Oh Calcutta, The Fallen Star
Speaker: Adit Jain, IMA India June 2021
A road journey from Kumardhubi, a small company-owned township where I was brought up, in the western fringes of Bengal, to Calcutta, took you through what was then an undeterred colossal industrial estate. Kumardhubi itself hosted some leading engineering companies, including McNally Bharat, which my father built from its formative years, a foundry which was then India’s largest and most specialised, and a fire-brick plant that was a frontrunner in its field. The ancient national highway that connected India’s capital, Delhi, to its industrial power house, Calcutta, meandered through the towns of Kulti and Asansol with large manufacturing firms such as Indian Iron, British Oxygen, Carew’s Gin, Chittaranjan Locomotives, Bengal Coal, Pilkington Glass, Martin Burn, Sen Raleigh Cycles, amongst hundreds of smaller ancillary units employing millions of people.
As you drove eastwards, you crossed the towns of Raniganj with its huge collieries, previously privately owned and managed by erstwhile giants such as Bird & Company, Thapars and the Tatas. The highway cut through Durgapur, which had a massive steel plant, a fertiliser factory and dozens of smaller engineering and chemical plants. The journey continued through Burdwan, the then district headquarters, and you ultimately reached Uttarpara on the outskirts of Calcutta. This was a giant industrial hub with hundreds of factories, including Hindustan Motors.
Calcutta, historically, an imperial city with deep water ports like Kidderpore Docks and navigable rivers, was the industrial and business capital of the Asia Pacific region, several times the size of Hong Kong and Singapore. Asia’s largest companies and banks were headquartered here. For instance, the Chartered Bank Building existed even before the merger of Standard and Chartered banks. Lyons Range hosted the stock exchange and the offices of leading insurance companies. In fact, the entire area of Dalhousie and Fairley Place contained the stalwarts of Indian business with names like Martin Burn, Andrew Yule, Bird & Company, Garden Reach, Jessops, Murphy Radio and several businesses across the spectrum from ship building to mining. Calcutta was a truly global city with a highly diversified demography that included Iraqi Jews, Armenians, Persians, Chinese and others who chose to make it their home. Commercial opportunities were considerable and so was the need for expertise. In Calcutta there was serious money to be made. Industries in Bengal extended north-eastwards into the tea gardens of Darjeeling and Jalpaiguri. These produced the finest tea in the world with auction prices that exceeded those of other produce from across the world.
The tragedy is not that all of this was subsequently destroyed; the tragedy is that it can never be rebuilt. And that is what happened to Calcutta and the entire industrial manufacturing of Bengal since the 1970s. Left Front governments, particularly under the leadership of Jyoti Basu, Bengal’s erstwhile Chief Minister, cracked down on industry and empowered unions to such an extent that factory after factory began to shut permanently. The red flags of the Communist Party unions fluttered across the state, creating a condition that made it literally impossible for business to function. Most shut shop, some were nationalised and the wiser ones quickly relocated their offices and plants to other locations. The only significant company that retains its head office in Calcutta today, at Virginia House, and continues to flourish, is ITC. Most of its operations, however, are now spread across other parts of India. None of the other giants exist anymore and if they do, are a tiny fraction of their original size.
Mr Basu, a graduate of University College, London, was called to the Bar at the Middle Temple. He was an activist in his student days and remained one for his entire political career which was propped by labour unions. He depended on them, as they did on him. Consequently, strikes and unrest became the order of the day and companies began to suffer. Many businessmen tried to hang on but, in the end, simply gave up. Bengal had become intolerable to function in. Law and order were replaced by anarchy and goons of the communist party routinely harassed business managers and owners. Millions of workers were laid off as business enterprise either shut or fled the tyranny of the communists. Bengal had not just lost its edge; it had simply lost everything.
Leading brands like Dunlops, Guest Keen Williams, Braithwaite, Burn & Company (after whom the town of Burnpur carries its name) and Metal Box were either nationalised or ceased to exist. Indian business families like the Birlas and Singhanias shifted to Bombay and other parts of India, closing factories and leading to economic ruin. This created massive unemployment. The Communist government added fuel to the fire when it prevented the police from interfering in labour disputes even when business managers were manhandled and beaten up by union goons. In 1984, as a young project engineer responsible for a project site in Durgapur, where my employer was contracted to build a material handling plant for Hindustan Fertiliser, I was made to stand on an oil barrel for four hours in the mid-afternoon sun, with the labour unions shouting threatening slogans. The odd part was, I had no clue as to what I had done wrong or indeed what their demands were. Strikes and violence in those years were as common as reporting to work.
Tragically, Bengal, a leader in industry and technology, reduced itself to a laggard state which no sensible businessmen would want to be associated with. Its unions had sent investors scampering away, never to return. The Communist Party and its leadership had ensured this fate. The great companies of Calcutta had closed shop forever. Subsequently, a reverse migration began to happen and educated Bengalis left their homes for better opportunities elsewhere. Ironically, six decades ago – all roads led to Calcutta; now they all lead away from it. The great industrial hub from Kumardhubi, across Asansol, Raniganj and Durgapur is now a rust belt. In Calcutta, factories that once produced products that were best in class have been replaced by retail showrooms. Dum Dum airport, once India’s busiest, with direct links to most European and Asian cities, is now a shadow if its former self. Most global airlines have pulled out. From a world class metropolis that boasted the finest Christmas decorations along Chowrangee and Park Street, Calcutta stands reduced to a status of an over-crowded and wretched city.
The communists did realise their folly when Buddhadeb Bhattacharya became Chief Minister, but by then it was too late. Mr Bhattacharya’s plans to revive Bengal, beginning with a chemical manufacturing hub in Nandigram, fell into political controversy. Thereafter, the failed Tata Motors plant in Singur, sealed the fate on any meaningful revival of investment in the state. Mamata Banerjee of the Trinamool Congress, whose anti-capitalist antics were responsible for the cultivated collapse of these projects, subsequently replaced Mr Bhattacharya. Last month, she assumed her third consecutive term in office, a telling reflection of the sort of interest groups from which she derives her political legitimacy.
Calcutta, upon which an empire had once been built, now lies reduced to just another fallen star. It has no credible prospect of returning to its former glory, at least in my life time. For me and an entire generation of Indians who remember that city for what it once was, that is a dreadful tragedy. Its demise, and indeed that of Bengal, is a clear example of the consequences of disrespect for wealth and those who create it. It is an important lesson for politicians. When governments create hurdles for business, it undermines their growth and productivity. When they ill-treat them, it leads to a flight of capital and cessation of economic activity; unemployment and unrest inevitably follows. That, in a nutshell, is Bengal’s history of the last 40 years. Oddly, many policy planners still don’t get it.