India’s East-West Imbalance, Can a New Political Alignment Fix the Economic Divide?
The emphatic victory of the Bharatiya Janata Party (BJP) in elections to the West Bengal assembly focuses attention on an important aspect of India’s political economy: the role of politics and governance in economic development. The link is hard to quantify, especially in an era where economics is increasingly about mathematical models. However, as pointed out by a paper on ‘The relative economic performance of Indian states during the period 1960-61 to 2023-24’ by Sanjeev Sanyal, member of the Economic Advisory Council to the Prime Minister (EAC-PM), and Aakanksha Arora, joint director, EAC-PM, there is no getting away from harsh facts: the economic performance of Indian states has been vastly disparate.
West Bengal, which accounted for the third-largest slice of the country’s GDP at 10.5 per cent in 1960-61, saw its share shrink to 5.6 per cent by 2023-24—the most severe reduction among states. Accordingly, its per capita income went from 127.5 per cent of the national average to 83.7 per cent over the same period. Assam, Bihar, and Odisha have similar stories of relative decline. With West Bengal now under the same political dispensation as the Centre, and the BJP part of ruling alliances in Bihar and Odisha, can investors expect a shift in business conditions for the better? This article examines the historical decline of India’s eastern states, the factors that held them back, and the possibility of a turnaround under a new political alignment.
Part I: The Numbers – A Story of Relative Decline
The Sanyal-Arora paper lays out the stark reality. In 1960-61, West Bengal was India’s third-largest economy, contributing 10.5 per cent of national GDP. Six decades later, that share had nearly halved to 5.6 per cent—the most severe reduction among all Indian states. The decline in per capita income is equally telling: from 127.5 per cent of the national average (meaning West Bengal was significantly richer than the national average) to 83.7 per cent (meaning it is now poorer than the national average).
Assam’s story is similar. The state had an above-average per capita income in 1960-61. By 2010-11, it had dropped to 61.2 per cent of the national average. There has been a modest recovery since, to 73.7 per cent in 2023-24, but the state remains far below its historic position.
Bihar’s decline is the most dramatic. The undivided state’s relative per capita income was 70.3 per cent of the national average in 1960-61. It hit a low of 31 per cent in 2000-01 and then stayed at around 33 per cent after the state was split into Bihar and Jharkhand. From a position of modestly below the national average, Bihar fell to a position of catastrophic poverty.
Odisha offers a glimmer of hope. The state saw a consistent decline over the three decades to 1990-91 (from 70.9 per cent to 54.3 per cent of the national average). But then it recorded a significant turnaround, taking its figure to 88.5 per cent in 2023-24. Odisha’s experience proves that eastern states can recover.
Part II: The Factors Behind the Decline – What Went Wrong
The reasons for the relatively poor showing of India’s major eastern states vary, but several common factors emerge.
First, difficult land acquisition. Land acquisition for industrial projects in West Bengal has been notoriously difficult. The Nandigram and Singur episodes are the most famous examples. In Singur, the state government acquired farmland for a Tata Motors factory. The project faced fierce opposition, and Tata Motors eventually moved the factory to Gujarat, which was more welcoming. The message to investors was clear: setting up a factory in West Bengal comes with political risk.
Second, lack of growth hubs. The south has Bengaluru and Hyderabad—cities that have become global technology hubs, attracting talent, investment, and entrepreneurship. The west has Pune, Ahmedabad, and the Mumbai Metropolitan Region. The east lacks comparable hubs. Kolkata, once the commercial capital of British India, lost its preeminence and never regained it. Without a vibrant, globally connected city, the east struggles to attract tech-related investment.
Third, law and order challenges. The long-running Maoist rebellion (left-wing extremism) affected large swathes of eastern forest belts—in Jharkhand, Chhattisgarh, Odisha, and West Bengal. The insurgency made these regions unattractive for investment. While the rebellion is said to have been finally quelled, the perception of risk lingers.
Fourth, weak governance. Investor complaints often cite poor governance: bureaucratic delays, corruption, unpredictable policy changes, and lack of transparency. The eastern states have generally performed worse on governance indices than their western and southern counterparts.
