Just 72 hours before Bengal finance minister Amit Mitra presents the state budget for the financial year 2014-15 in the assembly on February 27, the cash-strapped government will be going for an open market borrowing of Rs. 2,500 crore on February 24.
With this fresh borrowing, the total open-market borrowing of West Bengal during the current financial year goes up to Rs. 20,600 crore, with a month still left for the current financial year to end.
A state finance department official said that the recent additional financial burden that the state government is facing because of the recent announcement of enhanced dearness allowance (DA) to its employees is forcing the government to go for so high open-market borrowing this time as well as in January 2015.
“The money from the open market is being utilised mainly to service obligatory expenditure like payment of wages, salaries and retirement benefits to existing and retired state government employees. And now, besides the additional DA burden, the state exchequer is facing the additional burden of making part payment for the contractors and the outsourced agencies,” he said.
Last time, when West Bengal government went for open market borrowing was on January 27, 2015, when it borrowed Rs. 3,000 crore, a record borrowing by any state government in a single tranche during the last 10 years.
Of the 16 Indian states that are going for open market borrowing through the Reserve Bank of India (RBI)-window on February 24, 2015, West Bengal will the highest borrower in that tranche.
According to a notification from the RBI, altogether 16 states are going for a total market borrowing of Rs. 15,086 crore in February 24, 2015, with West Bengal being in the top position at Rs. 2,500 crore, followed by Uttar Pradesh at Rs. 2,000 crore.
Karnataka comes in the third position borrowing at Rs. 1,500 crore, followed by Gujarat at Rs. 1,200 crore and Maharashtra at Rs. 1,183 crore. Andhra Pradesh, Assam, Haryana, Orissa and Telegana are borrowing Rs. 1,000 crore each.
Rajasthan comes next borrowing Rs. 750 crore, followed by Tamil Nadu at Rs. 600 crore and Manipur at Rs. 103 crore. While Sikkim and Nagaland are borrowing Rs. 100 crore, the lowest borrowing state in this tranche is Meghalaya at Rs. 50 crore. The Union finance ministry has recently denied the West Bengal government a moratorium and as reason for denial, the ministry cited the massive jump in the annual market borrowing from the open market by the state government during the last three years.