Archive for February, 2006

The Informalization of some parts of the Indian Economy

The Communist Party (Marxists) and their Left Front partners have won every election in Bengal since 1977- an unbroken period of 29 years. All the more surprising when you consider that on human development indices like Life Expectancy at Birth or percent below the poverty line Bengal is at just about the Indian average and in the ranking of Indian states by per capita income has actually declined.

Why do people in Bengal vote back into power a party which has done so little for them?

An intriguing answer comes from Abhirup Sarkar of the Indian Statistical Institute writing in this week’s Economic and Political Weekly.

The answer , he says, lies in the “informalization” of the Bengal economy. Unregistered enterprises now account for 60% of all manufacture versus 30% in the ’80′s and a large proportion of the population is in ‘marginal’ occupations like street hawkers, shopkeepers’ employees, autorickshaw drivers, marginal farmers and often live on encroached government or railway land. They live in complete insecurity and find the formal legal system too costly or beyond their reach- the only protection they have is the Marxist party. In return they give the party their support.

Sarkar call this frightening situation a ‘political society’ and this society is what keeps the CPM in power.

You can read the full article: “The Political Economy of Bengal: A Puzzle and a Hypothesis” at

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