thanks to reader amrish for forwarding this excellent paper.
as amrish says, west bengal had the worst of all possible worlds: a nehruvian stalinist regime at the center, and a maoist regime in the state. no wonder they're seriously screwed. this is the nehruvian penalty, doubled.
here is the summary of the lahiri paper: the authors (economists with the federal reserve) compared the trajectories of the economies of maharashtra and west bengal, the two wealthiest states at independence, with roughly equal per capita income. between 1960 and 1995, west bengal managed to reduce its per capita income to only 60% of maharashtra's level! the authors show that a) low productivity, b) poorly functioning labor markets and sectoral misallocations are to blame. also, they show high correlation between factors a) and b) and the rise of the marxist vote share! this is a damning indictment.
quote: "west bengal experienced de-industrialization during this period." so much for the rights of the proletariat.
i suggest that this paper should be read in conjunction with the Survey of Chinese Peasants that has been banned in china, and which shows that almost a billion peasants have been enslaved and severely oppressed to provide the funds for the glittering coastal cities in that country. a google search will bring up a number of reviews, if not the text of the book itself.
simple conclusion: nehruvian stalinist/maoist voodoo economics will perpetuate poverty.
prediction: thanks to the nehruvian stalinists in power at the center now, we can expect india's GDP growth rate to head towards their comfortable 'nehruvian rate of growth' of 3% again soon.