Bengal needs Rs19000cr; Pranab at work

Mamata Banerjee

 New Delhi, Aug. 1: The Union finance ministry has calculated that Bengal will need at least Rs 19,000 crore this year over and above the usual inflows and is working on a package to help out the state.

A meeting to discuss the financial reconstruction of the state has been called by finance minister Pranab Mukherjee tomorrow. The meeting is expected to be attended by Bengal finance minister Amit Mitra.

Mukherjee today confirmed to PTI that the central government “was working out a package” to bail out the debt-ridden state.

He said Mamata Banerjee, who has inherited fiscal problems from the Left Front government, “requires accommodation” and the Centre had something to “accommodate her”.

The mechanism of providing assistance was being worked in a sustainable manner, he said.

But he also cited three basic problems plaguing Bengal, which suggests that the Centre will nudge Mamata to take unpalatable steps such as levying water tax and other service charges.

The answer to the state’s financial woes is likely to be sought in a mix of packages for specific schemes focused on Darjeeling and Jungle Mahal and the state agreeing to raise more tax and non-tax resources on its own.

Pranab Mukherjee

The Prime Minister’s Office had earlier calculated that the state required about Rs 12,000 crore to bridge its deficit gap. But fresh calculations based on the state’s spending pattern and the slew of new promises made have revealed that the state will need as much as Rs 19,000 crore, sources said.

Mukherjee has instructed his officials to work on a package in a manner that will make it sustainable so that the state is not forced to ask for money in driblets.

Mukherjee told PTI that he did not make any remarks against the state’s financial performance during a closed-door session with MLAs on Friday. Mamata had criticised Mukherjee on Saturday on this count.

“I do not know how these remarks have been ascribed to me when the meeting (with Congress MLAs last week in Calcutta) was a closed-door discussion and there was no interaction with the media,” he said.

Mukherjee has said the “question is how to fund this plan and how to bridge the gap (between expenditure and income)”. Bengal has a poor tax-to-gross state domestic product ratio of 4.5 per cent, compared to Gujarat’s 7.5 per cent, Karnataka’s 16 per cent and Andhra Pradesh’s 11 per cent.

The Union finance minister cited three basic problems in Bengal: poor ratio of tax to gross state domestic product, excessive dependence on small savings and not mobilising resources through taxes, especially service charges.

The central government-run Eastern Coalfields has already warned the West Bengal Power Development Corporation that it will not be able to keep supplying coal if arrears of Rs 590 crore are not cleared.

Officials said that over and above a package, a new window of opportunity could be created if the 13th Finance Commission headed by Vijay Kelkar can be approached for a partial debt write-off for the most indebted states. But such a deal would be contingent on improvements in the state government’s own internal resource generation.