The performance of industrial growth has been less impressive than for agriculture overall, although there has been an acceleration of industrial output in the Nineties. The Eighties was a period of relative decline for industry in West Bengal, but the latter part of the Nineties exhibits an impressive recovery... This is not really due to improved performance of organized industry, since growth in certain sectors such as jute and leather has been counterbalanced by the relative slowdown in other sectors such as engineering, which have been adversely affected by the decline in railway investment in the eastern region.

The traditional (mainly Marwari) business houses of Bengal have shown a tendency to move new investment to other states, unlike the regional bourgeoisie of other states such as Tamil Nadu and Andhra Pradesh. The lack of development of a regional bourgeoisie has therefore played a role in determining the less than desired performance of organized industry. This may be why there has been no substantial tendency of private corporate capital to move from declining industries to more buoyant areas within the state. Public enterprises in the state began to decline in the mid-Eighties, affected by the reduced share of WB in all-India public investment, and by the general stagnation of the Durgapur-Asansol industrial area.

However, the unorganized manufacturing sector in WB has exhibited much greater dynamism than earlier, and it is really that which has contributed to the acceleration of aggregate industrial growth in the state. The share of unregistered manufacturing in the manufacturing state domestic product...almost doubled from an average of 30 per cent in the early years of the Eighties, to nearly 60 per cent in the number of informal sector manufacturing units, especially in the rural areas.

Aggregate manufacturing employment over the Nineties increased in rural WB even as it decreased in urban WB. According to official sources, even in the three years from April 2000, more than 11,300 new small-scale and cottage industrial units employing more than 36,500 people, came up in the state. Therefore, it seems plausible that the combination of institutional changes and agricultural growth that occurred over the Eighties in particular, put greater purchasing power into the hands of rural masses, and this contributed to the expansion of rural industrialization.

The services sector has experienced very large output expansion over the past decade in particular. In the period 1994-95 to 2000-01, the tertiary sector as a whole in WB grew at an annual rate of well over 10 per cent per year.

However, as in the rest of India, this expansion of services contains many very different components which deserve greater disaggregation. Some of the output increased actually reflects the increased wages of public sector workers consequent upon the Fifth Pay Commission awards from 1997 onwards. Some of it also reflects the increase in certain sectors such as transport, distribution and trade, which are positively related to real output growth.

There has been some expansion in IT-enabled services and related activities in the urban areas of the state, but mostly limited to the metropolitan area of Calcutta. There is also some part of the increase in services which represents a distress movement of workers who are unable to find employment in agriculture or industry...

The fact that labour productivity in the services sector has lagged behind other sectors in WB, suggests that this latter tendency may have been the more prevalent pattern for a range of service activities.