links are built around technical institutions. Kolkata’s New Town should be pushed to attract global capability centres, fintech, health technology, and research-linked services, rather than remain a mere real-estate story.

But clusters alone will not suffice unless the everyday state works better. Bengal’s industrial decline was not caused by one factor alone. Labour militancy, political conflict, weak infrastructure, land disputes, slow approvals, poor urban governance and loss of investor confidence all played their roles over decades.

The new government must therefore create a time-bound clearance system that is actually binding on departments, strengthen commercial dispute resolution, digitise land records, and make power, logistics and municipal services reliable in industrial areas.

For too long, Bengal’s politics compensated citizens for the failures of an economy that offered too few pathways to upward mobility. While the new government must not dismantle the social floor, it must build the ladder above it, where farmers see value in industrialisation, workers see mobility in it, firms see reliability in it, and the government itself sees beyond the next election.

Nandy is Associate Professor of Economics & Public Policy at IIM Ranchi, and Kundu is Assistant Professor of Finance at IMI Kolkata. Views are personal

Published on May 7, 2026