1How important is Calcutta in India's economy? One knows that during the British days, even as late as the thirties, the metropolis of Calcutta was the centre of the most important industrial complex, the port of Calcutta was by far the major gateway for foreign trade, and the city of Calcutta commanded no less amount of financial resources than the city of Bombay. It is also common knowledge that over the years, particularly since the fifties, this overwhelming importance of Calcutta has waned, in certain respects absolutely, but in most cases relatively to the all-India picture and to that of some other urban centres. But Calcutta still plays a major economic role.

2In this paper we shall attempt to assess the importance of this role in the seventies, and its change since the thirties, from three angles, viz., (i) bank finance, (ii) port traffic, and (iii) industrial activity. Because of the lack of readily available and comparable data, the information that we shall present will not necessarily relate to the same years. But since our purpose is to form some general idea of Calcutta's importance, this should not matter if the years in question are close enough and not freakish1

Calcutta's economic role in the seventies

3Table 7.1 présents Calcutta as a centre of bank finance in the context of India as a whole.

4It will be seen that even though Calcutta has only something more than 2 per cent of the total number of bank offices in the country, thanks to enormous expansion of branches in recent years, it still commands about 11 per cent of the total deposits and takes care of about 15 per cent of the total advances. In respect of bank finance, Calcutta now takes the second place, next to Bombay.

5Calcutta's importance as a port is a more debatable issue. Table 7.2 suggests that Calcutta is no more a leading port of India.

Table 7.2: Traffic (lakh tons) at selected ports, 1970-71

6But a closer analysis in terms of breakdown of merchandise shows that the above picture is largely due to the contribution of two kinds of Commodities, viz., iron ore and petroleum and its allied products. If these two are taken out of account, Calcutta still remains as a leading port of India, next only to Bombay.

7One may certainly say that this is small comfort. But one has to recognise that, apart from policy questions, the port of Calcutta is not a natural outlet for the iron reserves of the country, the exports of which registered a tremendous increase during the sixties; nor is Calcutta the nearest port for importing petroleum crude. However, our point is, that apart from mineral oils and iron ore, which Calcutta could not perhaps attract because of its natural disadvantages, the port of Calcutta still handles nearly 25 per cent (by weight) of the total foreign trade of the country. Again, the port of Bombay is ahead.

8City-wise breakdown of industrial statistics is not available. It is, therefore, extremely difficult to assess the importance of the metropolis of Calcutta from the point of view of industrial activity. For this purpose, we shall take the state of West Bengal as a surrogate for the metropolis. In regard to Calcutta, this may not be far wrong, because, as is common knowledge, the industrial activity of the state is highly concentrated in and around the metropolis.

9Table 7.3 gives the number of units and the number of employees in the registered factories in West Bengal and in India as a whole, in 1970. They relate to factories employing 50 workers or more if using power, and 100 workers or more if not using power.

10It will be observed that West Bengal accounts for more than 12 per cent of the total number of factories and for nearly 20 per cent of the total number of employees, as covered by the above official publication. But the above global percentage conceal a much greater importance of West Bengal in respect of certain key manufacturing industries. This is shown in Table 7.4.

Calcutta and Bombay, West Bengal and Maharashtra: their respective importance in the seventies

11We have mentioned that though Calcutta still occupies a very important place in India’s economy, it is second to Bombay in the matter of bank finance and port traffic. The picture is the same in respect of industrial activity too. In this section we intend to study the relative positions of Calcutta and Bombay in the seventies, so that in the next section we can assess the relative changes that have occurred since the thirties.

12The relative positions of Calcutta and Bombay in the seventies, in respect of banks finance, may be assessed from the following tables.

13Thus in 1972, Bombay had nearly 75 per cent more bank offices commanded nearly 70 per cent more deposits and took care of nearly 65 per cent more advances than Calcutta. There is doubt that in respect of bank finance, Bombay is now far ahead of Calcutta. In fact, Bombay’s pre-eminence in respect of finance in general is still greater, because of the concentration of term-lending institutions in that city.

14A comparative picture of Calcutta and Bombay in respect of port-traffic in the seventies, may be had from Table 7.6.

15The above breakdown of cargo handled by the ports of Calcutta and Bombay clearly shows that Bombay's lead is primarily due to its handlings of mineral oils, thanks to the setting up of the oil refineries in that area. Bombay did not handle iron ore and coal, as Calcutta did, but handled fertilizers, in which Calcutta's role was marginal. Of course, Bombay also handled "other" cargo, to a greater extern than Calcutta did. One may expect that when Haldia refinery goes on stream and the coal berths at Haldia port start being fully utilised, the relative position of the port complex of Calcutta-Haldia to that of Bombay will improve significantly, and the metropolis of Calcutta will have its importance largely restored, in respect of port traffic at least2.

