West Bengal finance minister Amit Mitra walks tightrope — high debt haunts ‘humane govt’

Mitra said tax collection had also increased by 103 per cent during the same period

Written by Aniruddha Ghosal | Kolkata | Updated: February 11, 2017 4:55:16 am
Kolkata: Finance Minister Amit Mitra present the state budget 2017-18 in the Legislative Assembly in Kolkata on Friday. PTI Photo by Swapan Mahapatra (PTI2_10_2017_000110A) Kolkata: Finance Minister Amit Mitra present the state budget 2017-18 in the Legislative Assembly in Kolkata on Friday. PTI Photo by Swapan Mahapatra (PTI2_10_2017_000110A)

Preparing the annual budget for a state that owes around Rs 45,000 crore to the Centre demands an exercise in caution. But while many had expected to see Mitra reducing expenditure, while attempting to increase the tax base – the finance minister increased expenditure by almost 14 per cent. While the minister announced that this would mean a massive four-fold increase from the previous government’s last budget (in 2010-’11), he said tax collection had also increased by 103 per cent during the same period.

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He tried to reason the high expenditure, despite the high debt, by saying: “We may be cash-strapped but we are a humane government; we believe in hanste hanste chalna seekho.” For every Rs 100 the government will spend, around Rs 58 will go towards servicing debt, paying government salaries, paying pensions and retirement benefits and subsidies. The rest will go towards paying for its various projects.

Overall, the budget has seen an increase in most of its segments from last year except for subsidies which has seen a dip – from Rs 6087.94 crore to Rs 5,794.85 crore (around 5 per cent reduction).

While the Trinamool Congress attempted to trim the government machinery by clubbing departments, merging 40-odd state undertakings, reducing some of the cost – the additional liability on the government on the salary account, once it has to implement the seventh pay commission, remains.

As per estimates, paying out the 50 per cent dearness allowance (DA) backlog for 11 lakh state employees will lead to an additional expenditure of Rs 18,000 crore. “A hike of 14 per cent is roughly Rs 17,000 crore more and it will remain to be seen what the government does. This additional liability, will be apart from the debt and will be a total of Rs 35,000 crore,” added an official.

But the TMC government’s continued emphasis on a ‘humane’ increase in expenditure, which focuses primarily on increased outlays on key sectors – agriculture and rural development, education and welfare of SC, ST and backward classes – is motivated, at least in part, by the upcoming Panchayat elections in 2018 and Lok Sabha polls in 2019. Take for instance, Mitra’s announcement that the expenditure incurred by them in the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2016-17 was more than Rs 5600 crore, the highest of any state, leading to an “employment generation of 128% of proportionate labour budget”

An official explained, “To say that West Bengal hasn’t made progress in the past few years would be a lie. But if right now, we attempt to right the ship, in terms of our debt situation – then the cost of that will obviously be that we can no longer provide the incredible, life-changing services that we’re providing to the people of the state.”

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