Govt trapped in Mamata's populism
KOLKATA: Who is right - the chief minister or her finance minister? When CM Mamata Banerjee claims that her government has fulfilled 90% of her development programme, finance minister Amit Mitra fusses and frets just to make ends meet, what to speak of development.
Mamata's magical numbers apart, data from the finance department bears out the kind of challenge the finance minister is trying to come to grips with.
The state has to spend Rs 25,561 crore in debt servicing and Rs 40,000 crore towards salaries and pension. These two add up to Rs 65,561 crore. And on the revenue side of the balance sheet, the picture is hardly comforting.
The Mamata Banerjee government has improved its tax mobilization, and along with the non-tax revenue, the income comes to Rs 34,885 crore. Add to it another Rs 21,976 crore that the state gets as its share of central tax and duties, and Bengal has an income of Rs 56,851 crore. Its liability is Rs 65,561 crore, leaving a gap of Rs 8,700 crore.
What's significant, this is minus the allocations under the plan head. But what about the Rs 20,000 crore central grant that Bengal receives for central projects? State finance officials say that the fund is project specific and cannot be used for meeting non-plan expenses.
Even while funding the Rs 17,000 crore plan allocation the state cannot use the Rs 20,000 central grants as it wishes to. The central grant is released in tranches only after the government furnishes utilisation certificates for the work done.
That explains why Mamata Banerjee had once asked for untied funds from the Centre to come out of the debt trap. The government has rephrased its demand of late, and is asking for a moratorium on central loans, but the purpose is the same - to get money that will help the government leverage the expenditure under different heads, both plan and non-plan.
People in Bengal appreciated the difficulty because Mamata Banerjee inherited a debt-burden of Rs 1.98 lakh crore left behind by the Left Front government.
What next? The finance rule book says that the state government has to curb revenue expenditure, and raise its own generation to bridge the gap. Amit Mitra has done the second. He increased tax mobilization in the first and second quarters in the present fiscal. But the chief minister did little to enforce austerity.
On the contrary, the CM went ahead with extra-budgetary pay-outs like Rs 40.09 crore to 2,395 para clubs, Rs 126 crore as honorarium to Imams and Muezzins, organizing festivals, embarking upon elaborate district tours and announcing hundreds of jobs off hand.
"A debt restructuring should essentially be preceded by a set of austerity measures," said Dipankar Dasgupta, former professor of economics at Indian Statistical Institute. "Even if the new government did not indulge in such unproductive expenditure, the money at their disposal would not have been very large, thanks to bad inheritance," conceded the ISI economist. But he can't help saying that the government is overspending on the non-plan revenue account.
However, the government isn't listening. In the last 20 months, not a single audit committee meeting was convened at Writers' Buildings. The quarterly audit meet - a norm for two decades now - is crucial for identifying deficiencies and plugging loopholes and fixing responsibility for financial irregularities.
Officials said most of the 52 government departments have not bothered to reply to audit queries so far and the lack of audit committee meetings would have a spiralling effect on the coffers.
Instead, a proper investment in infrastructure would have helped the government fetch private investments, generate jobs and thus give a push to tax mobilization. The ISI economist cited instances of poorer states such as Jharkhand, Chhattisgarh and Odisha that have managed much higher tax-GSDP figures.
So when Amit Mitra meets the Union finance minister in Delhi for a palliative, the Centre may ask him to submit a consolidated road map for recovery that is pending since the days of former Bengal finance minister Asim Dasgupta. His successor hasn't been able to able to give a roadmap either.
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