Part III: The Turning Point – New Political Alignment
Now, with West Bengal under the same political dispensation as the Centre, and the BJP part of ruling alliances in Bihar and Odisha, a new alignment has emerged. For the first time in decades, the eastern states are not politically opposed to the central government.
The potential benefits are several. First, policy coordination. When the state and central governments are from the same party, policy coordination improves. Central schemes can be implemented more effectively. State-level reforms can be designed to complement central initiatives.
Second, investment promotion. The central government can actively promote eastern states to domestic and foreign investors. The “Make in India” campaign can highlight the advantages of the east: cheaper land and labour, proximity to markets in the Northeast and Southeast Asia, and improving infrastructure.
Third, infrastructure focus. The central government can prioritise infrastructure projects in the east: highways, rail corridors, power plants, and internet connectivity. The eastern states have historically been underserved. A focused infrastructure push could change the investment calculus.
Fourth, law and order support. The central government can provide central forces, intelligence sharing, and coordination to help eastern states maintain law and order. The Maoist insurgency was finally quelled through a coordinated centre-state effort. Sustaining that peace is essential for investment.
Part IV: The Learning from Bimaru – States That Turned Around
In the mid-1980s, demographer Ashish Bose coined the acronym ‘Bimaru’ for Bihar, Madhya Pradesh (MP), Rajasthan, and Uttar Pradesh (UP) in a paper that outlined the slow progress of these states that were home to almost 40 per cent of India’s population. The acronym was deliberately chosen: ‘Bimaru’ in Hindi means ‘sick.’
Since then, these four states have made concerted efforts to shake off that tag. MP and UP especially have seen significant improvements in infrastructure, ease of doing business, and economic growth. The Bimaru experience offers lessons for the eastern states.
First, political will matters. The turnaround in UP and MP did not happen automatically. It required sustained political commitment to reform, regardless of the short-term political costs.
Second, infrastructure as a driver. The construction of expressways, industrial corridors, and power plants in western and central UP transformed parts of the state into an industrial belt.
Third, ease of doing business. Both MP and UP implemented single-window clearance systems, simplified regulations, and reduced bureaucratic hurdles. They competed actively for investment.
Fourth, law and order. Both states prioritized the reduction of crime and improvement of public safety, signalling to investors that their assets would be secure.
Part V: The Biba Vision – Vibrant Eastern States
If eastern states undergo a gear shift in favour of economic growth, it might well be time for a new acronym: BIBA, which means ‘vibrant’ in several Indian languages, for Bihar, Bengal, and Assam.
The BIBA vision is not a fantasy. Odisha has already shown that an eastern state can turn around. The state’s per capita income went from 54.3 per cent of the national average in 1990-91 to 88.5 per cent in 2023-24—a remarkable recovery. If Odisha can do it, why not West Bengal, Bihar, and Assam?
The potential gains are enormous. The eastern states are resource-rich: West Bengal has tea, jute, and minerals; Bihar has fertile agricultural land and a young population; Assam has tea, oil, and natural gas; Odisha has minerals. The region has a coastline, river systems, and proximity to Southeast Asia. With the right policies, the east could become a manufacturing and logistics hub, serving both the Indian market and exports.
Moreover, addressing the east-west imbalance would have national benefits. It would reduce migration pressures on western and southern cities, spread economic growth more evenly, and reduce regional disparities that fuel political discontent. A more balanced India is a more stable India.
Part VI: The Hard Work Ahead – What Needs to Be Done
The new political alignment is an opportunity, not a guarantee. The hard work lies ahead. Several priorities emerge.
First, land acquisition reform. West Bengal must learn from the Singur and Nandigram episodes. Transparent, fair, and efficient land acquisition policies are essential. Landowners must be compensated fairly, and communities must see benefits from industrial projects.
Second, create growth hubs. Kolkata must be revitalised as a commercial and technology hub. The city has a talented workforce, historic institutions, and a strategic location. A focused urban renewal programme, coupled with incentives for tech companies, could spark a revival.
Third, improve governance. Bureaucratic hurdles must be reduced. Single-window clearance systems must be implemented and enforced. Corruption must be tackled. Investors need predictability and transparency.
