Not even one and half month into the new financial year and the West Bengal government has borrowed more than 17 per cent of its projected market borrowing plan this financial year.
Between April 1 and May 11, the West Bengal government borrowed a whopping Rs 3,500 crore, which is about 17.43 per cent of the projected market borrowing of the state government at Rs 20,071 crore.
Faced with an acute cash crunch, West Bengal has been relying on market loans to meet its committed expenditures, like pension and salaries.
Interestingly, the present government has been blaming the earlier Left Front government for passing on a huge debt burden of Rs 2.26 lakh crore, making it the most indebted state in the country in terms of debt to gross state domestic product (GSDP) ratio at close to 39 per cent.
Earlier, Amit Mitra, Finance Minister, West Bengal, had said that of the borrowing limit of Rs 17,828 crore in 2011-12, the earlier government had borrowed Rs 5,213 crore in one-and-a-half months, leaving little room for borrowing over the rest of the year. Thus, the state availed of relaxation of the Fiscal Responsibility and Budget Management (FRBM) Act twice last year, pushing the borrowing of the state to Rs 22,423 crore.
However, data from the Reserve Bank of India showed between April 1 and May 11, 2011, when the Left Front government was in power, the state had borrowed about Rs 3,733 crore, which is just Rs 233 crore more than the present borrowing of the state government in the same period last year.
It is in the wake of the financial crisis that the state government has been lobbying for a financial package at the earliest. The state is seeking a moratorium on interest and repayment totaling Rs 22,000 crore on its debt for the next three years, formulation of a debt restructuring exercise over the interim period. The debt restructuring should include debt elimination, increasing repayment tenure and reducing interest rate on loans.
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Earlier, West Bengal chief minister Mamata Banerjee had given a 15-day deadline to the Centre for sanctioning the moratorium. However, later Banerjee, had gone on backfoot even though the meeting with the Prime Minister has so far not yielded into a financial package.
The outstanding debt of the government is set to increase to Rs 2,26,550 crore in the present fiscal, against Rs 2,08,382 crore in the last fiscal.
This financial year, West Bengal's revenue receipt is projected to be Rs 76,943 crore and expenditure is Rs 83,801 crore leaving a huge revenue deficit of Rs 6,585 crore.
West Bengal's expense on salaries alone is set to increase from Rs 28,899 crore to Rs 31,184 crore by the end of this fiscal, which is about 37 per cent of the projected expenditure of the government.
Similarly, the cost of pension and other retirement benefits is projected to increase from Rs 8,385 crore to Rs 9,582 crore.