Kolkata’s tryst with reforms: IT, retail gained but past glory elusive

Three years into India’s economic liberalisation, as the licence raj was unravelling, Chief Minister Jyoti Basu signalled a tentative opening to private capital. His government announced an industrial policy that welcomed “new technology and investment in selective spheres” for the benefit of the economy and of “mutual interest”. 

Six years later, the state’s most ambitious industrial project, Haldia Petrochemicals, was commissioned in April 2000. 

A slew of memoranda of understanding were signed with investors, but few translated into factories or jobs. West Bengal had become associated with militant trade unions and industrial unrest — a reputation that over the years had prompted many companies to take their investments elsewhere. The image proved stubbornly difficult to shake. 

It only began to change after Buddhadeb Bhattacharjee took office in November 2000. With his trademark “do it now” approach, the Chief Minister made industrialisation the centrepiece of his agenda. The change was visible in the city: Information Technology (IT) companies’ campuses came up in Salt Lake and Rajarhat, while gleaming shopping malls and restaurants began to alter the commercial landscape of Calcutta, which was rechristened Kolkata in 2001. 

While central and north Kolkata were defined by their colonial architecture and old commercial districts, Salt Lake and Rajarhat on the city’s northeastern fringes emerged as new business and social hubs, their glass-and-steel towers standing in sharp contrast to the older quarters. 

Over the last 15 years, under the Trinamool Congress, the state’s IT footprint received a notable boost from projects like the Bengal Silicon Valley Tech Hub — though much of it remains under development. 

Yet, even as new-age offices and crisscrossing flyovers reshaped the skyline, Kolkata’s image changed only fleetingly.

The promise, however, was once real. 

It was 2004. The setting was an interactive session on “Transformational Leadership”, organised by the Confederation of Indian Industry. Wipro was set to inaugurate a software development centre in Kolkata, and a sense of optimism filled the room regarding West Bengal’s investment story. 

The mood found its strongest expression in an endorsement from Wipro Chairman Azim Premji, who declared: “Your Chief Minister is doing an outstanding job and he is today the best Chief Minister in the country.” 

The statement captured the sense of possibility that resonated through much of Bhattacharjee’s time in power. 

Bhattacharjee’s early years in office were defined by a push to build a services economy. Although the state’s IT policy was unveiled in January 2000, before he took over as Chief Minister, the government organised about 50 roadshows across Hyderabad, Bengaluru, Chennai, Mumbai, and Delhi between 2003 and 2005 before taking its pitch overseas. 

IT department officials zealously responded to company emails even on Sundays, meaning to signal that Bengal meant business. The efforts did not go unnoticed. 

In 2004, The Economist reported on the reformist winds blowing through Communist-ruled Kolkata. Tata Consultancy Services (TCS) and Cognizant expanded their operations in Kolkata, Infosys began exploring the market, and a host of IT and IT-enabled services firms set up shop across the city. 

TCS’s journey in Kolkata began in 1976 from a leased office in Dalhousie. “We later moved to Salt Lake Sector V and, by early 2000, decided to consolidate our operations. We applied for a 40-acre plot on the condition that it received special economic zone status, and the proposal was approved,” recalled Ajoyendra Mukherjee, who headed the company’s Kolkata operations from 1998 to 2008.

“We were confident that, given the pace at which the business was growing, the talent available in Kolkata, and the quality of execution and delivery from the city, this was where we should be expanding,” he said.

TCS employs more than 54,000 IT professionals across facilities in Kolkata.

As companies responded to the state’s investment pitch, the government looked beyond Salt Lake to Rajarhat, where the West Bengal Housing Infrastructure Development Corporation had acquired vast tracts of land for residential, commercial, and industrial development. The stage was set for West Bengal’s next IT hub. Today, Salt Lake and New Town Rajarhat together host around 300,000 IT professionals.

“If you look at the newer side of the city, particularly New Town, it has developed remarkably well,” said Harshavardhan Neotia, chairman of the Ambuja Neotia Group.

“You can’t rebuild a city with more than 300 years of history from scratch. Some parts of Kolkata face infrastructure challenges, but that’s also part of its character,” he argued.

The Salt Lake–New Town Rajarhat corridor is more than just a technology hub. Over the past two decades, it has evolved into a self-contained urban ecosystem where tech parks and corporate headquarters coexist with residential neighbourhoods, commercial centres, schools, hospitals and leisure hubs.

Yet, this transformation was not confined to the city’s northeastern fringes; other parts of Kolkata have acquired a distinct sheen of their own.

“We’ve seen a proliferation of retail and entertainment options across the city, driven largely by rising disposable incomes among the middle and upper-middle classes. That’s been a natural consequence of the economic growth of both the country and the city,” Neotia pointed out.

As Kolkata evolved, so did its centres of gravity. Park Street ceased to be the city’s sole culinary address, while New Market — the iconic red-brick Gothic landmark — yielded its status as the undisputed mecca for shoppers.

