In the rough and tumble of Assembly polls, CPI(M)’s Asim Dasgupta and Trinamool Congress’ Amit Mitra cross theoretical swords in Khardah.
Earlier, they would often meet in air-conditioned conference halls buzzing with discussions on taxation and economy. These days they are more likely to run into each other in the heat and dust of Khardah, an unlikely intellectual hotspot in the rough and tumble of West Bengal Assembly polls, but studiously avoid crossing each other’s path.
Twenty-five kilometers from Kolkata, Khardah, which goes to polls on April 27, is host to the battle of the economists: Amit Mitra and Asim Dasgupta. Not surprisingly, it’s a battle of theories out there.
Mitra, who did his masters in economics from the Delhi School of Economics and PhD from the Duke University, USA, went into teaching before moving back to India where he eventually became the secretary-general of the Federation of Indian Chambers of Commerce & Industry, or Ficci. Under Mitra, the industry lobby rediscovered its voice and became a worthy rival to the Confederation of Indian Industry which in the 1990s had got used to setting the industry’s agenda in its parleys with the government. After Mamata Banerjee became railway minister, Mitra came to be identified as her trusted advisor. Since he threw his hat in the Khardah ring, he has been thought of as the state’s finance-minister-in-waiting.
Asim Dasgupta, in the other corner, is no lightweight. A doctoral student of the Massachusetts Institute of Technology, he was helped by an economist no less than Paul A Samuelson in establishing that there was not necessarily a contradiction between growth and equity. In this bout, Dasgupta is the defending champion, in the sense that he has been the state’s finance minister since 1987 in the CPI(M) government.
| THE BENGAL ACTION PLAN |
| Communist Party of India (Marxist): The remedies # Don't treat small savings as debt, and centre must change the rule # States’ revenue is set to increase in the GST regime, and debt situation would improve with the burden of the Sixth Pay Commission decreasing # Financial discipline will be strengthened # Revenue deficit would be brought down in stages # Special cell would be created to speed up maximum utilisation and implementation of the Central projects, with states contribution # Intensive farming would be raised to over 200% by use of technology |
| Trinamool Congress: A three-pronged strategy # Broad and deep focus on West Bengal MSMEs # Restarting and re-modelling closed PSUs across the state # Attracting private investments in sectors like engineering, steel, tea, jute, textiles and other areas of manufacturing, mining, power and food processing |
| Highlights of the 200-day agenda # Massive cluster development drive # A supportive mechanism involving grant of property rights for the unorganised sector and a social security mechanism for employees of the informal sector # Work plan in first 200 days to set up industrial hubs in each district |
During the 34 years of the Left Front rule, West Bengal may have achieved equity to some extent, but has faltered in achieving growth. This Assembly elections, the Opposition has made the plight of the state’s finances a major issue, and Dasgupta's thesis of growth with equity is now being put through a practical test.
Dogged by high revenue and fiscal deficits, high committed expenditure and high debt compared to revenue receipts, West Bengal is nearing a debt trap. In the current year (2010-11), the state's accumulated debt stood at Rs 1.86 lakh crore, compared with Rs 1.92 lakh crore in the previous year. The state's debt burden increased 29 per cent last year (Rs 1,48,110 crore in 2008-09). As much as 85 per cent of the state's revenue receipts have to be spent on committed expenditure such as salaries, interest payments and subsidies, leaving little room for expenditure on development projects.
But Dasgupta has answers, backed by numbers, and dismisses the claim that the state is nearing a debt trap. At Khardah, flanked by a group of self-help group women, he says: “They are our strength.”
The state government last year decided to invest more than Rs 250 crore, up from Rs 162 crore in the previous year, in small scale industries. According to the National Sample Survey (2005-06), West Bengal tops the list in the number of small scale industries in India with 2.753 million. The number of employees in these units is 5.493 million.
For West Bengal, small savings is a big source of funding, and the state has been asking the Centre not to consider it as debt. If conceded, this will, in a flash, dilute the debt column in the state’s books. Even under the current norms, Uttar Pradesh and Maharashtra have higher debt than West Bengal.
“If you see the debt burden component, of the Rs 1.86 lakh crore, Rs 78,000 crore is from small savings. The Centre passes the small savings as loan. We are discussing the situation with the Centre. It is their rule, and they need to change it,” says Dasgupta.
The Opposition, dismissing Dasgupta as one who is living in a state of denial, has prepared a 200-day revival plan for state’s finances. The plan includes a “deep” focus on medium and small industries, revival of state public sector units and private investment. However, this plan, too, hinges on the same thing that Dasgupta is hoping for: A bailout by the Centre. But a Trinamool government in the state, given the criticality of the party’s 19 MPS to the United Progressive Alliance, may be seen as the more likely to have its way with New Delhi.
“In the short term, when Mamata Banerjee becomes the chief minister, she will talk to Pranab Mukherjee for a short-term relief. The Centre and the state will cooperate under Mamata Banerjee and Pranab Mukherjee's leadership, who is also from Bengal. There are great hopes for this partnership. Certainly short-term measures can be taken to get temporary relief through a collaborative approach,” Mitra says.
For the Left Front, the Centre's “deprivation” of the state is the reason for the state of Bengal’s finances. “They are not doing charity, this is our legitimate share,” Dasgupta says about the Centre's debt relief schemes.
The state has been asking for a raise in the share of funds under the 13th Finance Commission from 32 per cent to 50 per cent. “West Bengal is one of the few states which decided to take the entire responsibility of giving salaries to all teachers. No other state does it. With the Sixth Pay Commission’s revision, there has been a financial burden on the state,” says Dasgupta.
At Khardah, Mitra has been sweating it out, literally. The 63-year old, having discarded the lobbyist’s pinstripes for dhoti and an occasional Panama hat, walks almost six hours a day going from one household to another.
“In the short and medium term, the resurgence of Bengal's economy will automatically take care of the state’s finances,” he says.
The other ace up Mitra'a kurta sleeve is reopening of the 68,000 closed factories. “About 68,000 factories are closed in Bengal. The Left Front government had a confrontational approach. If you adopt a win-win approach for the workers and the owners, some of the factories could reopen. For small and medium enterprises, too, there is an inspector raj, which will improve,” he says.
Interestingly, Banerjee's tirades against globalisation, big capital, disinvestment policies and privatisation, are not exactly in tune with what Mitra has been advocating as an industry lobbyist. Mitra, however, sees no conflict. “It is a wrong notion that Trinamool Congress is against industry and globalisation. The party is against companies who come and try setting up factories through eviction of farmers.”
If Dasgupta is to be believed, the Left will have the last word. “This is not the last time that we are meeting,” he says, looking too composed for the madness around him.