16How about the industries? Just as in case of Calcutta, we had to use West Bengal figures as a surrogate, similarly in case of Bombay, we have to use Maharashtra data as a surrogate. It is very difficult to say as to what extern the comparison between West Bengal and Maharashtra figures will reflect the relative positions of the two metropolitan areas in respect of industrial activity, without any quantitative assessment of the degree of concentration of industries within these two States. But the present availability of data leaves us no other option. Table 7.7 shows the comparative positions of West Bengal and Maharashtra, on the same basis as in Table 7.4.

17It will be noted that in comparison with West Bengal which accounted for 12 per cent of the total number of factories and 20 per cent of the total number of employees. Maharashtra accounted for 21 per cent of the total number of factories and 28 per cent of the total number of employees as covered by the Annual Survey of Industries in 1970, which relates to factories employing 50 or more workers, if using power, and 100 or more workers, if not using power. Maharashtra is certainly ahead of West Bengal, but one should note that it is not as much ahead of West Bengal in respect of number of employees as in respect of number of units. In other words, West Bengal has a heavier concentration of industrial units employing large man-power. This surely has implications for employment and technology policy for India as a whole.

18A comparison of selected industries, in which West Bengal and Maharashtra have far superior positions than what the above percentage shows, is shown in Table 7.8.

19Table 7.8 shows that Maharashtra commands a dominant position in terms of employees, in the manufacture of cotton textile, apparel and garments, furniture and fixtures, printing and allied products, Chemicals and their products, glass, metal products (except machinery and transport equipment), machinery (except electrical machinery), and miscellaneous other products. West Bengal, by the same token, has a dominant position in the manufacture of jute products, paper and its products, rubber products, basic metals, railway workshop service and its products, and shipping service and its products. It appears that though Maharashtra predominates in such basic industries as Chemicals, metal products, and machinery (non-electrical), its importance in the manufacture of consumer goods is much more than that of West Bengal. In other words, the industrial structure of Maharashtra appears to be much more balanced than that of West Bengal.

Table 7.8: West Bengal and Maharashtra industries as percentages to All India total 1970

Calcutta, Bombay and their Provinces in the thirties

20How was the situation in the thirties, before the War, Partition, and later, planning, made the situation like what it was in the beginning of the seventies? One difficulty of making a valid comparison between the thirties and the seventies is the lack of corresponding and comparable data. But we can form some broad ideas.

21In respect of bank finance, no quantitative evaluation of the roles of metropolitan areas of Calcutta and Bombay in the thirties is possible, because of the lack of corresponding data on deposits, and advances. But, according to Banking and Monetary Statistics of India published by the Reserve Bank of India in 1954, Calcutta had 35 bank offices during 1931-36, as compared to 43 such offices in Bombay in the same period; the total number of bank offices in India in places having a population of 50,000 or more being 469 during the same period.

22When one remembers the importance of the "exchange" banks in those days, whose head offices were mostly situated in Calcutta, one can infer that Calcutta certainly was not inferior to Bombay during the thirties in respect of command over financial resources in the country. Over the years, then, Calcutta's position has certainly deteriorated.

23Fortunately, the data availability in respect of port performance is much more satisfactory. Table 7.9 proves the point.

24Table 7.9 reveals that the port of Calcutta was far ahead of the port of Bombay in terms of total tonnage handled in 1930-31. The situation was completely reversed in 1970-71 as noted in the previous section. One, however, notes, that just as Bombay's superiority in 1970-71 was primarily due to traffic of mineral oil, Calcutta's superiority in 1930-31 was primarily due to its handling of the export of coal, for which it has a natural advantage. If coal is taken out of account, Calcutta was marginally ahead of Bombay in 1930-31. A comparison with the information in Table 7.6 shows that apart from mineral oil and coal Calcutta appears to be handling as much iron and Steel and machinery as before, though Bombay has caught up. However, among the other new commodities of importance, leaving aside iron ore for which neither Calcutta nor Bombay has natural advantages, Calcutta has not been able to attract the import of fertilizers, which has largely gone to Bombay. As we observed earlier, the relative deterioration in the importance of the port of Calcutta appears to be based on transitory factors, and with the commissioning of the Haldia refinery and the utilization of Haldia coal berths, the port of Calcutta is expected to be restored to its former position.

25We come now to the comparative industrial situation in the thirties. For this, we have to use far wider Surrogates for Calcutta and Bombay, than in the seventies. For, the data available in respect of the thirties relate to the provinces of Bengal and Bombay as then existing which were completely different from the present States of West Bengal and Maharashtra in terms of geographical coverage.

26However, one also knows that in the thirties, there was not much of manufacturing industries in Bengal except for those centering round Calcutta, and similarly, not much in Bombay province except for those centering round the city of Bombay, with the notable exception of cotton textile industries around Ahmedabad and Nagpur. Table 7.10 gives a picture of the situation as obtaining in 1935.

