The Capitalist Manifesto

West Bengal did attract industry, but no thanks to McKinsey

The Capitalist Manifesto
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Some officials call it McCanDo. That's because the reports churned out by the US-based consultancy firm, McKinsey, for the West Bengal government have always been unduly optimistic. The bitter truth, however, is that the much-touted studies haven't really amounted to much. It all started in the late 1990s, when 'The Firm' was invited by the Left regime since it was perceived to be "the most objective assessor" of the state of things in West Bengal. A juicier, though unconfirmed, story is that McKinsey's global CEO Rajat Gupta was asked by the then CM Jyoti Basu to undertake the first project because he was a "Bengali boy" (though he was born and brought up in Delhi).

In January 1999, McKinsey presented its first report, "Manifesto for a Business Revolution" (note the clever use of terminology with communist associations by the fanatically capitalist Firm). Says Indian Chamber of Commerce secretary-general Nazeeb Arif, who was present at the meeting: "McKinsey talked about the advantages West Bengal had in IT, agri-business and many new-economy areas, charted out policies that could leverage these advantages, and talked about the negative perceptions about Bengal."

Later, the Firm was asked to draw up two reports on the state's agri-business possibilities and its nascent IT industry, both of which were ready in November 2002. And these works have sparked indignation among Calcutta thinkers and policy shapers. "Why did we bring in outsiders when there are enough institutions here to carry out the same kind of work?" asks Anup Sinha, professor of economics at iim Calcutta.

Many critics feel that the reports lack depth and quality. Says economist-commentator Abhirup Sarkar: "McKinsey hasn't actually touched on the real problems plaguing West Bengal. Rural-urban inequities, labour relations and a directionlessness about the marketing of products, are just some of the things it should've addressed." Admits the state's IT secretary G.D. Gautama: "We came out with our IT policy in 2001, and McKinsey's study contributed little to it." McKinsey's recommendations on agri-business have also been implemented only partially.

Working closely with a high-profile global consultant has not even helped Bengal attract higher domestic or foreign investments. Since 1998, domestic investments have quadrupled to Rs 2,335 crore. But critics credit this to the boom in the iron and steel sector—an area that wasn't earmarked by McKinsey as a potentially high-growth one. A study by the state's commerce and industries department shows that Bengal has been able to attract a mere 3.18 per cent of the total fdi approved in India. This makes the state a poor eighth, behind Maharashtra, Delhi, Tamil Nadu, Gujarat and others.

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