Prime Minister Manmohan Singh informed Trinamool Congress MPs on Friday the Centre will do ?everything? to rescue West Bengal from its debt crisis. This will include a three-year moratorium on West Bengal?s interest payout on a principal amount of R1.87 lakh crore ? not R2.3 lakh crore which the state owes to banks, the Centre and the national small savings fund.
Union finance minister Pranab Mukherjee is learnt to have told a TMC delegation that West Bengal had been forking out R15,093 crore in interest just before the Trinamool Congress came to power. So, the Centre should give a three-year moratorium on this amount, which would mean a dent of R45,279 crore in the Centre?s consolidated account, from which all regular expenditures were made.
The Centre has not yet finalised its plan and has sought time before reaching a final decision.
A TMC parliamentary delegation led by Sudip Bandopadhyay met Mukherjee on Thursday evening to pitch for West Bengal?s debt recast. Although chief minister Mamata Banerjee earlier gave 15 days to the Centre, she later softened her stand.
A Congress minister in Mamata Banerjee?s Cabinet said on condition of anonymity that Mamata Banerjee?s toughest possible decision against the Centre would be pulling out of the government but that would neither solve the state?s problem nor would put the Centre into too much difficulty.
Sishir Adhikary, Union minister of state for rural development, who was part of the delegation, told FE that Mukherjee had the will to bail out Bengal from its financial crisis but he had to do it within the federal frame work.
?The Centre has already started working on a bailout package and he would do something very soon. We have said that the state be allowed to pay a principal amount of R7,000 crore every year to repay loans. But both the state and Centre will have to accept what is logical,? Adhikary said.
A finance ministry official said the Centre needs to take a view on bailing out all three debt-trapped states ? West Bengal, Punjab and Kerala ?with least impact on the exchequer, while ensuring states prudently manage debt and adhere to fiscal responsibility norms.
While West Bengal has R1.87 lakh crore debt, the Centre is is also working on Punjab?s R1.6 lakh crore debt and Kerala?s R71,000-crore debt. West Bengal and Punjab are stressing on an unconditional debt recast claiming setting conditions would breach states? tax sovereignty.
The finance department official said West Bengal has already received interest exemption worth R274 crore on government loans. Interest rates have been brought down from 8.5% to 7.5% for a period of 20 years and there has already been a sanction of R8,750 crore from the backward region grant fund (BRGF) following stipulations made by the 13th finance commission.
These have already made an impact of over Rs 10,600 crore on the central exchequer on account of West Bengal alone and the Centre must see how much more it could absorb, the official said. Chief minister Mamata Banerjee has argued that BRGF has been part of regular central allotment.