Bengal has virtually no chance of borrowing beyond the limit set under the Fiscal Responsibility & Budget Management (FRBM) Act, 2003, as suggested by the Reserve Bank of India’s (RBI) indicative quantum of borrowing by all state governments for the last quarter of the current financial year of 2012- 13.
According to highly placed RBI sources, the apex bank, in consultation with the different state governments, has calculated an indicative quantum of borrowings by the state governments and an Union territory for January- March 2013, where West Bengal’s share has been estimated at around Rs. 6,500 crore, which is almost equivalent to the remnant borrowing limit of the state for the entire fiscal.
As per RBI estimates, the total indicative borrowing quantum for all states and the Union territory of Puducherry is estimated to be between Rs. 55,000 crore and Rs. 60,000 crore during the quarter under review. With the last market borrowing of Rs. 2,000 crore on December 18, 2012, West Bengal is now officially left with just Rs. 6,821 crore in the last quarter of the current fiscal year, as against the total borrowing limit of Rs. 22,821 crore for the entire fiscal as under the FRBM Act.
According to RBI sources, had there been a possibility of exceeding the borrowing limit, the process would have started by now and the apex bank would have received indication of the same, since the process of allowing a state beyond the FRBM limit by the Union government is quite lengthy and complicated.
RBI sources further said that the apex bank would make all possible attempts to conduct the auctions for state development loans in a calibrated manner and spread it evenly throughout the remaining quarter. “This would mean that no individual state can borrow according to its whims or borrow the entire remaining amount at one go,” an RBI official said.
“While giving any individual state permission to borrow beyond the FRBM limit, the Union finance ministry needs to give an explanation to the Parliament under what circumstances the concerned state was allowed to breach the limit. The process is quite lengthy and complicated,” an RBI official pointed out.
Meanwhile, state finance ministry sources pointed out that West Bengal would have actually been left with just Rs. 4,071 crore to suffice in the last quarter, had the Union government not raised the borrowing limit for the state to the present quantum of Rs. 22,821 crore from the earlier limit of Rs. 20,071 crore.
In the previous fiscal of 2011- 12, Bengal government was allowed to exceed the FRBM limit twice essentially due to the personal initiative of then Union finance minister Pranab Mukherjee at a time the honeymoon phase between Congress and Trinamool Congress was at its peak.
However, according to political observers, the chances of breaching the borrowing limit became bleak for West Bengal since the Congress- Trinamool relationship became bitter.
As of March 31, Bengal’s total debt was Rs. 2,08,382 crore and considering that the state will exhaust its entire borrowing limit of Rs. 22,821 crore, its total debt burden at the end of the current financial year will be Rs. 2,31,203 crore.