As Bengal’s debt piles up, state govt applies brakes on spending


Recently Chief Minister directed all the departments to cut down unnecessary expenditure beyond the approved budget and not to take any new project without the approval of the Chief Secretary or the finance department. This made it obvious that the government is trying to negotiate the financial burden imposed by the non-planned expenditure of the dole politics of the chief minister before the election.

“The Centre owes us more than Rs 90,000 crore. However, the state finance department has released Rs 74,000 crore this year to various departments and 84 per cent of the funds disbursed have been spent already. No projects which are not approved in the budget should be taken up. The approval from the Chief Secretary and the finance department will be mandatory for any project,” Banerjee had said.

She added that the state’s revenue collections have been hit by the Covid pandemic raging since the last two years. She made it clear that the state government will not be able to allocate Rs 100 crore for the proposal to buy land for expansion of Malda airport. “I cannot give Rs 100 crore (to the land losers). I may build houses for them, provide jobs but I cannot buy their land. I don’t have that kind of money,” Mamata had said.

The Chief Minister had suggested several measures that will not only cut down the unnecessary expenses but also increase the state revenues. She announced that the state transport department will acquire all the truck terminals functioning along the border to increase the revenues.

Banerjee had alleged that some people in nexus with some officers were taking money from the truck terminals functioning along the border. The taking over of all the truck terminals will be completed before February 7, she added.

See also  US consumer prices rise strongly in January; weekly jobless claims fall

The state government’s efforts to meet the huge cost of non-planned expenditure come at a time when the state revenues have plummeted because of the pandemic and the inability to design a proper revenue model that could balance the state’s planned and non-planned expenditure. The financial situation is so precarious that the state had to take loans thrice from the open market in January itself.

According to the statement issued by the Reserve Bank of India, the state borrowed Rs 3,000 crore from the open market on January 21 – the third time in the month taking the total borrowing to 6,500 crore in January – the second highest state after Uttar Pradesh to borrow such a huge amount from the market. Earlier the state had borrowed Rs 3,500 crores in two instalents in January.

Last month, the government twice borrowed from the open market. On December 14, seven states borrowed a total of Rs 7,053 crore from the market. Of these seven states, was the highest borrower with Rs 2,500 crore. On the 24th of that month, a total of 16 states borrowed a total of Rs 22,984 crore from the market. In this case too, West Bengal had the highest debt at Rs 4,000 crores. This means that from December 14 to January 24, in these 41 days, the West Bengal government borrowed a total of Rs 13,000 crore from the open market.

In the period between April 2020 to December 2020 when the state revenues plummeted to an all time low because of the pandemic situation and the consequent lockdown the state raised around Rs 35000 crores from the market but interestingly enough during the current financial year between April 2021 to December 2021 the state went for a market borrowing of Rs 52,500 crore. During the same period in 2019 the state borrowed Rs 28,000 crore via the State Development Loan.

See also  Ashok Leyland tanks 22% in 1 week on margin concerns; hits 15-month low

Earlier IANS wrote that if the state government is supposed to run the social schemes like Swastha Sathi or Lakshmir Bhandar announced by the chief minister before the election, market borrowing can be the only viable alternative for the government. The reason is very simple.

After coming to power for the third time chief minister announced two major schemes – ‘Lakshmir Bhandar’ and ‘Swastha Sathi’ for all – that demand a huge financial involvement. ‘Lakhmir Bhandar is a project where the state is supposed to give Rs 1,000 to the women belonging to SC/ST/OBC and Rs 500 to the women belonging to the general caste. The government has allocated approximately Rs 12,900 crore for around 1.8 crore women who have so far registered themselves for the scheme.

Initially the government had an estimate that nearly 2 crore beneficiaries will register for ‘Lakshmir Bhandar’ project but so far, the government has received 1.63 crore applications of which 1.52 crore have been approved. Nearly 7 lakh applications have been rejected. The government has spent more than Rs 800 crore on the project and going by the figure the finance department estimates that the state government will have to cough up another Rs 5,600 crore which might in turn lead to a staggering figure in a full financial year.

Countering the Centre’s Ayushman Bharat the state launched its own scheme – ‘Sasthya Sathi Prokolpo’ where some citizens of the state were given an annual health coverage of five lakh rupees. After coming to power in 2021, the Chief Minister opened ‘Swastha Sathi’ for all the citizens of the state leading to a quantum leap in the expenditure. Even a year back the estimated budget for this project was around Rs 925 crore, but this year the allocation touched Rs 2,000 crore annually.

See also  Campus Activewear IPO subscribed 1.24x on Day-1 on retail interest

According to experts, with declining revenues multiple market borrowings have now become the essential compulsion of the West Bengal government to meet its recurring expenses. The experts are of the opinion that the state is struggling with the non-plan expenditure mostly to meet the promises made by chief minister Mamata Banerjee during her election campaign.

Incidentally, when the 34-year rule of the Left Front came to an end in 2011 and Mamata Banerjee became the Chief Minister, the accumulated debt of the state was Rs 1.93 lakh crore. But, according to the state government’s budget figures, the accumulated debt is likely to go upto Rs 5.5 lakh crore by the end of the 2020-21 financial year.



(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


Source link

Aslantia Saga