Viewed in this perspective, small scale industries can play an important role in fulfilling the basic objectives of the Left Front government in West Bengal like reduction of unemployment, eradication of poverty and decentralisation of administrative power. Unfortunately, the process of industrialisation in West Bengal, especially the expansion of small-scale industries, has been hindered by the discriminatory policy of the Central government. The position of West Bengal in India has deteriorated from 5 to 10 in respect of State’s share in total (central) plan outlay, from 10 to 13 in respect of number of bank offices per lakh population, from 2 to 3 in respect of deposits and advances of commercial banks, from 8 to 11 in respect of credit deposit ratio of public sector banks, from 4 to 7 in respect of non-bank central financial assistance, from 6 to 9 in respect of state’s share in assistance given by all India financial institutions from 7 to 14 in respect of number of industrial licenses issued and from 7 to 10 in respect of number of letters of intent issued during 1980-81 - 1989-90. Mention should also be made of the freight equalisation policy of the mid 1950’s (which has been withdrawn recently) that undoubtedly impeded the comparative advantage of West Bengal in such core sectors as coal, iron, and steel. The problems of small-scale industries in West Bengal have been further aggravated by the post-1991 liberalisation policy of the Central Government. De-licensing, de-reservation of small scale industries, curtailment of subsidies for small scale industries, curtailment of government expenditure for rural development, free entry of MNCs - all these have exposed the small scale sector to an unequal competition from the large scale industries which enjoy economics of scale.

Despite these obstacles the Left Front Government of West Bengal is trying with its limited power to protect the small-scale industries. Implementation of land reforms, provision for beneficiaries of land reforms such non-land inputs as irrigation facilities, and improved seeds and fertilisers and democratic decentralisation through the Panchyati Raj system have brought about a major breakthrough in agriculture and allied sectors. West Bengal today not only enjoys the first position in the country in food grain production but has also recorded the highest national growth rate per hector yield of food grains. Besides, the State is in the forefront in fishery and social forestry. The increased productivity has caused a corresponding increase in the rural purchasing power. This has created a new market for industrial products especially of small-scale industries in West Bengal.

The 2nd All India Census of registered Small Scale Industries (1988) admitted that in West Bengal the per unit employment in small scale industries, the wage-share expressed as percentage of Net value in small scale industry and the percentage of small scale units in rural areas are higher than the all-India average. This fact implies that the employment absorption capacity in small scale industry is not only higher in West Bengal, but the size of the market for the products of this sector in the backward areas in West Bengal is much bigger than the national figure. For West Bengal, the small-scale industries could be effective in combating unemployment, poverty and local economic imbalances. The State governments should thus undertake special measures for the expansion of the small-scale sector in West Bengal. This assertion is in consonance with the Arthur D. Little Committee Report on industrial prospects of West Bengal. The main findings of this Report are:

(i) West Bengal has the best environment within India for both domestic and foreign investment.

2. West Bengal is progressing rapidly as an industrial region within India.
3. West Bengal is the suitable place within India for the establishment of competitive and rapidly changing industries.
4. West Bengal is the main entrance within India regarding connection with the economy of Asia-Pacific-Region.
5. West Bengal is the good reservoir of natural resources.
6. West Bengal has long industries heritage.
7. Working class has strong educational base and they have potentiality to acquire improved technological knowledge.
8. The domestic market of West Bengal and neighbouring states of eastern India are progressing rapidly.

West Bengal has a bright industrial prospect and so government should take a lot of measures to strengthen the industrial base of the country.