Data drive: Development matters

By: | Published: May 21, 2016 6:13 AM

Results of the assembly polls in West Bengal, Tamil Nadu, Kerala and Assam indicate that development expenditure by state governments may have played a significant role in deciding the fate of the incumbents.

Results of the assembly polls in West Bengal, Tamil Nadu, Kerala and Assam indicate that development expenditure by state governments may have played a significant role in deciding the fate of the incumbents. In Tamil Nadu, the J Jayalalithaa government spent R1.11 lakh crore on development and in West Bengal Mamata Banerjee spent R81,260 crore, in FY16. Both these states reported 7% year-on-year (y-o-y) growth in development spending in FY16, while it contracted 6% to R42,230 crore in Assam from R44,790 crore in FY15. In Kerala, though, despite development spending growing 21% y-o-y to R52,420 crore in FY16, the UDF government lost the polls.

However, for Mamata Banerjee, the state debt will be a big concern still. From a high of 44% of state GDP in 2009-10, during the last year of the Left rule, the debt-to GDP has dropped to 33% in FY16. But it is still very high, with all-India average at 22%. Interest payments account for 21% of West Bengal’s revenue expenditure. Even the debt in Kerala is higher than the country’s average and in the other two states—Assam and Tamil Nadu—it is lower than the average of all states.

The fiscal deficit of West Bengal is 1.7% of state GDP in FY16, which is lower than the average of all states at 2.4%. The state fiscal deficit is higher for Kerala at 3.1%, an issue which the new government will have to address at the earliest.

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