During his trip to Delhi for the GST council meeting on September 22, West Bengal finance minister Amit Mitra is likely to take up the issue of Centre’s “delayed clearance” to the second phase of a loan from the Asian Development Bank (ADB), amounting to Rs 2,000 crore. This, chief minister Mamata Banerjee said, is “vital” to Bengal’s development and alleged continued “negligence” on the Centre’s part. The issue threatens to become the next flash point between the two governments.
The loan, said the state government, was approved by the board of ADB almost 11 months ago, after the completion of the first phase — in which West Bengal carried out a slew of “people-centric fundamental reforms.” While the state government maintained that the Centre had been quick in their approval of the loan in the first phase, the proposal is yet to be cleared 11 months after it was sent to the Department of Economic Affairs. During this period, the state finance ministry said, the government has written a number of letters to the Centre.
With the relationship between the BJP government at the Centre and the West Bengal government souring over the last few months, with Banerjee delaying the ratification of the GST bill in the state Assembly, the issue of the loan isn’t likely to improve matters. According to a TMC source, the issue had the CM “extremely displeased” and was one of the reasons behind her decision to delay the GST ratification and choosing to “wait and see” what other states were doing.
West Bengal CM Mamata Banerjee told The Indian Express: “We have been waiting for the approval of the loan for months. The government talks about pro-active governance, but in the case of West Bengal’s development, there is continued negligence.” Officials added that the loan was more crucial for a debt-ridden state like West Bengal because of its terms. “In the first phase, the loan has a moratorium, but afterwards it goes into a soft loan. The terms are very ideal for us. But in the absence of this money, we’re having to borrow from other sources. The cost of this 11-month delay is incalculable.”
The ADB loan is a tri-partite agreement and requires clearance from the screening committee of the Department of Economic Affairs under the finance ministry. Both Banerjee and Mitra have written repeatedly to the Centre to no avail. Sources confirmed that previously Mitra had written to the Union finance secretary regarding the issue and also spoke to him, when he was in Delhi previously. Recently, the state government has sent yet another letter to the finance secretary with further details about the proposed loan, seeking clearance of the same.
“However each time we write to them, the matter gets taken up and we’re sent yet another query. For 11 months, we’ve been receiving queries about the issue. But the Union government isn’t saying no to the proposal, nor are they clearing it,” said a senior official in the finance ministry.
The second phase of the ADB loan follows the “successful competition” of the initial phase in which the state government carried out reforms aimed at transparency and ease of governance. “West Bengal is the only state where payment is completely electronic. We are using an RBI portal, e-kuber and we were the first to start using this. This all came out of the ADB’s first phase loan,” said a senior official in the finance department.
According to the state government, the Centre has recognised and awarded the West Bengal government for three different reform measures taken by them, following the funding by ADB’s first phase loan. West Bengal was given the highest award in e-taxation, integrated central finance and for use of information technology by the excise department under the e-Abgari loan. “In fact, the award was given to us in Gujarat and the principal secretary of the finance ministry had gone to receive it last year. So the Centre obviously knows that we’ve done good work and has awarded us for it. But now that we’ve asked for further deepening of these reforms, the approved loan is not being cleared. There is no substantive reason for it,” an official said.
The loan, officials said, will seek to finance voluntary retirement schemes, particularly for the transport department which amounts to Rs 300-400 crore. The official explained: “The transport department has a number of sick PSUs. Yet, they employ a large section of the population. The idea is to restructure or revive these PSUs.”
Apart from this, officials added, the loan also aims at providing viability gap funding of Rs 600 crore — a grant aimed at providing support for infrastructure projects in the state.
The West Bengal government has alleged that the issue was a matter of “attitude” and the problem was not just limited to the ADB bank loan. Citing the instance of Mamata Banerjee’s recent trip to the Vatican City for the canonisation of Mother Teresa, an official said: “It was a month after the state government informed the Centre that Mamata Banerjee would be travelling to Vatican City after being issued an invitation from the Missionaries of Charity, that the approval was given”.