Bengal’s 4-month finance mountain

PRANESH SARKAR AND MEGHDEEP BHATTACHARYYA

Calcutta, Nov. 28: The Bengal government has released in eight months only a little over 25 per cent of funds meant to build durable assets, saddling the state with the daunting task of allocating the remaining Rs 17,000 crore in half the time.

“The projected plan expenditure was Rs 23,771.44 crore for the year but till now only around Rs 6,050 crore has been released. That means around 75 per cent of the allocation has to be released in four months before March 31, 2013. That’s a challenge,” a finance department official told The Telegraph today.

The grim statistics assume significance against the backdrop of the approaching panchayat polls, where the government will be under pressure to show results on the ground. Development projects can be implemented only if the government generates funds that finance minister Amit Mitra had earmarked in his budget under plan heads.

Plan expenditure is incurred by the state on building durable assets like highways, civic infrastructure, irrigation and water supply projects, which result in improvement of the productive capacity of the economy.

Expenses under the plan head not only create value in economic terms, they also serve a political purpose as the investments result in assets that can be showcased on the campaign trail.

Actual funds allocation is different from making promises as either resources have to be generated or money has to be borrowed.

The scope of tapping the easier option of borrowing is difficult at the moment, officials said. They referred to the state’s borrowing schedule in the eight months: it has exhausted Rs 14,500 crore of the Rs 22,821-crore limit.

“In December, the Rs 1,100-crore tranche of the Asian Development Bank’s public resource management loan and a Rs 1,100-crore loan from the Nabard would be added to the tally, leaving Bengal with room to borrow Rs 6,121 crore in the last quarter,” an official said.

Even that amount cannot be used up only on the projects. The government has to find around Rs 3,000 crore every month to pay salary, pension and provident fund.

“Chief secretary Sanjay Mitra has recently asked finance secretary H.K. Dwivedi and C.M. Bachhawat (the former finance secretary recently given charge of industries and commerce) to prepare a note on what can be done to avoid a crisis,” said an official.

According to the official, the pressure to generate resources in the last quarter for spending under the plan head is a common feature in most states. But the situation is “different” this year despite a 35 per cent growth in the state’s own revenue generation between April and September.

“Last year, too, we faced a somewhat similar situation and we were able to give only Rs 9,000 crore in the last four months against the Rs 14,000 crore that was due for release. But the situation is worse this year because we cannot resort to market borrowing,” the official said.