The West Bengal Assembly recently passed the Public Safety and Control of Anti-Social Activities Bill, 2026, also popularly known as the “Goonda Bill”. It allows preventive detention for up to a year, empowers authorities to extern individuals from specified areas and extends its ambit to crimes such as illegal mining, sand extraction and organised criminal activities. Predictably, the bill has triggered an intense debate on the issues of preventive detention and possible violation of civil liberties. The government, on the other hand, has tried to defend the legislation as a necessary response to organised extortion networks such as syndicates. Amidst the debate, an equally important dimension has received far less attention, namely, that syndicates are not only a law-and-order challenge but also a significant drag on the investment climate and long-term economic prospects of the state.
For any state aspiring to industrialise and attract private investment, it needs to fulfil three institutional conditions: property rights must be secure, rules must be predictable, and the cost of doing business needs to be certain. Investors become reluctant to invest in environments where hidden costs proliferate, rules are uncertain, property rights are not secure and economic activity is vulnerable to informal interference.
This is exactly where the syndicate economy assumes significance. In the early 2000s, although syndicates initially emerged as informal networks of local suppliers and labour contractors in the Rajarhat-Newtown area near Kolkata, over time they evolved into extortion rackets controlling construction, land dealings and other economic activities in the state by establishing a reciprocal relationship with the ruling political parties. Consequently, they started functioning as an informal tax on investment. Moreover, investors often felt that doing business in West Bengal required compliance not only with formal regulations but also with an unwritten set of informal local rules set by the syndicates. In many cases, the financial and non-financial burden of complying with these informal arrangements has become an additional cost of doing business in the state.
Economists refer to these as transaction costs, that is, the costs associated with obtaining approvals, enforcing contracts, navigating institutional and non-institutional barriers, etc. When transaction costs become too high and unpredictable, the investment climate deteriorates, uncertainty increases, and investment ultimately declines. Evidence suggests that entrepreneurs, in such situations, normally respond by postponing projects and searching for alternative investment destinations. This is exactly what happened in West Bengal in
the last two decades.
In West Bengal, the economic consequences of syndicates were therefore not only limited to extortion or criminal activity, but they also directly affected investment and economic growth by increasing transaction costs and raising uncertainty and the regulatory risk of investment projects. Consequently, while some projects became financially unviable, others were postponed or relocated to other states. Lower private investment, in turn, slowed industrial activity and economic growth, generated fewer employment opportunities and limited government revenue, which ultimately weakened the ability of the state to invest in infrastructure projects and public services. The syndicate economy, therefore, became a structural drag on West Bengal’s long-term growth prospects. Seen in this context, the bill cannot be dismissed merely as a political exercise. It needs to be understood as an important precondition for rebuilding investor confidence in the state.
Despite the economic significance of the law, it also raises a difficult question: whether stricter laws will be able to provide a permanent solution to the syndicate problem. The answer is most probably no. This is because a significant part of the economy of West Bengal operates in what economists call a semi-legal environment. In a semi-legal environment, laws exist, but the implementation of these laws becomes slow, uncertain and highly discretionary. Citizens and businesses often face long delays and uncertainties in getting building plan approvals, land mutations, business licences, property disputes, etc. When formal institutions fail to provide timely and predictable services, informal institutions emerge to fill the vacuum.
This is precisely where syndicates emerge. They often work as intermediaries in facilitating services to citizens and businesses which the state should ideally provide. For instance, beyond their actual role of controlling construction, land dealings, etc., syndicates often facilitate faster approvals, resolve local property disputes, arrange labour for industries or help navigate administrative bottlenecks using political connections, making citizens and businesses dependent on them. In other words, syndicates fill an important vacuum generated by imperfect state institutions and a semi-legal environment. Unless these institutional weaknesses are rectified, it is difficult to control them by making stringent laws.
The long-term solution, therefore, lies in strengthening state capacity and expanding access to public services. As state capacity increases and the state becomes more effective in delivering services, the dependence on informal intermediaries gradually declines. To permanently eliminate syndicates, the government must carry out three broad institutional reforms centred on improving service delivery, accelerating dispute resolution and reducing administrative discretion.
First, government services must become simpler, faster and time-bound. Building approvals, land mutations, trade licences and other public services should be delivered within clearly defined timelines. Citizens and businesses should be able to access these services directly, without relying on political connections or middlemen.
Second, the speedy resolution of land and property disputes must be ensured. Fast-track civil courts and digital case management systems can significantly reduce the need for informal dispute-resolution mechanisms and local power brokers.
Finally, administrative discretion must be reduced. The more transparent the rules and the more automated the processes, the smaller the space available for informal intermediaries.
The new Goonda Bill may weaken some organised criminal networks, but to improve the investment climate in the state, much more needs to be done. The real battle against syndicates, therefore, is not simply a battle against crime. It is a battle to rebuild West Bengal’s investment climate by creating a more capable, accessible and predictable state.