Fourth, invest in infrastructure. The eastern states need better roads, reliable power, and high-speed internet. The central government can help, but state governments must also invest their own resources.
Fifth, sustain law and order. The Maoist rebellion has been quelled, but the underlying conditions that fuelled it—poverty, inequality, lack of opportunity—remain. Development is the best counter-insurgency policy.
Conclusion: A Chance to Fix the Divide
India’s east-west imbalance has persisted for decades. The economic divide has not received as much attention as the north-south gap, but it is equally consequential. Millions of people in eastern states have seen their relative living standards decline. They have watched as western and southern states raced ahead.
Now, for the first time in a generation, there is a chance to fix the divide. West Bengal is under the same party as the Centre. The BJP is part of ruling alliances in Bihar and Odisha. The political alignment is favourable. The central government has an incentive to invest in the east. The state governments have an incentive to reform.
The Bimaru states shook off their sick tag. The Biba states can become vibrant. The path is hard, but it is possible. The opportunity is here. It must not be wasted.
5 Questions & Answers Based on the Article
Q1. What do the Sanyal-Arora paper’s data reveal about West Bengal’s economic decline between 1960-61 and 2023-24?
A1. The Sanyal-Arora paper reveals that West Bengal’s share of India’s GDP declined from 10.5 per cent in 1960-61 to 5.6 per cent in 2023-24—the most severe reduction among all Indian states. Its per capita income fell from 127.5 per cent of the national average to 83.7 per cent over the same period. This means West Bengal went from being significantly richer than the national average to being poorer than the national average—a dramatic reversal of fortunes over six decades.
Q2. What are the four main factors identified as holding back the economic performance of India’s eastern states?
A2. The four main factors are: (1) Difficult land acquisition – as seen in the Singur and Nandigram episodes where industrial projects faced fierce opposition, leading to companies like Tata Motors moving to Gujarat. (2) Lack of growth hubs – unlike Bengaluru and Hyderabad in the south, the east lacks a vibrant technology and investment hub; Kolkata never regained its preeminent position. (3) Law and order challenges – the long-running Maoist rebellion in eastern forest belts made regions unattractive for investment, though it has reportedly been quelled. (4) Weak governance – bureaucratic delays, corruption, unpredictable policies, and lack of transparency feature prominently in investor complaints.
Q3. Which eastern state has shown a significant economic turnaround, and what was the magnitude of its recovery?
A3. Odisha has shown a significant turnaround. The state saw a consistent decline over the three decades to 1990-91, falling from 70.9 per cent of the national average per capita income to 54.3 per cent. However, it then recorded a remarkable recovery, taking its figure to 88.5 per cent in 2023-24. Odisha’s experience proves that eastern states can recover with the right policies and governance.
Q4. What is the ‘Bimaru’ acronym, who coined it, and what does it signify?
A4. The ‘Bimaru’ acronym was coined by demographer Ashish Bose in the mid-1980s. It stands for Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh. The word ‘Bimaru’ means ‘sick’ in Hindi, and Bose used it to highlight the slow progress of these states that were home to almost 40 per cent of India’s population. Since then, these four states have made concerted efforts to shake off that tag, with MP and UP especially showing significant improvements in infrastructure, ease of doing business, and economic growth.
Q5. What is the ‘BIBA’ vision mentioned in the article, and what does it aim to achieve?
A5. The ‘BIBA’ acronym is proposed for Bihar, Bengal, and Assam—three eastern states that have experienced relative economic decline. ‘Biba’ means ‘vibrant’ in several Indian languages. The vision aims for these states to undergo a gear shift in favour of economic growth, similar to the turnaround seen in Odisha. The potential gains are enormous, as the eastern states are resource-rich (tea, jute, minerals, oil, natural gas, fertile agricultural land), have a coastline, river systems, and proximity to Southeast Asia. With the new political alignment (West Bengal under the same party as the Centre, and the BJP part of ruling alliances in Bihar and Odisha), the article argues that the conditions are now favourable for the east to become a manufacturing and logistics hub, addressing the long-standing east-west economic divide.
