Cash-strapped West Bengal, which needs R2,100 crore every month for salaries, pension and bills, has been borrowing R1,000-1,500 crore from the market every month. The state has already used 45% of its borrowing limit of R22,821 crore this fiscal, with the latest open market borrowing of R1,500 crore on September 18.
The Trinamool Congress’ pullout from the UPA-II at the Centre dashed hopes of a financial package chief minister Mamata Banerjee was banking on to announce a slew of populist measures since coming to power last May. A state finance department official told FE that before the pullout, talks were on for a special grant-in-aid of R16,000 crore to the state.
It is also unlikely that the Centre will concede to the TC government?s demand for a three-year moratorium on interest payment for the debt already accumulated. The Centre is also unlikely to increase the borrowing limit beyond the terms and conditions of the Fiscal Responsibility & Budget Management (FRBM) Act, 2003.
West Bengal?s total debt as on March 31, stood at R2,08, 380 crore, which by the end of FY13 is estimated to go up to R2,31,203 crore. The state, which sought a three-year moratorium on interest payout, needs to pay interest of R22,000 crore annually.
The state also cannot hope to get anything beyond the FRBM stipulation. After then finance minister Pranab Mukherjee’s intervention in taking Parliamentary approval, Bengal?s open market borrowing limit for FY13 was raised to R22,821 crore from R20,071 crore. With Mukherjee being elevated to the post of President, Banerjee knows that the state’s borrowing limit will not be enhanced anymore, the official said.
While market borrowings have increased the state?s debt burden, it is not being employed for any capital expenditure, thus putting finances under tremendous pressure, the official added.
However, the state?s commercial tax collection has grown 29% year-on-year to R4,322 crore during the first quarter of the current fiscal but there has been a flat growth in other revenue sources. The projected overall revenue receipts for the fiscal have been pegged at R76,943 crore, while expenditure has been pegged at R83,800 crore.
The Mamata government has been able to collect R12,446 crore extra from the Centre on account of the Planning Commission?s additional sanction of R3,696 crore in FY13 (Planning Commission sanctioned R25,910 crore in FY13 as against R22,214 crore in FY12) and Backward Region Grant Fund of R8,750 crore.