THE state Budget, presented by Finance Minister Amit Mitra on Friday — with an eye on panchayat elections two years later — again focused on providing social and civic infrastructure. There was, however, no specific plan to boost revenue and counter the state’s severe debt trap, described by Chief Minister Mamata Banerjee as a “death trap”.
“I propose to increase the plan expenditure to Rs 57,905 crore. Our aim is to work for financial and social development of the people of Bengal, particularly for those who remain financially and socially backward,” Mitra said.
Meanwhile, he has proposed a 9.1 per cent rise in tax collection against the revised figure of 2015-16, with a target to raise a tax revenue of Rs 50,773 crore as against Rs 42,919 crore achieved in 2015-16. The budgeted figure for 2015-16 stood at Rs 46,496 crore.
While no provisions were made for additional revenue generation for the current fiscal, sources said Mitra intended to raise taxes on state excise and vehicles. It is expected that while a raise in state excise would increase the price of India Made Foreign Liquor (IMFL), a higher tax on vehicles would lead to a rise in the on-road prices.
Officials pointed out that the revised estimates for 2015-16 in terms of collection of state excise stood at Rs 3,981.59 crore — lower than the budget estimate of Rs 4,418.15 crore for the same fiscal.
But Mitra has set an optimistic target of raising Rs 4,698.29 crore during 2016-17. “It is a clear indication that an interim hike of state excise is on cards. Or else, it would not be possible to meet the target,” said a finance department official.
He added that compared to the revised estimate figure of Rs 1,655.15 crore for 2015-16 in terms of tax on vehicles, Mitra had set a target of Rs 1903.40 crore during 2016-17, which was only possible after an interim hike.
On Friday, Mitra spoke about simplifying taxation laws and reducing administrative costs. “We have simplified VAT laws, thus leading to better compliance and higher revenue generation… The deadline for disposing tax dispute cases regarding VAT will be reduced from one year to six months… In cases where the amount in case of a tax dispute is less than Rs 1 lakh, the government will not appeal, thus reducing administrative costs… a simplified TDS (tax deducted at source) will also encourage higher tax compliance,” he said, adding that the settlement commission is also being done away with.
When asked about the saturation level owing to higher tax compliance, Mitra said he was also looking at improving the state’s income, which in turn would result into better tax collection.
“Mai bure halat ke tufano se ghabrata nahi (I am not afraid of storms)”, he added.
Mitra announced that the planned expenditure for 2015-16 was Rs 53,000 crore — the “highest ever” in the state. Specifically, he said that when compared to the 2010-11 financial year, while spending in infrastructure sector has increased four times, it is 7-fold in agriculture and 4.5-fold in the social sector.
Capital expenditure in 2015-16 had also risen seven-fold over the capital expenditure in 2010-11. While the Gross State Domestic Product (GSDP) for Bengal has risen to Rs 9,20,083 crore, revenue has risen from Rs 20,000 crore to Rs 42,000 crore. Consequently, fiscal deficit has dropped to 2.6 per cent, in comparison to 4.2 per cent in 2010-11. Similarly, revenue deficit had also dropped down by 1.03 per cent.
But Mitra’s performance as finance minister, particularly him doubling the state’s revenue to Rs 42,000 crore by ensuring better compliance, might still not be enough, simply because of the state’s disproportionately high share of unorganised sector’s contribution to the economy, said economists. Moreover, the state’s achievements continue to pale when compared with its outstanding debt of Rs 3 trillion.
“We have a huge debt burden. Yes, we have followed fiscal discipline. We have spent over Rs 94,000 crore to repay the debt incurred by the Left Front,” said Mitra on Friday. This amount of Rs 94,000 crore is simply what was spent by the government as debt servicing in the last five years or the money required to cover the repayment of interest and principal on the debt. The debt stock has increased by Rs 1.13 trillion during these five years.
In 2015-16, the Bengal government had paid around Rs 28,000 crore to its debtors. This is likely to increase by 14 per cent to Rs 32,000 crore in the next financial year, said Mitra.