"Connecting communities, empowering nations: Unifying the Regional and Global Economy ."

For decades, eastern India has grappled with economic challenges that have left it trailing behind other regions. While historical policies, such as freight equalization, initially contributed to this gap, the critical need now lies in local-level policy reforms that can drive economic growth, enhance governance, and improve law and order. To revive the region’s economy, policymakers must focus on creating entrepreneur-friendly environments, enhancing governance, and fostering urban hubs that can serve as growth anchors.

The Freight Equalization Legacy and Beyond

Freight equalization was a central policy aimed at balancing regional disparities by reducing transportation costs across regions. This policy, though well-intentioned, hampered the development of eastern India by diminishing its natural advantage in mineral-rich states, redirecting industries toward western and southern regions. Although this policy has been repealed for over 30 years, its impact lingers. However, the blame for the current economic lag cannot solely rest on historical policy choices. Now, it is the lack of progressive local governance and pro-growth policies in eastern states that perpetuates this economic disparity.

The Role of Local Governance and Policy Implementation

Governance at the state level plays a pivotal role in shaping economic outcomes. States with progressive policies and efficient administration have demonstrated substantial economic growth, irrespective of central policies. For instance, Odisha, once perceived as one of the poorest states in India, has made remarkable progress over the past two decades. While its per capita income remains below the national average, it now surpasses neighboring states like Bihar and even West Bengal. This transformation underscores the potential of well-executed local policies to catalyze development, even in regions with historical disadvantages.

Similarly, Assam, which witnessed economic stagnation due to political unrest and regional conflicts, has shown signs of recovery in recent years. Although it has not yet reached the national average, the progress highlights how political stability and governance reforms can lay the foundation for economic growth. These examples reveal that sustained development is achievable when states embrace policies that foster industrial growth, improve law and order, and invest in infrastructure.

The Anchor Urban Hub Model: A Key Driver of Growth

A defining feature of high-growth regions in India is the presence of major urban hubs that act as economic engines. For instance, Karnataka’s economic success is heavily driven by Bengaluru, while Maharashtra’s growth is fueled by the Mumbai-Pune corridor. Similarly, Hyderabad serves as a growth anchor for Telangana, and the Delhi-NCR region drives the economies of North India.

In contrast, eastern India lacks such a cohesive urban hub. Kolkata, the only metropolis with the potential to act as an anchor for the region, has struggled to serve this role effectively. Once the economic powerhouse of India, Kolkata’s per capita income now lags behind other major cities, hampered by outdated infrastructure, political instability, and an unwelcoming business environment. Revitalizing Kolkata as a growth anchor is essential not only for West Bengal but for the entire eastern region. With its historical significance, existing institutions, and strategic location, Kolkata has the potential to become a thriving economic hub that can attract industries and foster regional development.

The Importance of Policy Synergy Between Central and State Governments

While national policies undoubtedly impact regional economies, they must be supported by state-level initiatives to yield meaningful results. Local policies need to be tailored to harness the opportunities presented by national reforms and global economic trends. The case of Gujarat during the early 2000s illustrates this synergy. Despite political challenges, Gujarat’s pro-business policies and infrastructure development positioned it as an economic powerhouse, demonstrating that local policies can effectively capitalize on central government reforms.

In contrast, many eastern states have yet to implement similar reforms, leaving opportunities underutilized. Although central support is crucial, economic growth requires local governments to create conducive environments for business and investment. For example, West Bengal and Bihar could foster economic growth by streamlining bureaucratic processes, ensuring law and order, and promoting industrial development zones.

The Role of Aspirations in Driving Economic Growth

A notable observation is the aspiration level among populations, which often dictates the type of governance they demand. In democracies, the collective aspirations of the people shape the policies and political environment. Regions that prioritize economic development over divisive politics tend to foster governance that drives growth and investment. The five southern states, which contribute nearly 30% of India’s GDP, exemplify this phenomenon. Their focus on economic growth, coupled with policy adaptations following liberalization, has enabled these states to capture the benefits of economic reforms more effectively than others.

In contrast, some eastern states have struggled with issues of lawlessness, political instability, and bureaucratic inefficiencies that hinder economic aspirations. For eastern India to thrive, the aspirations of its populace must align with a vision of progress and economic prosperity. Community engagement, effective governance, and political stability are vital to creating an environment where industries and infrastructure can flourish.

Moving Forward: Policy Recommendations for Eastern India

1. Strengthening Kolkata as an Economic Hub: The revival of Kolkata is essential to bridge the regional economic gap. State and central governments should collaborate to develop Kolkata’s infrastructure, create special economic zones, and promote ease of doing business in the city. Investments in transportation, digital infrastructure, and education will make Kolkata a more attractive destination for businesses.


2. Implementing Entrepreneur-Friendly Policies: Eastern states should streamline regulatory processes, reduce bureaucratic barriers, and offer tax incentives to attract businesses. Such measures will encourage entrepreneurship and attract investments in manufacturing, IT, and service sectors.


3. Enhancing Law and Order: Improved security and efficient law enforcement are fundamental to creating a conducive business environment. Eastern states should invest in training law enforcement personnel and implementing technologies that can aid in maintaining public safety and order.


4. Fostering Urban-Rural Connectivity: Infrastructure development should not be limited to urban centers. Investments in road networks, digital connectivity, and power supply across rural areas will enable a balanced distribution of economic activities and promote inclusive growth.


5. Education and Skill Development: States should focus on building a skilled workforce by investing in education and vocational training. Partnerships with private sector companies can bridge skill gaps and create a job-ready workforce capable of meeting industry demands.


6. Leveraging Natural Resources Responsibly: Eastern India is rich in natural resources, and responsible extraction and management of these resources can contribute significantly to state revenues. Policies should encourage sustainable resource management practices that benefit local communities and the environment.

The path to economic revival for eastern India is clear: proactive local governance, enhanced law and order, and strategic development of urban hubs can propel the region towards growth. While historical policies may have contributed to the economic lag, the responsibility now lies with state governments to enact reforms that foster entrepreneurship, attract investment, and drive economic prosperity. Eastern India has the potential to become a vibrant economic region, but only if local policies are aligned with aspirations for growth and development.