Inheritance of loss for mamata

Written by fe Bureau | Kolkata | Updated: May 14 2011, 07:13am hrs
When Mamata Banerjee takes charge of the new government in the West Bengal next week, she will be staring at a debt burden of around R2 lakh crore, which has risen significantly from the 2008-09 levels of R1.48 lakh crore.

Desperate to meet daily expenses, the Left government, after the elections were announced, raised almost R5,500 crore in 45 days, exhausting almost one-third of its fund-raising targets for the entire fiscal. Its really unfair that the government withdrew one-third of funds in such a short time, it leaves us in a spot, said Amit Mitra, who staged one of the upsets of the elections by ousting finance minister Asim Dasgupta.

The fiscal parameters arent looking good at all. The state governments gross fiscal deficit increased from R11,400 crore in 2007-08 to R12,694 crore in 2008-09 and jumped to R22,984 crore in 2009-10. According to the 13th Finance Commission report, West Bengals fiscal deficit till 2007-08 exceeded 3% of gross state domestic product (GSDP). While the state has been able to increase its revenue receipt through an increase in collection under a few heads like sales tax, it continued to pay almost 30% of its earnings towards the interest payment.

The Finance Commission report has also suggested a road map to bring down Bengals fiscal deficit gradually to zero in 2013-14. Accordingly the new government is facing an immediate target of bringing down fiscal deficit to 1.6% of GSDP by the current fiscal.

But such a climbdown in fiscal deficit seems difficult as the state is already reeling under annual salary burden of R7,901 crore and a declining trend of own tax revenue (OTR). Per capita GDP of the state at 2008-09 price level is at $781.8, much lower than developed states like Goa ($2,272.5), Haryana ($1,438.3), Maharashtra ($1,012.7), Punjab ($1,138.2), Gujarat ($985.2) or Tamil Nadu ($969.8).

According to experts, whats even more worrying is the income inequality in the state. The Economic Survey of 2010-11 finds that West Bengal has one of the highest income inequality in both rural and urban areas. It also shows that almost 24.7% of the states population is living below the poverty line.

Agriculture, the mainstay of the state after industry went into decline, too is facing several challenges, not least falling productivity, decline in soil quality, lack of marketing and so forth.

West Bengal produces almost 15% of the nations foodgrain. The state has a net sown area of 52,95,773 ha, and 84% cropping intensity.

Amending Agriculture Produce Marketing Committee (APMC) Act of 1972, to ensure better price realisation for farmers, is yet another challenge the new government faces.

Although the seventh Left Front government had time and again said that it is ready to amend the Agriculture Produce Marketing Committee (APMC) Act of 1972, it dithered on the issue. The old act has been a hindrance to retail chains to enter the farm-to-table segment. While entry of retail majors would have assured better price realisation for farmers, the state would also have made use of almost 30% vegetables which is wasted every year.