This is to explore the cultural and economic implications on the Eastern India composed of two provinces, West Bengal and Orissa. West Bengal and Orissa are geographically in eastern regions of India and are the most densely populated and agriculture-dependent state in India. These states remains one of the poor states in India. However, they are in different stage and process of economic development because of their different cultural and social background. It gives some policy implications for the firms to enter India market.
The basis of the traditional culture of Eastern India may be the Jagannath belief and Durga puja. And modern culture is heavily influenced by the modernism brought by East India Company in the 19th century onward. West Bengal and Orissa marks the lowest on the human development indices such as medical service, health care, education, housing etc. Though the communists has been taking the power in West Bengal government, the government servants show us serious corruption and the violence of the upper classes is very widely prevalent in all over the province. What is to be noted on Orissa is that they have very good number of Scheduled Tribes in its north-western region where deep forest with various natural sources are lying. And the development policy of the government and entrepreneurships lead the serious resistance and struggle of the indigenous people dwelling in the region. The power and influence of Naxalite struggle here in Orissa is most noteworthy in all over India. In addition to this, the refugees from the 1947 Partition and the Bangladesh Liberation War of 1971 have affected the backward economic situation of these two provinces. Though the governments of the provinces have been trying to prompt various investments, the poor condition of infrastructure like road, light, port is blocking the progress.
West Bengal and Orissa are most poor states compared to others. Agriculture is the leading occupation in West Bengal and Orissa. However, industry is the lowest contributor to the gross domestic product of the states. Except the mineral and steel industries, only traditional sectors such as cottons and leathers are playing important economic role in these states. Manufacturing are still backward sectors in these two states. Minerals account for 50% of Orissa's export and the traditional items such as engineering products, leathers, textiles, jeweller are major export products in West Bengal.
Two states are by far the least industrialized and underdeveloped states because of their unique social and cultural backgrounds. It is analyzed that the reasons that West Bengal remains one of the poor states in India are political instability and bad governance, political and high corruption with Bengal the Communist Party of India (Marxist) led Left Front rule for three decades.
Orissa is India's poorest state and highly disparities which have long historical and deep institutional roots. Agriculture-deep dependence and its low productivity, lack of leadership and fails of industrial policies have been unable to break the disparities. Land reform makes another obstacles for the firm that needs vast land to establish the factories. Massive resistance from the people of the state who mainly depend on agriculture for livelihood also is a major factor against attracting investment in Orissa.
There are two case to explore the cultural and economic implication on the eastern India, the Tata Nano and POSCO.
In 2006, Tata Motors started constructing a factory to manufacture their $2,500 car, the Tata Nano at Singur, West Bengal. Tata chose the Singur site because of its proximity to Kolkata and highway connections. The West Bengal government obliged, making use of a colonial land expropriation law and state pepression to force 13,000 Singur peasants out of 1,000 acres of prime agricultural land. The project faced massive opposition from displaced farmers. They were given a political support by West Bengal's opposition leader Mamta Banerjee of Trinamul Congress Party. After repeated violences, Tata finally decided to move out of Singur in 2008. On 7 October 2008, Tata announced that they would be setting up the Tata Nano plant in Sanand, Gujarat.
POSCO signed a Memorandum of Understanding (MOU) with the Government of Orissa in June 2005, to set up a 12 MTPA green field steel plant near Paradip, Jagatsinghpur District, Orissa, with an estimated investment of USD 12 billion. The company will build a 4 million-tons per annum capacity steel plant in Orissa, during the first phase of its project , and expand the final production volume to 12 million tons per annum. Production from the plant was scheduled to begin by the end of 2011. But the plan, one of India's largest foreign investment projects, has already faced more than three years of delays because of controversy over land acquisition and mining rights. POSCO has faced protests from local residents who stand to be affected by the plant as well as the environment ministry probe. In August, 2010, the environment ministry ordered a halt to all work on the project, including land acquisition, while the panel looked at whether the forest rights act, which seeks to protect forest land and settlers, had been violated.
Policy implications for potential investors from inside or outside India are about the process of land acquisitions. Land for investment project is advised not to include the privately owned or to minimize. If it included private land, direct negotiations between the industry and the landowners would be advisable but it needs a strong political will to end all protocol and red tape. Even in the case of projects that are genuinely for public welfare, there is a considerable difference between market value of the property and the value that the land acquisition officer pays to the landowners. The rehabilitation and relocation of the landowners affected by acquisition should be looked into carefully.
The results gives some policy implications that the level and growth of economic development in India would be different in state by state. It also shows that land aquisition is the most difficult factor for the firm to invest in Eastern India and the resistance has a different background. It indicates that the cultural and economic backgrounds have to be investigated before the firm invests in India such as West Bengal and Orissa. Finally, the results show that the two states still have a potential as an emerging market even though there are structural difficulties.