Tough task on hand to check mounting debt.


2 May 2011
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KOLKATA: It's an inheritance of loss that the Mamata Banerjee government has been grappling with ever since it took charge on May 20. The biggest challenge is to tackle the Rs 2.03 lakh crore debt burden that was passed on by the previous Left Front govrnment. The CM, however, put up a brave front, saying she hoped to overcome the crisis within six-eight months.

The fiscal health of the state is grim — the rate of the growing debt burden has grown manifold and 90% of the state's budget is allocated for paying salaries to its 10.5 akh employees. Bengal's accumulated debt burden stands at Rs 2.03 lakh crore, which is 18 times higher than what it was in 1977 when the Left Front came to power. Immediate steps are needed because the state is in penury and may find it difficult to pay employees' salaries.

The Mamata Banerjee government has begun working out steps to tide over the crisis. Mamata, her finance minister Amit Mira and Union finance minister Pranab Mukherjee held a meeting recently to work out a bailout package for the state.

As the Left Front government left bills worth Rs 3,500 crore unpaid, Mamata has decided to borrow money from the market to clear dues. Mitra has recently said the state will borrow Rs 3,000 crore from the market and the remaining Rs 500 crore will be taken as loan from small savings schemes.

The good news is that additional revenue rom coal cess and incremental income tax collection can help the government overcome the initial crisis. Taken together, this could well be close to the proposed initial market borrowing of Rs 3,000 crore that the government has decided to opt for.

The state will get Rs 652 crore as additional revenue from coal cess in 2011-12. The share of income tax collected from Bengal is expected to go up by Rs 2,100 crore. The collection from the state has increased by Rs 7,000 crore due to better tax compliance by corporate houses, and with the state govrnments getting 30% of this share, Bengal should get 30% of the Rs 7,000-crore rise.

In her first meeting with the industry as the CM, Mamata said she would set up a panel to solve problems faced by the industry and work out plans for investment in Bengal. She said she wouldn't allow bandhs and strikes in the state. "Between 1991 and 2010, the state got 4,700 investment proposals of which only 1,300 were implemented. This is below 27%," she said.

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