The cash-strapped West Bengal government, which is already reeling under a debt burden of over Rs. 2,00,000 crore, is going for a fresh borrowing of Rs. 2,000 crore on October 16, 2012, which makes it the highest borrowing state among the eight Indian states going for market borrowing in this tranche.
According to a notification issued by the Reserve Bank of India (RBI) on October 12, 2012, a total of eight Indian states are going for borrowing on October 16, 2012 for a total amount of Rs. 7,550 crore, out of which Bengal alone is going for Rs. 2,000 crore, which counts for 26.49% of the total borrowing amount.
As per RBI statistics, the states following West Bengal are Tamil Nadu at Rs. 1,200 crore and Karnataka, Maharashtra and Uttar Pradesh at Rs. 1,000 crore each. According to state government sources the borrowing is intended at paying salaries and retirement benefits to the state government employees.
The least borrowing states in this tranche will be the northeastern state of Arunachal Pradesh at just Rs. 50 crore. With this fresh borrowing, the state government’s total borrowings for the current financial year of 2011-12 will rise to Rs. 12,000 crore thus exhausting 52.58% of nits total borrowing limit of Rs. 22,821 crore set under the Fiscal Responsibility and Budget Management (FRBM) Act, 2003.
This means that the state government will have to manage with the remnant borrowing amount of Rs. 10,821 crore for the remaining five months of the current fiscal. With the chances of getting the Union finance ministry permission to borrow above the FRBM limit is bleak in the backdrop of the poor Centre-state relationship, state government sources said that managing the remaining five months would be extremely difficult with this paltry remnant borrowing amount since obligatory expenditure are maximum in the closing months of any fiscal.
Last time the West Bengal government resorted to borrowing was on September 18, 2012 when it raised Rs. 1,500 crore from the market.
Sources from the state finance department said that with the fresh borrowing on October 16, 2012, the state would have actually exhausted around 60% of its borrowing limit for the fiscal, had not the Union government recently increased its borrowing limit from the earlier Rs. 20,071 crore to the present Rs. 22,821 crore. As on March 31, 2012, West Bengal’s total debt of Rs. 2,08,382 crore, and considering that the state would exhaust its entire borrowing limit of Rs. 22,821 crore, its total debt burden at the end of the current financial year would be of Rs. 2,31,203 crore.