Kolkata’s liveability hides chronic underachievement

TL;DR

Kolkata ranks as India's most liveable megacity due to low living costs and welfare schemes under Mamata Banerjee.
Rents, home prices, school fees and healthcare are the lowest among big Indian cities, with 23m residents.
Its pleasantness stems from economic stagnation, making it a chronic underachiever that repels ambitious businesses.

The story at a glance

The Economist's Banyan column argues that Kolkata's status as India's most liveable megacity comes at the cost of growth. Chief Minister Mamata Banerjee gets credit for modernising the city and expanding welfare after ousting communists in 2011, but her policies have failed to attract investment. The piece is published now to highlight why the city's low-cost appeal masks deeper stagnation amid India's urban boom.

Key points

Kolkata, with nearly 23m people, is India's second-largest metropolis after Delhi and claims top liveability among megacities.
Rents and home prices are the lowest in major cities; fees for high-quality schools and healthcare are similarly cheap.
A strong tradition in art, music, literature and liberal views on religion and gender bolsters its cultural appeal.
After Mamata Banerjee took power in 2011, she improved infrastructure and rolled out handouts for minorities, women and the poor.
The mix of low prices and welfare makes it ideal for the poor and middle class but hostile to business and ambition.
West Bengal's share of national output keeps sliding; the state drew less than 1% of recent private investment.
Kolkata thrives by default as the trade hub for India's poor eastern region, including Bihar and Jharkhand.

Details and context

Kolkata was once British India's capital and an economic powerhouse, but decades of communist rule from 1977 brought labour unrest and business flight. Ms Banerjee reversed some decay by cleaning up the city and adding welfare, yet private investment shuns West Bengal—national data shows it lagging far behind states like Gujarat or Maharashtra.[[1]](https://www.hindustantimes.com/india-news/the-secret-of-india-s-most-liveable-megacity-101776073206746-amp.html)[[2]](https://www.hindustantimes.com/india-news/the-secret-of-india-s-most-liveable-megacity-101776073206746.html)

Its liveability reflects weak growth: low demand keeps housing and services affordable, unlike booming Mumbai or Delhi. “You cannot just give and not earn much,” a local economist notes, pointing to over-reliance on handouts.[[1]](https://www.hindustantimes.com/india-news/the-secret-of-india-s-most-liveable-megacity-101776073206746-amp.html)

Judged against its port, talent and history, Kolkata underperforms—a loss for West Bengal and the neglected east.

Key quotes

“The mix of low prices and handouts has made Kolkata the best big Indian city in which to be poor or middle-class. But it is less hospitable to those with greater ambition.” — The Economist[[3]](https://www.facebook.com/TheEconomist/posts/the-mix-of-low-prices-and-handouts-has-made-kolkata-the-best-big-indian-city-in-/1451891886969327)
“You cannot just give and not earn much.” — local economist[[1]](https://www.hindustantimes.com/india-news/the-secret-of-india-s-most-liveable-megacity-101776073206746-amp.html)

Why it matters

Kolkata's story shows how welfare without growth can trap cities in comfortable poverty, hurting India's eastern region. For residents, it means cheap living now but few high-paying jobs or dynamism; businesses and investors should look elsewhere in India. Watch if Ms Banerjee shifts to pro-business reforms before 2026 state elections, though unions and politics make change unlikely.