Push to shake off debt burden

KOLKATA: On the completion of one year in office, the Mamata Banerjee government is adopting a two pronged strategy to combat the debt trap.

Besides, asking the Centre for a bail-out package, the state government is taking measures to increase internal revenue generation. Bengal finance minister Amit Mitra told TOI in an exclusive interview that it is confident of achieving more than 20% growth in tax collection in the current fiscal, thanks to better compliance and new taxes.

"We have collected additional revenue of Rs 4,000 crore in 2011-12 though there was no new tax. It was Rs 25,000 crore in 2011-12 compared to Rs 21,000 crore in 2010-11. It will easily cross Rs 30,000 crore this year because there are additional tax components," Mitra said.

He pointed out that measures like introduction of e-filing of return under sales tax act, pre assessment refund facility through electronic clearing system, enhancement of number of banks receiving e-payment of taxes have resulted in better compliance and revenue generation in 2011-12.

In the current fiscal, some new taxes have been added - like compensatory entry tax, one-time motor vehicle tax, stamp duty on developers agreement, and increase of VAT in luxury commodities - that would mobilise additional revenue.

"Last year, through better compliance alone we have mobilised an additional Rs 4,000 crore. This year it will be much more because of the new taxes," he added.

However, Mitra made it clear that increase in internal revenue generation alone cannot clear the fiscal mess unless there is aid from the Centre. He argued that the Centre too is responsible for Bengal's debt trap so it should help out.

The finance minister alleged that Centre has repeatedly allowed the former Left Front government to resort to market borrowing despite the fact that Bengal was the only major state which refused to obey Fiscal Responsibility and Budget Management act (FRBM).He pointed out that all the major states came under FRBM by 2005-06 except Bengal. A state government needs to take permission from union finance ministry while going for market borrowing.

"Interestingly Centre has always gave permission to the Left Front government to raise money from market through RBI auction though it was not following FRBM. Just 30 days before we came to office the former government raised Rs 5,400 crore from market. Left Front rampantly borrowed money to maintain its cadre base and the Centre has allowed them to do so that has resulted in this burgeoning debt. So this has to be shared by the Centre," he added.

Now, market borrowing stands at around Rs 90,000 crore and is the biggest component of Rs 2.08 lakh crore debt stock of Bengal. The market borrowing was around Rs 80,000 crore when the new government took over.

Mitra reiterated that the state will continue to demand a moratorium on principal repayment and interest for three years followed by a debt restructuring. The state has to pay Rs 23,199 crore every year on account interest and principal repayment. This is likely to go up to Rs 25,561 crore soon if the debt is not restructured.

"Punjab has got moratorium for both principal and interest between 1995 and 2006. The amount was Rs 9,000 crore. The finance commission has also accepted that Bengal, Punjab and Kerala are the three debt stressed state with Bengal topping the list," he added.

Who says Paschimbanga is in a debt trap?

Seeing the way the tripod street lights are being put up all over Kolkata, it does not seem there is any shortage of funds in Bengal.

In Bangur Avenue on just one main road they have installed 136 nos of these tripod fitting.

Now each fitting should cost about Rs 40,000/- to install including the pipes, cables and contract labour.

So installing these 136 fittings should have cost about Rs 54.40 Lakhs.

Each of the tripods have a 18 / 20 watt Philips CFL lamps.

If we assume, the lamps run for 10 hours at night the daily consumption of electricity would be 8.16 KW,

This would cost Rs 40.8 per day, ie. Rs 1470/- per year.

Now this is for only one Bangur Avenue.

Just imagine the amount being spent all over Kolkata.

We wouldn't mind if these lights were installed where there were no lights.

However, the street where these lights are being installed is already illuminated very well with sodium vapor lamps.

Now when Didi talks of fund shortage, we can say she is talking rubbish.

There is no fund shortage that I can see.