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Kolkata, located on the eastern banks of Hugli River ushered in an innovative era of development in commerce which eventually made this city as a hub of trade and industries. The history of Kolkata goes back to 1690 when it was chosen by the British government as the center for their trade settlements in India. The reason for choosing this location by the British was its geographical location where the city was protected by the Hooghly River on the west, a creek on the north, and by salt lakes about two and a half miles to the east. Since then the city adopted the character of a cosmopolitan city in which people, technology and ideas mix with socio-political culture to construct the new design of the city.
The metropolis of Kolkata is a financial center of eastern India. In the pre-independence era, the city played a lead role in the economy of India. After the independence of India, the city went through a series of social, economic and political changes. The economy of Kolkata witnessed a rapid upsurge after the liberalization of Indian economy in the 1990s. Due to the cumulative efforts of the people, today's Kolkata is recognized as the commercial and financial of hub of eastern India. Huge portion of city’s economy is based on trade and industries.
The large segment of the population is poor and vulnerable. These sections mostly derive their income from the work of laundering, housecleaning, sweeping, plastic salvaging, plumbing, furniture making, electrical wiring, TV repairing, masonry, messaging, newspaper selling, rickshaw pulling, hair designing, music and art, tailoring, leather work, shoe making and food selling.
The state of West Bengal has now liberalized its industrial policy as a result of which foreign investors have shown their interests for direct investment. Kolkata has the potential for Foreign Direct investment (FDI) but the sole problem is the lack of infrastructure. The government is trying to overcome the situation by developing various industrial zones. The city’ dual economy has two features – the informal economy helps the poor to survive while the educated mass tries to step into the global economy. The multifaceted financial system of the city is rapidly changing for a rich economy in the near future.
The famous Calcutta Stock Exchange is located in Kolkata. The city is also home to the headquarters of the Allahabad Bank, UCO Bank and the United Bank of India, ITC Limited, Coal India Limited and Britannia Industries. Several major corporate offices of the industries like steel mining, minerals, heavy industries, electronics, jutes, chemicals, heavy engineering, pharmaceutical, agriculture food processing, cement and steel are located in Kolkata. From the late 1990’s, Kolkata is experiencing a skyward growth in the IT sector. The rate of annual IT growth is 70% which is twice the rate of national average.
Economic History and Modern Developments
The decades of 1960s and 80s saw a steady decline in the number of factories as a consequence of investment crunch and lack of resources. Kolkata, once the most developed city in the country till the early eighties instantly witnessed a sharp decline in the economy. However the economic liberalization in 1991 had a paradigm shift in economy of the city with vibrant sectors such as Information Technology and Business Process Outsourcing contributing to a spatially balanced economic development. The city has proven to be exceedingly striking to the investors because of the ever-increasing market size, ease of use of skillful work force, political strength, enhanced governance collectively with the State Government’s strategy on decentralization and last but not the least – the optimistic impact of a moderately little competition strength which is incredibly imperative for several industries to setup.
Economic Prospects - Sector Wise
The State Domestic Product (SDP) induced out of this sector can be elevated efficiently through amplified production in the areas of horticulture, aqua culture, horticulture and animal husbandry. With the escalating metropolitan inhabitants the demand for the products from these activities has enhanced.The city being the major flower producing center is well connected to Singapore through the airport where the wholesale flower market is set up, brightening the export prospect.
The city is poised for brisk proliferation of industries. To speed up the growth process the government has portrayed several policies and schemes. Based on recent trends several industries identified growth potential within the city. IT and BPO are also contributing in the economy of Kolkata . The city provides befitting backdrop for setting up the units. The government has established many industrial zones in the city to promote service industries in Kolkata. The man power required by the industries are in plenty in and around Kolkata. The food processing industry is another significant industry in Kolkata. It has witnessed phenomenal growth as the state is predominant in agricultural production in the country. This imparts mammoth opportunities to the agro based processing industries within the city. The garment manufacturing industry has also seen a healthy competition in the present era. With the presence of National Institute of Fashion Technology, there is a flourishing space to accommodate the changing needs in the international markets. The engineering and metal processing industries holds a tremendous potential with rising requirement for consumer durables and household appliances.
Jute industry nin the city provides considerable employment to the inhabitants of the city. Soaring demand in the developing countries for environmental friendly products has provided an opportunity for these products. However, to uphold the significance of jute based business activities, it is crucial to instigate actions at the apt level to reduce costs and make jute products price competitive.
The inauguration of Haldia Petrochemicals Ltd (HPL) in Kolkata is seen as benevolence to the state as far as expansion of chemical and plastic industries are concerned. As an auxiliary business, toy-manufacturing industry is another potential livelihood in this region. To promote this manufacturing, a Toy Park is positioned Salt Lake. The park has facilities like molding and supply of raw materials to the units which cater to the increasing in house and global market. The skillful artisans in manufacturing of gems and jewellery contribute to a great extent of value addition and endorsement of the business in Kolkata due to proximity of market. The Gems and Jewellery Park at Salt Lake provides infrastructural facilities to professional jewellery makers and is exported to various countries.
The banking and insurance sector has contributed to the financing of business and commerce in the city. Economic liberalization and diverse banking and insurance reforms would contribute to the vibrant and growing economy.The city also enjoys the status of stable financial metropolitan in the country . It contributes to the nations economy and promotes major sectors like tourism, handicrafts, culinary etc.