TMC flaunts Mamatanomics growth model, but is Bengal truly shining?

As West Bengal warms up for Assembly elections mid-2026, Mamata Banerjee’s Trinamool Congress government is loosening its purse strings even as the Opposition sharpens its vote-bribery dig.

The electoral dividends the TMC is deriving from the largesse is undisputable. But is it a mere political gimmick bereft of any economic prudence?

The TMC government would like to call it a “Bengal model of development”, as articulated in some of its election manifestos, while the Centre claims the state’s economy is floundering.

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Nirmala Sitharaman’s criticism

“Capital formation crashed from 6.7 per cent (2010) to 2.9 per cent in recent years — a direct result of your (West Bengal government's) hostility to investment. There are no jobs, no factories, no vision,” Union Finance Minister Nirmala Sitharaman told Parliament last month.

“Once India’s industrial powerhouse (2 per cent share of industrial production in 1947), Bengal is now far behind in manufacturing at 3.5 per cent share in 2021,” she added. “Bengal’s per capita income growth lags national averages for 20 years. It's ranked 23rd in 2021-22.”

West Bengal BJP leader Suvendu Adhikari claims the state economy is marked by mindless spending and reckless borrowing.

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Bengal’s counter

However, West Bengal Finance Minister Chandrima Bhattacharya said the state government’s policies and schemes are driven fundamentally by the ethos of inclusion to bring about an equitable economic growth.

She further claimed the three key sectors of agriculture, industry and services contributed significantly and exhibited higher annual growth than national figures. The industry sector registered a growth of 7.3 per cent in the last fiscal, higher than the national growth of 6.2 per cent, she added.

The real story of the Bengal economy lies in the conflicting claims. It’s a mixed bag of growth and fiscal disquiet.

What Mamatanomics brings

The Bengal model of the TMC is a low-cost development model dependent largely on micro, small and medium enterprises for manufacturing. It is inevitable considering that the acquisition of large parcels of land for big industries is always a political hot potato in the land-starved state.

West Bengal occupies only 2.7 per cent of India’s total land area, but it contributes 7.8 per cent of the country’s total population.

Ever since it ascended to power in 2011 on the back of massive anti-land acquisition protests in Nandigram and Singur, the TMC has opposed the acquisition of land by the government for industrial projects. Instead, it focuses on setting up MSMEs.

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MSME push

The state is now home to 90 lakh MSMEs, the second largest presence in the country after Uttar Pradesh, contributing more than 10 per cent of the country’s total count. The sector employs over 1.35 crore people.

More importantly, female enterprises own 23.42 per cent of the MSMEs in the state, the highest in the country, per the MSME ministry’s annual report for 2023-24.

This year’s budgetary allocation of Rs 1,229 crore for MSMEs is expected to provide a further boost to the sector, said Vivek Jalan of the Bengal Chamber of Commerce and Industry (BCC&I).

Social welfare

Social welfare is another crucial focus area of Mamata's development model. The government runs more than 25 welfare schemes targeting every section, from birth, to education, marriage, livelihood, retirement and beyond.

The sustained social sector focus since 2011 has helped 1.72 crore individuals to come out of poverty by 2024. The Below Poverty Line (BPL) population in West Bengal was around 24.7 per cent of the total population in 2010. Per the latest Multidimensional Poverty Index (MPI) of 2023, the percentage of BPL population has dropped to 11.89 per cent, which is slightly higher than the so-called developed state of Gujarat (11.66 per cent).

The state government claims the percentage has further declined to 8.6 per cent.

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Better than BJP states

West Bengal performed much better than most BJP-ruled states like Gujarat, Uttar Pradesh and Maharashtra, reducing the percentage of population deprived of nutrition, per the NITI-Aayog’s survey.

The survey said 27.28 per cent of the state's population is malnourished, against 38.09 in Gujarat, 36.43 per cent in Uttar Pradesh and 32.29 per cent in Maharashtra.

West Bengal’s Gross State Domestic Product (GSDP) grew 6.8 per cent in 2024-25, surpassing India’s overall economic growth rate of 6.37 per cent. It is the sixth largest economy in India with a share of 5.60 per cent in the national GDP.

Minus Central funds

Expectedly, in the Bengal Budget 2025-26 presented last month, the last full state budget before next year’s election, the social sector got more priority with nearly Rs 1.6 lakh-crore out of its total estimated revenue expenditure of Rs 3.01 lakh-crore earmarked for the social sector.

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Again, around 27 per cent of the proposed capital expenditure of about Rs 73,000 crore for 2025-26 has been allocated for the social category. This comes to Rs 19,724.72 crore.

“A large chunk of the enhanced allotment for the social sector would be spent to run the schemes that the Centre has stopped funding,” a government official said.

Bengal housing scheme

Since December, the state started funding a rural housing scheme called ‘Banglar Bari’ as the Centre has not released its share of funds under the PM-Awas Yojana.

Of the Rs 19,724 crore of the capital expenditure earmarked for the social sector, Rs 9,600 crore has been allocated for Banglar Bari to benefit 16 lakhs families, the official added. This is in addition to 12 lakh beneficiaries who, last December, got the first instalment of Rs 60,000 under the scheme.

Another Rs 1,500 crore has been allocated for the development of rural roads under a scheme called Pathasree, launched in the wake of the Centre’s dilly-dallying over release of PMGSY funds.

Pre-election announcements

Eyeing next year’s elections, the state government recently announced a Rs 10,000-15,000 per month salary hike for doctors and 4 per cent increase in the dearness allowance (DA) of government employees.

The doctors’ fraternity was up in arms against the state government following the brutal rape and murder of a junior doctor in the government-run RG Kar Medical College and Hospital last year.

Doctors were demanding justice for the deceased, workplace safety and the weeding out of corruption.

Debt trap looming?

The state’s capital and revenue outlays, however, are not proportionate to its revenue generation, pushing it to a debt trap. The state’s current debt to GSDP ratio is 38.93 per cent, the highest in the country after Punjab.

The outstanding debt in the 2025-26 fiscal is expected to be Rs 7,71,670.41 crore with an increase of Rs 65,000 crore. This means the state will have to pay a whopping Rs 81,000 crore for loan repayments.

Its revenue receipts are largely dependent on the devolution of Central taxes and grants-in-aid. It is a worrying trend considering the withholding of funds for several centrally-sponsored schemes by the Union government.

The silver lining is that the dependency is waning. The Centre’s share in the revenue receipt was 55.87 per cent in 2020-21. It is projected to be 52.30 per cent in 2025-26 — a decline of 2.37 per cent from 2024-25.

A corporate exodus is one more area of concern. Over 2,200 companies have shifted their registered offices from West Bengal in the past five years. At least 39 of them were listed companies.