Union finance minister Pranab Mukherjee sounded a debt-trap warning to Mamata Banerjee, widely regarded as West Bengal’s chief minister-in-waiting, saying the state is one of three that can slide into a debt trap by 2014-15.
“According to the financial review, three states are probably heading for a debt trap by 2014-’15, of which one is West Bengal. In the last fiscal, it had a total debt of Rs 1.62 lakh crore,” Mukherjee said at a press conference on Monday before leaving for Nalhati, in Birbhum district, to campaign for his son, Abhijit. Mukherjee did not name the other two.
A debt trap is defined as a situation where a government has to make fresh borrowings just to service old debts. Obviously, the new debts incurred to pay off old ones raise the quantum of debt further, calling for even higher liabilities the next year, leading to a vicious cycle.
West Bengal’s financial crisis has come under sharp focus during the run-up to the polls, with the government being forced to clamp down on all payments, just to keep salaries and pensions going. The debt burden on Bengal’s exchequer has been labelled the state’s biggest problem even by Amit Mitra, secretary-general, Federation of Indian Chambers of Commerce and Industry (Ficci), and the Trinamool candidate for Khardah — and speculated to be the finance minister if he pulls off a victory against incumbent Asim Dasgupta.
In a statement submitted to the assembly in March, Asim Dasgupta admitted that loan repayment consumes R20,753 crore out of a total tax revenue of Rs 22,535 crore (or 92%).
Mukherjee, however, did not want to react to Dasgupta’s contentions that the debt burden of such states as Maharashtra and Uttar Pradesh was much more than that of West Bengal. “I don’t want to make any comment on any statement made by anyone,” he said.
Mukherjee also ridiculed the Left Front’s allegations of deprivation by the Centre. “During the 12th Plan period, between 2005 and 2010, the central fund allocation through the Finance Commission was about R51,000 crore, but was subsequently enhanced to Rs 118,000 crore for the 13th Plan period. If they describe this as deprivation, I have nothing to say,” he commented.
In reply to CM Buddhadeb Bhattacharjee’s comment that Mamata Banerjee would lead the state on a disaster course as she was leading the Railways, Mukherjee said, “Mamata’s running the Railways’ affairs efficiently and, as a CM, she’ll run the state with equal efficiency.”
Mukherjee warned Congress dissidents contesting as Independents of disciplinary action. “I understand that grievances are natural after ticket denial. But, for the sake of the anti-Left wave, to strengthen it, they should withdraw their nominations,” he said.