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Fiscal Situation in West Bengal: Canard and Facts

Sections of the media and the Trinamool Congress have repeatedly asserted that the Left Front Government for the last 34 years has ruined the state finances and the burden of debt on the people of West Bengal is such that the new Government will be in a difficult position to pay the salaries of the State Government employees. Even after assuming power, the same canard is continuing. Amit Mitra, the new Finance Minister of state has himself joined in the process. The facts however show a completely different story.

Fact 1: The total debt of West Bengal currently stands at Rs. 198195 crore (2010-11). The total debt of Uttar Pradesh is Rs. 234581 crore while that of Maharashtra is Rs. 236526 crore in the same year. So, it is not the case that only West Bengal has a debt problem.

Fact 2: The fact of the matter is that the debt of all the states taken together has decreased significantly over the last 20 years. In 1991, the total debt of all the states was Rs. 128155 crore which has increased to Rs. 1820155 crore in 2011. In other words, the overall debt of all the states increased 14 times over the last 20 years. (Source: Study of State Finances, Reserve Bank of India)

Fact 3: The Debt-GSDP ratio, which is a better measure for the debt situation, has increased significantly in West Bengal from 47% in 2005-08 to 40.8% in 2010-11. This signifies that the debt situation of West Bengal is actually improving rather than worsening.

Fact 4: 41.8% of the debt comes from National Small Savings Fund (NSSF), because West Bengal has the highest mobilization of Small Savings Fund. For all the states taken together, only 29.53% of the total debt comes from NSSF. Now the Central Government has made it mandatory for State Governments to borrow from NSSF. Since West Bengal has high NSSF deposits so it has a high debt burden. Moreover, the interest rate charged by the Central Government from NSSF loans is very high. This further aggravates the debt problem of West Bengal.

Fact 5: The monthly expenditure of the State Government on salaries, pensions, subsidies and interest payments is Rs. 3973 crore while the revenue mobilization per month is Rs. 4412 crore. Therefore, there is no question of non-payment of salaries to the employees. Over the last 34 years, the salaries of the employees have never been stopped. In fact, immediately after the new Government took over, the CM announced that salaries for teachers funded by State Government will be given on the first day of every month. This proves that there was no issue of non-payment of salaries because of fiscal problems.

Fact 6: The loan of the State Government in April-May last year was Rs. 5790crore, comprising of Rs. 1790 crore from NSSF and Rs. 4000 crore from the market. In April-May this year the loan of the State Government is Rs. 5678 crore, comprising of Rs. 505 crore from NSSF and Rs. 5173 crore from the market. In other words, the loan taken by the State Government in the last two months is less than the amount taken as loan in the same months last year. In fact, within days of assuming power, the new Government has decided to take loans of Rs. 500crores from NSSF and Rs. 3000crore from market.

The basic idea behind the charge against erstwhile Left Front Government is that it took too much responsibility in providing succour to wide sections of working people. Left Front Government, apart from paying all school and college teachers directly, also provided wages for all municipal and various local Government administration. It also initiated the scheme of distribution of rice at Rs. 2 per Kg, shared the burden of provident fund of nearly 28 lakh unorganised workers. Left Front was the last to accept FRBM Act, causing much heartburn for neo-liberal proponents.
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