State, Private Sector and Labour:The Political Economy of Jute Industry Modernisation, West Bengal, 1986-90

In the decades since Independence, the jute industry has undergone a sharp eclipse. To reverse this process, in 1986 a Jute Modernisation Fund (JMF) was createdand certain otherpolicy measures were taken by the central government. Almost all of jute manufacturing takes place in West Bengal. The attempted restructuring thus took place in the context of the general political economy climate of West Bengal which has been ruled by a leftist coalition since 1977.

This paper documents that the period 1985-90, when the JMF was being implemented, actually witnessed increasing sickness in the jute industry. While there are important economic reasons for this phenomenon, this paper does not offer an economic analysis of the jute industry's continuing decline. Instead, this paper examines the nature of state-private sector - lubour relationships within the context of the revitalisation that was attempted in the mid 1980s. The paper documents: (I) that in many cases the proposed modernisation funds could not be dispersed because mills were not in a position to provide the promoter's contribution, or such funds had to be used forpuying off existing credits on provident funds and other workers' dues; and (2) that large numbers of labour lost their jobs, or retained theirjobs only by accepting wages below the legally stipulated minimum wages in the industry. Thus large numbers of workers were pushed outside of the margins of organised employment in spite ofa supposedly labour-friendly leftist government and a well entrenched trade union culture.

The analysis thus underlines, firstly, the limits of state attempts at jute industry restructuring via the private sector; and secondly, the vulnerabilities of both the government and of labour, to mill managers in a situation of a rapidly declining industry and the threat of large scale unemployment.