Unclear intent

Written by Sudipta Datta | Updated: Aug 15 2011, 07:10am hrs
All the Bengal chief ministers men need a crash course in fiscal-speak. Well, that may be a bit harsh but last week, during the Budget session, several of Mamata Banerjees colleagues couldnt decide what to call a vote-on-account placed in June. State industries minister referred to it as a full-fledged Budget, leading to much confusion in the assembly. The state finance minister refused to be drawn into the issue and said he was presenting a summary of the annual financial statement, calling it An Abstract of the Financial Statement Made in 2011-2012 & Trends of Expenditure & Growth. Even if one doesnt want to split hair about semantics, Mitras supplement on his vote-on-account did little to explain to the state what his government would do to reshape the Bengal economy.

For instance, curiously, there were no tax proposals in his supplementit will probably come later, on August 29, nearer to the end of the Budget session when Mitra presents the finance Bill. And thats not the only glaring slip. Mitra announced that he will reduce the share of the three biggest spending areas of the governmentsalary, pension, interest payoutsfrom 93% of revenue receipts (a legacy of the three decades of Left rule) to 74% this fiscal. But he didnt specify how exactly he would go about fulfilling this ambitious task. Especially when he also announced that the government was increasing allocation by 12% for salary payouts and 7% for pension payments. With chief minister Banerjee already announcing at least 40,000 jobs, the 12% hike in salary payouts would definitely cover some of it, but then the finance minister wasnt clarifying anything.

In his supplement, Mitra says that Bengal will generate additional revenue of R6,390 crore this fiscal, but where will it come from Fresh taxes Better revenue collections There were no explanations. Whenever in doubt, the Left government would raise prices of IMFL and other luxury items. The Mamata government, too, expects to raise R300-odd crore from liquor and online lottery taxes. Although there are no clear signals on the modus operandi, Mitra indicates that the government will gather better resources, approximately R5,045 crore, through sales tax, stamp duty, excise and motor vehicles tax.

The state government is targeting a 31.39% increase in tax revenue collection, but then again, no details are forthcoming. In 2010-11, the government collected R13,500 crore, so a 31.39% increase means the government is expecting to gather R17,700 crore, but theres no clarity on the means of achieving this end.

State coffers are now not exactly empty. This month, the Centre finally announced a package amounting to R21,614 crore, which includes central allocations for projects. The chief minister isnt too happy, but conceded something is better than nothing. What the Centre also clarified is that the state must do more to increase revenues, which clearly means it must raise taxes and curb expenditure. And thereby hangs a tale. The chief minister, despite coming to power on a huge popular mandate, doesnt seem to want to take harsh decisions. The Left, a quiet Opposition so far, is crying foul on this and asking why the government is not raising revenues by opting for the tax route. She has been dragging her feet on even imposing a water tax or raising power tariffs. At her Brigade Rally victory speech last month, she exhorted her partymen to be disciplined and maintain calm and peace at all costs, but conveniently blamed the Centre for delaying the special package and didnt say a word on what the state government could do to rework the economy. She is known to be a great negotiator, and people will listen to her if she explains why the government needs to take some difficult decisions taking a long-term view.

On various other fronts, the new government is letting things lie. To give just one example, the tea wage impasse has hit tea gardens across the Dooars and Terai, but the government has not yet intervened. Despatches from the gardens have been stopped and this is peak tea season. On infrastructure, there have been lots of promises, but no clear intent on the way forward. The airport modernisation is behind schedule and has already missed three deadlines. With unions, affiliated to the Left and Trinamool, scrapping, the chief minister recently made a plea to both to finish the work on time. When Bengal was hit by rains last week, Howrah, the main connector to the rest of the country, lay submerged and destabilised for at least two days, wreaking havoc on train traffic throughout the east, northeast, south and north. Amid all this, the chief minister held a meeting to decide just how she could transform Kolkata into London. For now, a small portion of the Hooghly will be beautified la Thames, the rest can wait.