Buoyant tax revenue was the only bright spot in finance minister Amit Mitra's 2013-14 budget that was dictated by an urge to spend on a multitude of populist schemes despite a crippling debt burden, salary, pension and subsidy bill. Before the panchayat polls, Mamata Banerjee's urge for populism weighed down on the scant resources that Mitra had at his command. To meet the demand, the finance minister raised both the floor and the ceiling of VAT, which will have an all-round inflationary impact in the market.
One of the most significant allocations was for the minority affairs department, where a 50% jump was proposed from Rs. 570 crore to Rs. 859 crore. "The budget is a good one under the circumstances. We have consciously avoided taxing the poor," chief minister Mamata Banerjee said, while her finance minister avoided the post-budget presentation press conference, perhaps for the first time in decades.
One of the posers that were waiting for the finance minister is his claim of having generated 10.24 lakh jobs in the April 2012 - January 2013 period alone. "You would be happy to know that between April 2012 and January 2013, new employment generated was estimated at 10,24,521, crossing our target. By March this year, the figure would further swell," said Mitra in his budget speech.
However, none on the part of the government clarified in which sectors these jobs were generated, since almost all government departments have numerous vacancies. Mitra pegged the next year's target at 13.14 lakh jobs.
Leader of the opposition Suryakanta Mishra and the Congress questioned the employment generation figures. Mishra described the budget as one without a "meaning and vision".
"The speech has no direction and is full of hollow noise," remarked Congress MLA Manas Bhuniya.
The budget had two conspicuous omissions. There was no incentive for investors in industry, a rather unhappy constituency in Bengal. Second, there was no major spending on infrastructure projects.
On the contrary, an 'incentive scheme' for the unemployed was announced. The government would pay Rs. 1,500 per month to unemployed youths between 18 and 45 years of age who have passed Class 8 and who have enrolled in the employment bank announced in 2012.
For the past two years, Mitra had the unenviable task of marshalling resources for the numerous schemes that the chief minister announces intermittently. The budget figures clearly indicated how he had to borrow to meet those expenditures while simultaneously meeting his obligations such as debt servicing and paying salaries and pensions.
A year ago, Mitra thought he would be able to contain the revenue deficit at Rs. 6,858 crore. However, he ended up with a figure of Rs. 13,308 crore, double the amount he budgeted for. Revenue deficit measures the excess of total expenditure over total resources and is a direct reflection of the spending binge of the government. The fiscal deficit (fresh debt that the government has to incur) was alarming too. Mitra pegged it close to Rs. 16,000 crore but ended up close to Rs. 21,000 crore.
For the next year, Mitra projected a revenue deficit figure of about Rs. 3,500 crore, a target that will be extremely challenging going by the government's record.
Despite the buoyant tax revenue, the figures look alarming as the combined expenditure on debt servicing (interest and principal payout of Rs. 25,195 crore), salary (Rs 30,549 crore) and pension (Rs 9,237 crore) stand at 200% of his revenue figure (Rs 32,405 crore). The situation is not going to be any different in the next budget.
At the end of next year, the accumulated debt will stand at Rs. 2.47 lakh crore, which will translate to about Rs. 25,000 of per capita debt in the state. Another blow for the exchequer would come in the form of increased salary and pension bills by the end of March 2014.