A timeline of 60 years: How West Bengal went from being the 3rd richest State in India to witnessing unprecedented economic downfall
West Bengal, which ranked 3rd in the list of India’s richest States in 1960, is languishing at 24th rank as of today. In the past 80 years, the State has witnessed a drastic and unprecedented economic downfall. This was at a time when other economically backward States were making huge progress. West Bengal began its journey as an undisputed industrial powerhouse, and through six decades of systematic ideological poisoning, it engineered its own structural relegation. On Tuesday (30th December), an X handle ‘The Matrix’ posted his analysis of the economy of West Bengal by sourcing state-level per capita income data from the Economic Advisory Council to the Prime Minister (EAC-PM). In the economic history of post-independence India, few case studies are as stark as the trajectory of West Bengal. Once the industrial engine of the East, the state has undergone a complete reversal of fortune over the last six decades.1. The Starting Point (1960-61): The… pic.twitter.com/0h7xirugIK— The Matrix (@indian_matrix) December 30, 2025 The Premium Era: When Bengal Led the Nation At the dawn of the 1960s, West Bengal was not just another administrative unit. It was the industrial clearinghouse of the Indian Union. In 1960-61, West Bengal’s relative per capita income stood at a staggering 127.5%. To put that in perspective, the average resident of Bengal earned nearly 28% more than the national average. This was a state in a weight class shared only by Maharashtra and Delhi. With the Calcutta port, a thriving jute monopoly, and engineering giants like Jessop and Braithwaite, Bengal was the default destination for any capital looking to build capacity in India. The ‘Death Cross’: Militant Unionism and the Exit of Capital The decline did not happen by accident. The graph of Bengal’s prosperity shows a steep, unrelenting downward slope starting in the late 1960s. By 1980-81, the relative income had plummeted to 96.9%. This was the “Death Cross”—the precise historical moment when the average citizen of Bengal became poorer than the average Indian. While some left-liberal ‘historians’ love to blame external factors like the Freight Equalisation Policy, the primary wound was self-inflicted. This era saw the rise of militant trade unionism, where the weaponised tool of the Gherao was used to hold industry hostage. When profit was treated as a “vice” and industrialists were publicly humiliated, capital responded with predictable rationality i.e. it fled. The ‘animal spirits’ required for innovation were drained out of Kolkata and relocated to Mumbai and Gujarat. Trapped in an Ideological Time Warp When India finally broke the shackles of the Licence Raj in 1991, the southern states leaped at the opportunity to build IT parks and court global supply chains. Bengal, however, remained trapped in an ‘ideological time warp’. This is a classic case of economic hysteresis, where the trauma of the 70s persisted long after the initial shocks were over. Even as the overt militancy subsided, the state’s reputation for hostility to capital remained entrenched. While Karnataka and Andhra Pradesh compounded their wealth, Bengal languished in a low-growth agrarian equilibrium. The numbers don’t lie. Between 1990 and 2010, the state’s rank continued its pathetic slide from Rank 15 to Rank 21. The Singur Standoff: De-Industrialisation 2.0 If the data is the skeleton of this tragedy, Singur is its heart. In 2008, Ratan Tata’s decision to establish the Nano plant in Singur was a potential inflexion point. It was a signal that Bengal might finally be ready to re-industrialise. Instead, we witnessed a ‘geopolitical event in the corporate world’. The subsequent agitation compelled Tata Motors to move to Sanand, Gujarat, effectively telegraphing to every global investor that land acquisition in Bengal was fraught with unmanageable political risk. Gujarat absorbed the entire industrial ecosystem, while Bengal suffered De-Industrialisation 2.0. It cemented an anti-industry brand that it has failed to shed for 15 years. The Audit of 2024: A Structural Collapse Fast forward to today, and the contrast is sobering. The state that once held the Rank 3 position in 1960 has crashed to Rank 24 in 2024. Today, the average citizen of West Bengal earns 16.3% less than the average Indian. While Tamil Nadu, which started lower, has surged to a relative income exceeding 150%, Bengal has experienced a complete structural reversal. This precipitous fall is the cumulative consequence of six decades of policy choices that prioritised political consolidation over capital accumulation.