27It appears that in 1935 Bengal accounted for 15 per cent of the manufacturing units and 28 per cent of their employees, whereas Bombay accounted for 19 per cent of the manufacturing units and 23 per cent of their employees. A comparison with the information presented in Table 7.3 shows that whereas Bombay has more than retained its position in terms of number of units, and has increased its importance in terms of number of employees (from 23 per cent to 28 per cent) Bengal has lost marginally in terms of the number of units, but significantly in terms of employees'(from 28 per cent to 20 per cent), yielding the first place to Bombay.

28The picture in terms of selected industries, in which Bengal and Maharashtra had dominant shares in the thirties, is given in Table 7.11.

29A comparison with the Table 7.8 shows that, leaving aside food (primarily rice mills), jute and cotton (in which Bengal and Bombay of the thirties had natural advantages), Bengal, i.e., West Bengal has lost much of its importance in respect of many key manufacturing industries, while Bombay, i.e., Maharashtra, has gained.

30As measured by employment, Bengal has lost its dominance in the manufacture of paper and paper products (from 44.54 per cent to 20.05 per cent), printing and allied matters (from 27.19 per cent to 15.13 per cent), Chemicals and their products (from 29.41 per cent to 16.07 per cent), glass (from 21.45 per cent to 14.24 per cent), metal products (from 33.60 per cent to 28.77 per cent), non-electrical machinery (from 47.49 per cent to 12.86 per cent), and electrical machinery (from 23.81 per cent to 5.43 per cent). However, West Bengal has gained in the industries of basic metals and railway workshop products. Maharashtra, while losing its relative position in the manufacture of metal products (except machinery and transport equipment), has gained in almost all other industries listed above.

Table 7.11: Bengal and Bombay industries as percentages to All India total

The causes of Calcutta's economic decline

31Have we been able to understand the economic importance of Calcutta, and in particular, the crisis that pervades the economy of this metropolis? I am afraid, not quite. All that we have been able to find is that the metropolis of Calcutta, once the glory of India even as late as the thirties, has lost its pride of place to Bombay, even though it continues to be the second most important economic centre of the country. But that by itself should be no reason why a crisis must develop in its economy, nor why some urgent measures must not be taken for strengthening it. In order to appreciate such points of view it would be necessary to analyse Calcutta's economy in depth from economic, technical and socio-economic angles. Such a study would be beyond the scope of the present seminar, and, in any case, would require a great deal of research effort, which is beyond the scope of the discussion.

32The metropolis of Calcutta appears to lack economic balance. In this context we include the hinterland of the metropolis as well. There is, of course, no inherent reason why a metropolitan economy should be balanced within itself. The twentieth Century world does have examples of large metropolitan areas which balance their economies through trade with other areas of the country or even through foreign trade, i.e., London and Hongkong. But in a vast country like India, it would be unnecessarily expensive to try to balance the economy as a whole, excepting for some natural resources. Nor would it seem feasible because of the planning constraints, to try to balance the economy of different areas or sub-areas of the country through foreign trade. We have already noted, on the basis of limited data presented earlier, that Calcutta does not have a balanced growth of consumer goods industries as befits this metropolitan area with its hinterland. Other studies show that this is true of agricultural products as well. The economy of Calcutta thus is much more dependent on capital goods industries compared to Bombay. In particular, Calcutta being the economic centre of the huge steel-coal-power triangle of eastern India, is heavily dependent on this interdependent set of capital goods industries. Since the uncertainties and the cycles of a market economy affect capital goods industries much more than they affect the consumer goods industries, the economy of Calcutta is found to be more crisis-ridden, as have found it to be.

33While discussing economic balance, one cannot help noting the absence of certain obvious technical balances, which do not need to be recounted here. Infrastructural facilities like roads, transport, housing, electricity, sanitation, etc., are not only inadequate in terms of population, but are also inadequate in terms of sustaining the production structure. Nowhere in the rest of India is the absence of such infrastructural facilities more noticeable than in Calcutta. So much so that it has become a vicious circle. Investments are inhibited because of want of infrastructural facilities. Infrastructural facilities are not created either by public effort or by private effort, because low level of investment does not generate enough resources.

34In respect of socio-economic balance also, the metropolis of Calcutta stands out as one of the worst human conurbations in the world, attracting world-wide attention. It is due to the fact that Calcutta is not only the only "city" in the state of West Bengal (in fact, it is the only "city" in the whole of eastern India) but also a city surrounded by a vast hinterland of over-populated, poverty-stricken area that is eastern India. Apart from the human waves that lashed Calcutta after the Partition of 1947, Calcutta has always been, and still is, the destination of hundreds of thousands of unemployed and underemployed from its hinterland seeking some means of subsistence. Calcutta has thus always been, and still is, a city of the poor. But urbanization generates its own demand. Apart from modem transport which must take people to work, people demand better housing, better health care, better educational facilities, and so on, than they were used to in their villages. They cannot, of course, generate enough resources to pay for all these, because of the absence of adequate Investments. How can the economy of a "modern” metropolis be stable, if its populace does not have even the minimum of "modem" facilities?