In her second term in the chair, Bengal chief minister Mamata Banerjee’s primary focus and objective would be to draw bigticket investments to Bengal, especially in the manufacturing sector. The objective, itself, is driven by the need to fast-track employment generation efforts and reduce the state’s mounting debt burden by boosting its own share of revenue by way of taxes.
According to sources in the newly-formed Mamata cabinet, while not going slow on the state’s flagship welfare schemes that fetched rich electoral dividend for the ruling Trinamool Congress in the recent Assembly polls, the chief minister has pledged to bring change to the state’s industrial climate and boost the exchequer.
“This is precisely the reason why she (Mamata) has stressed on boosting our own revenue generation through taxes and by drawing big-ticket investments in the manufacturing sector. She also has some ideas on ways to reduce non-planned expenditure,” a member of the state cabinet told HT.
The move to boost revenue generation comes amid an alarming upward shift in Bengal’s gross state domestic product (GSDP) ratio, which currently stands at 35.5%, the worst of all states and much higher than the national average of 22.3%.
The CM’s intent to draw investments and add more steam to the industrial growth was evident during her interaction with industrialists for the first time since her thumping win, on June 7. “Don’t waste time talking or citing recession as an excuse to hold off on your investment plans (for Bengal). Start investing without delay. We’re focusing on the automobile and the manufacturing sectors and are open to investment proposals, if any,” the CM was quoted as telling the industrial captains on Tuesday.
Sources in the state cabinet said the chief minister is quite keen on effective debt management and hinted as much at her first administrative review meeting since being sworn to office, on June 3. “At the meeting, she dropped clear hints on adopting some austerity measures. While such (flagship welfare) schemes as Kanyashree and Yuvashree, among others, will continue, the government won’t introduce any additional components or benefits along with them. At the same time, over the next five years, there will be significant reduction in nonplanned expenditure, especially on such events as fairs, festivals and award functions,” the cabinet member said.
Mamata’s first five years in office — from 2011 to 2016 — had been marked by a sharp rise in open market borrowing and an alarming slump in investment flow, two factors that put additional stress on the state exchequer and drove the debt-to-GSDP-ratio to a worrying 35.5%. Over the last five years, the Mamata government, having inherited a legacy of debts from the Left Front regime, went for a total open market borrowing, through the RBI window, of Rs1,07,046 crore, the highest among all states as per RBI records. “In order to reverse the alarming debt-to-GSDP ratio, the state needs to focus on gradual reduction in market borrowing by curtailing avoidable non-planned expenditure and boosting the state’s own revenue generation and investment flow.
A lot of it would be down to this government’s goodwill and necessary policy shift,” Dipankar Dasgupta, former professor of Indian Statistical Institute, Kolkata, told HT. Apart from the worrying debt-to-GSDP ratio, the other key economic indicators of Bengal, too, do not inspire confidence. The state’s interest-payment-to-revenue-receipts ratio is currently at 22.5%, significantly more than the national average of 10.7%.
While Bengal’s revenue-deficit-to-GSDP ratio is at 1.3% as against the national average of 0.1%, the fiscal-deficit-to-GSDP ratio is currently at 3% as against the national average of 2.9%.