West Bengal, which ranked 3rd in the list of India’s richest States in 1960, is languishing at 24th rank as of today. In the past 80 years, the State has witnessed a drastic and unprecedented economic downfall. This was at a time when other economically backward States were making huge progress.
West Bengal began its journey as an undisputed industrial powerhouse, and through six decades of systematic ideological poisoning, it engineered its own structural relegation.
On Tuesday (30th December), an X handle ‘The Matrix’ posted his analysis of the economy of West Bengal by sourcing state-level per capita income data from the Economic Advisory Council to the Prime Minister (EAC-PM).
In the economic history of post-independence India, few case studies are as stark as the trajectory of West Bengal. Once the industrial engine of the East, the state has undergone a complete reversal of fortune over the last six decades.
— The Matrix (@indian_matrix) December 30, 2025
1. The Starting Point (1960-61): The… pic.twitter.com/0h7xirugIK
The Premium Era: When Bengal Led the Nation
At the dawn of the 1960s, West Bengal was not just another administrative unit. It was the industrial clearinghouse of the Indian Union. In 1960-61, West Bengal’s relative per capita income stood at a staggering 127.5%.
To put that in perspective, the average resident of Bengal earned nearly 28% more than the national average.
This was a state in a weight class shared only by Maharashtra and Delhi. With the Calcutta port, a thriving jute monopoly, and engineering giants like Jessop and Braithwaite, Bengal was the default destination for any capital looking to build capacity in India.
The ‘Death Cross’: Militant Unionism and the Exit of Capital
The decline did not happen by accident. The graph of Bengal’s prosperity shows a steep, unrelenting downward slope starting in the late 1960s.
By 1980-81, the relative income had plummeted to 96.9%. This was the “Death Cross”—the precise historical moment when the average citizen of Bengal became poorer than the average Indian.
While some left-liberal ‘historians’ love to blame external factors like the Freight Equalisation Policy, the primary wound was self-inflicted.
This era saw the rise of militant trade unionism, where the weaponised tool of the Gherao was used to hold industry hostage.
When profit was treated as a “vice” and industrialists were publicly humiliated, capital responded with predictable rationality i.e. it fled.
The ‘animal spirits’ required for innovation were drained out of Kolkata and relocated to Mumbai and Gujarat.
Trapped in an Ideological Time Warp
When India finally broke the shackles of the Licence Raj in 1991, the southern states leaped at the opportunity to build IT parks and court global supply chains.
Bengal, however, remained trapped in an ‘ideological time warp’. This is a classic case of economic hysteresis, where the trauma of the 70s persisted long after the initial shocks were over.
Even as the overt militancy subsided, the state’s reputation for hostility to capital remained entrenched. While Karnataka and Andhra Pradesh compounded their wealth, Bengal languished in a low-growth agrarian equilibrium.
The numbers don’t lie. Between 1990 and 2010, the state’s rank continued its pathetic slide from Rank 15 to Rank 21.
The Singur Standoff: De-Industrialisation 2.0
If the data is the skeleton of this tragedy, Singur is its heart. In 2008, Ratan Tata’s decision to establish the Nano plant in Singur was a potential inflexion point. It was a signal that Bengal might finally be ready to re-industrialise.
Instead, we witnessed a ‘geopolitical event in the corporate world’. The subsequent agitation compelled Tata Motors to move to Sanand, Gujarat, effectively telegraphing to every global investor that land acquisition in Bengal was fraught with unmanageable political risk.
Gujarat absorbed the entire industrial ecosystem, while Bengal suffered De-Industrialisation 2.0. It cemented an anti-industry brand that it has failed to shed for 15 years.
The Audit of 2024: A Structural Collapse
Fast forward to today, and the contrast is sobering. The state that once held the Rank 3 position in 1960 has crashed to Rank 24 in 2024. Today, the average citizen of West Bengal earns 16.3% less than the average Indian.
While Tamil Nadu, which started lower, has surged to a relative income exceeding 150%, Bengal has experienced a complete structural reversal.
This precipitous fall is the cumulative consequence of six decades of policy choices that prioritised political consolidation over capital accumulation.