Restaurants, malls and entertainment hubs spread across the city, redrawing how Kolkatans live, work, and unwind. Meanwhile, the expansion of the Metro network played a pivotal role in shaping Kolkata’s urban trajectory, driving development into its peripheries.

Modern retail took root with the opening of the city’s first Pantaloons store in 1997. The retail transformation accelerated in 2003 with the launch of its first shopping mall, soon followed by a wave of premium and luxury destinations.

“When we entered Kolkata with Mainland China in 2000, not much was happening in the city’s dining scene, even though it had always been a place for foodies—whether for kathi rolls, biryani or the restaurants on Park Street. But beyond that, there wasn’t much,” recalled Anjan Chatterjee, chairman and managing director of Speciality Restaurants.

From then to now, it has been a “kaya palat (complete change)”, Chatterjee said. “People have become far more adventurous, embracing new cuisines and dining formats. The saying that Calcuttans live to eat has never rung truer.”

And yet, it remains a deeply price-conscious market. “We can’t price our dishes at the same level as Mumbai or Delhi. Barring the creamy layer, disposable incomes are much lower compared to cities like Mumbai, Delhi, Bengaluru, Chennai, Chandigarh or Pune.”

The income gap is one measure of how far Kolkata has drifted from its prosperous past. Its decline, however, was a protracted, uneven process shaped by decades of compounding setbacks.

Kolkata’s golden age stretched from the late 19th into the early 20th century, when its status as the capital of British India made it a thriving commercial centre, said political analyst Sabyasachi Basu Ray Chaudhury.

Then the advantages began to unravel. “The Second World War weakened the city’s position; Partition disrupted the supply of input materials like raw jute and brought a huge influx of refugees. Freight equalisation further eroded Bengal’s industrial edge. By the 1960s and 1970s, labour unrest and militant trade-unionism compounded the decline,” Basu Ray Chaudhury noted.

Restoring Kolkata’s lost glory remains an unfinished project. Yet, few dispute that the City of Joy remains among India’s most livable metropolises.

Kolkata is an immensely liveable city compared to other metros, said Abhirup Sarkar, former professor of economics at the Indian Statistical Institute. “The IT hub has come up in Sector V. There are cafés, hospitals and roads that simply weren’t there before. The power situation has improved, and the metro has made commuting much easier. These are visible changes.”

Yet Sarkar sees a worrying trend, pointing out that several of the city’s premier educational institutions have lost their shine. “The younger generation is leaving Kolkata. That reflects the lack of adequate opportunities, and ultimately it affects the city’s prosperity.”

Many say that Kolkata’s high-rises have become vertical old-age homes — a reminder of the lack of adequate opportunities in the city.

According to Mukherjee, the former senior TCS executive, Kolkata missed key opportunities. “The growth of the IT sector in the city has been primarily driven by TCS and other companies that contributed greatly later.”

But over the last two decades, Hyderabad, Pune and Chennai have overtaken Kolkata. “The city had every opportunity to outgrow them,” Mukherjee said.

That sense of falling behind extends beyond technology. Sushil Mohta, president of Credai West Bengal, said slower economic reforms have constrained the city’s real estate market.

“Real estate development is intrinsically tied to purchasing power. About 25-30 per cent of buyers in RERA-registered projects are NRIs or non-resident Kolkatans. Capital is flowing into the market, but it isn’t a reflection of the city’s economic momentum.”

Even with commercial districts such as Rajarhat and Salt Lake taking shape, Mohta believes Kolkata still trails Bengaluru, Pune and the National Capital Region.

The long road to investment

West Bengal has had a chequered history with investment. Cumulative investments till 2000, when Jyoti Basu relinquished office, totalled ₹17,000 crore.

When Bhattacharjee left office in May 2011, West Bengal topped the charts as an investment destination.

Between January and May 2011, proposed investments in West Bengal stood at nearly ₹3 trillion — surpassing Odisha, Maharashtra, Andhra Pradesh and Karnataka, according to data from the Department for Promotion of Industry and Internal Trade (DPIIT). The Left Front’s position as a key ally of the United Progressive Alliance government at the Centre (2004–2008) also helped secure investment proposals.

In the last five years of the Mamata Banerjee government — from 2021 to December 2025 — West Bengal attracted cumulative investment proposals worth ₹60,058 crore. In 2024, the state ranked fifth among Indian states, with proposed investments of ₹39,306 crore, according to DPIIT figures.

Investment figures do not tell the whole story. As Harshavardhan Neotia said: “Every city is like a person — it has its strengths and weaknesses. Kolkata has evolved into a warm, humane and liveable city.”

In some ways, that harks back to the city’s past.

“Kolkata was once deeply cosmopolitan, absorbing European influences. Chowringhee, Park Street and Free School Street formed part of the colonial corridor, and long after the burra sahibs had left, their imprint remained in the city’s architecture, food and lifestyle. At the same time, migrants from Odisha and Bihar added layers to the city’s character,” said Basu Ray Chaudhury.

Even as it lost its economic edge, Kolkata lived and let live.