Wednesday, January 11, 2017

Will the Bengal Global Business Summit Succeed?

The ground realities facing West Bengal and its Chief Minister Mamata Banerjee, are challenging when the third edition of Bengal Global Business Summit (BGBS) gets underway on January 20th and 21st.

Bengal Global Business Summit is back, and back on a very different backdrop. The first two editions of BGBS happened when the relations between the Central Government and West Bengal Government were very amicable. The evidence of this included attendance by heavyweights from Centre like Cabinet Ministers Arun Jaitley and Nitin Gadkari. 

But the third edition of BGBS is set to happen on 20th and 21st of this month, when the Modi-Mamata relations have hit an abysmal low. Thanks to Modi’s unprecedented demonetisation move and Mamata’s equally staunch opposition to this controversial strategy, the Centre-State relations have even turned ugly as it has never been before.

While Jaitley has an invite from Mamata to attend BGBS 2017, nobody - not even Didi - must be expecting India’s finance minister to attend it, not after her effectiveness in defeating the move to whitewash the demonetization affair. 

What has irked Modi and company is not her protest, but the way in which she usurped the moral leadership of the anti-demonetization protest from the likes of Rahul Gandhi and Arvind Kejriwal. It is easier for BJP to deal with Congress or AAP, but not a mercurial leader like Didi with profuse grassroots connect. 

She has even threatened point-blank to not support GST if demonetization is not rolled back. Mamata Banerjee couldn’t have done it any other way, as demonetization was sure to hit backward states with poor financial inclusion, the most.

The tussle with Centre is likely to be viewed as a negative by prospective investors as in India, which doesn’t fare high in business friendliness, companies need numerous clearances from both the state as well as the Centre. 

The second reason why BGBS 2017 is happening on a very different backdrop is that Mamata and her TMC team are not looking like the miracle-workers they were supposed to be. They definitely aren’t miracle-workers on the economic development front, and while it isn’t their fault alone in a peculiar state like West Bengal, investors aren’t likely to take this kindly, this time around. 

While most Indian states that are regularly conducting investor meets – including Gujarat - have poor track-records in converting MoUs to industries on ground, West Bengal’s achievement in this regard has been especially poor, with some unofficial estimates pegging the conversion rate at just 1% for the first two editions of BGBS. 

Thirdly, Didi’s image as a crusader against crony capitalism in Singur and elsewhere has been a double-edged sword; while it wins votes in a state with strong socialist ethos like West Bengal, this image has been enough to discourage all but the most courageous investors from setting shop in the state. 

It is an image that is quite difficult to correct as for many investors it has been a case of this charismatic leader throwing the baby out with the bathwater. When she succeeded against crony capitalism, she also succeeded in making capitalists chronically wary. 

However, even amidst such changing backdrop, Mamata Banerjee is expected to put up a strong show in BGBS 2017. She has several aces up her sleeve, many of them from hard learned lessons since becoming the Chief Minister. 

First among these strengths is her focus on Micro, Small, & Medium Industries. While an investor meet at the scale of BGBS is never intended to attract such small investors, it is a fact that most of the large industrial projects require a thriving MSME environment around it as feeder or ancillary units. Didi has been shrewd enough to realize that MSME sector that creates more grassroots level jobs are more likely to be acceptable to the socialist minded citizens of West Bengal. 

Secondly, despite many investors shunning the state in recent years, there have been notable exceptions too to this trend, when courageous companies have forged ahead and made the best possible of what West Bengal has to offer. One of the recent examples has been the mammoth biscuit factory commissioned in the state by India’s foods major, ITC. Such actions by domestic giants are not likely to be missed by international majors too.

Thirdly, West Bengal has been cosying up lately to USA, arguably the biggest investing nation in the world, and this is expected to produce some results in BGBS 2017. 

Mamata Banerjee also has a strong ally in Indian President Pranab Mukherjee, who being from the state, is strongly committed to see it developing, and has consented to inaugurate BGBS 2017. 

Lastly, despite not all in her ministry producing optimum results, Didi has a winner in Dr. Amit Mitra who handles core portfolios like Finance, Excise, Commerce, & Industries. A noted economist and professor abroad, Dr. Mitra was also the Secretary General of the influential apex trade body, the Federation of Indian Chambers of Commerce & Industry (FICCI). Dr. Mitra’s unparalleled experience spanning both sides of the table is expected to help West Bengal when it tries to attract game-changing investments during BGBS 2017.

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