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Last year, around this time, a few days before the Bengal budget, Finance Minister, Amit Mitra, had pronounced the financial crisis in West Bengal as similar to the debt crisis in Greece. Perhaps, there was hope that his words would reach Delhi, so that the state gets a financial package to sustain West Bengal’s falling finances.
As Mitra rises to present the state budget on March 11, his first after Trinamool Congress’s pullout from the Centre, there are little hopes that the viscous debt trap of Bengal would mitigate, but there are expectations that Budget document will at least have many more populist measures.
As though, setting the tone for the budget, a week earlier, chief minister Mamata Banerjee announced reservation of seats in higher education for ST, SCs and OBCs, by creating additional infrastructure costing about Rs 1000 crore. Another scheme offered a one-time payment of up to Rs 25000 to every girl child who has continued her education for 18 years, with family income of less than Rs 50,000. In addition, the state would also offer Rs 500 per month to the girl child between eighth and tenth standard. Both the schemes will together cost the state coffers about Rs 2,000 crore.
Just a day before the schemes were announced, West Bengal raised Rs 1,200 crore as state development loan from the Reserve Bank of India window. So far, West Bengal has raised about Rs 19,000 crore through market borrowing, the highest among states.
West Bengal's debt burden, according to the last Budget document, was Rs 2.08 lakh crore. The outstanding debt of the government is set to increase to Rs 2.26 lakh crore in the present fiscal, making it one of the most indebted state in terms of tax to GSDP ratio.
Glimmer of hope, only an illusion
It is strange, that in spite of poor state of Bengal finances, and no special financial package for the state from the Central government, it is expected that West Bengal will be able to narrow down its standard deficit figures, raise revenue, while doling out a few populist schemes too.
The magic lies in the lack of high doses of expenditure on infrastructure project, while periodic infusion of small doses of expenditure in populist schemes, according to Dipankar Dasgupta, former professor at Indian Statistical Institute (ISI), Kolkata.
“The Budget is going to be an interesting phenomenon. The state had earmarked some big investments in infrastructure projects, but that did not happen. Instead, we saw small amount of expenditure in populist schemes. Basically, the state has not been able to spend money, so the fiscal deficit might be low, which is generally a good sign, but may not be a good sign for West Bengal,” said Dasgupta.
On the positive side, West Bengal has initiated reforms for identifying loopholes in tax collection methodology, through use of technology, which is expected to raise the revenues.
According to the last state budget document, 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. The states, on salaries alone was set to increase from Rs 28,899 crore to Rs 31,184 crore by the end of this fiscal, which was about 37% of the projected expenditure of the government.
Similarly, the cost of pension and other retirement benefits was projected to increase from Rs 8,385 crore to Rs 9,582 crore. Thus, baring salaries and pension, the state was expected to spend some Rs 43,035 crore.
This financial year, some new schemes announced by the government, apart from the recent one on the education sector, include, the grandiose Mati Utsav and Jatra Utsav for rural folks. This apart, she announced pension schemes for folk artists and journalists, schemes for zari artists, among other schemes.
