Faced with dwindling cash reserves, the Mamata Banerjee government is set to raise Rs. 2,000 crore from the market via the Reserve Bank of India (RBI) on June 18, thus taking the net borrowing in the current financial year to Rs. 4,000 crore.
The fresh borrowing will mark the third such move in the current financial year, with the government having already borrowed Rs. 1,000 crore each on April 14 and May 21. The total borrowing limit set for the government for the current financial year under the Fiscal Responsibility & Budget Management (FRBM) Act, 2013, stands at Rs. 21,000 crore.
According to a notification issued by the RBI on June 14, eight states, including Bengal, are to make a net borrowing of Rs. 7,650 crore on June 18. The Mamata and Modi governments in Bengal and Gujarat would rank as the highest borrowers in this tranche, with each set to pick up Rs. 2,000 crore from the market.
While Kerala and Uttar Pradesh are to borrow Rs. 1,000 crore each, Tamil Nadu, Rajasthan and Jammu & Kashmir would pick up Rs. 800 crore, Rs. 500 crore and Rs. 300 crore respectively. Mizoram will borrow Rs. 50 crore, the least in this tranche.
According to sources in the state finance department, the borrowed Rs. 2,000 crore would be used for payment of salaries, wages and retirement benefits to state government employees.
As per projections of finance minister, Amit Mitra, while presenting the state budget for 2013-14, Bengal’s total accumulated debt by the end of the current financial year could likely reach an alarming level. The total accumulated debt rose from Rs. 1.96 lakh crore in March 2012 to Rs. 2.26 lakh crore in March 2013.
By March 2014, the total accumulated debt, as projected by the state finance minister himself, is likely to swell up to Rs. 2.47 lakh crore. The RBI, at a recent review of the financial affairs of all states, said the state has the highest interest payment to revenue receipt ratio at 27.20 %.