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Responsible Mamata? PDF Print E-mail
Wednesday, 26 March 2014 00:00
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Could it be that West Bengal is on the mend? The fisc suggests it may be the case

Cross your fingers, the impossible may just be happening. Despite all her populist rhetoric, West Bengal chief minister Mamata Banerjee may just be turning into a responsible politician, or at least one who lets her finance minister do a decent job—as opposed to poor Dinesh Trivedi who lost his job as railway minister for trying to do it. A combination of good luck, in the form of dramatically enhanced central government transfers and responsible husbanding of resources, has led to a situation in which West Bengal’s finances may be on the mend.

From an average of 5.1% of state GDP in 2008-10 (when the Left was still in power), the fiscal deficit is down to a budgeted 1.8% in FY14. And this is to be achieved by an increase in revenue receipts from 10% of GSDP to 12% of GSDP and a reduction in revenue expenditure from 14.9% to 12.5%. The 2 percentage point increase in revenue receipts was achieved through a combination of more central transfers—these rose from a 4.8% of GSDP average in 2008-10 to 6.4% in the budget estimates of FY14—and own tax revenues that rose from 4.2% to 5.4%. The flip side of taxes rising is that own non-tax revenues are down from 1% to 0.2%. West Bengal’s real contribution, of course, is to cut revenue expenditure from 14.9% of GSDP in 2008-10 to 12.5% in FY14, more or less equally shared between ‘development’ and ‘non-development’ expenditures. The spoiler, of course, could be that, when the final numbers for FY14 come out, both central transfers and own tax revenues could be lower than budgeted. Full marks for trying though.

 

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