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Bengal’s Salaries => Revenues

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In August, we reported that the India Public Finances Statistics’ report compiled by Dr Kaushik Basu, Chief Economic Advisor to the Government of India, did not have the monetary output for the state of West Bengal from fiscal year 2004-05 onwards or more than 5 years. Ditto with per capital net state domestic product.Interestingly, the confusion about data persists, as is evident from the recent war between the present and former finance ministers of West Bengal Amit Mitra and Asim Dasgupta.
The confusion is compounded if one looks through the data in the West Bengal Annual Financial Statement for 2011-12, as SPR Sourjya’s Bhowmick finds out.The controversy erupted when newly anointed Chief Minister Mamata Banerjee reportedly said in Delhi, “Out of one rupee, 94 paise are spent on salary and other responsibilities of the state. Only 6 paise are left for development. How will we do with such little money? The Centre has to think.” The Centre might well have asked the State to think why it landed in such a state but that is another matter.


Plan Expenditure


Mitra then pointed out (in a news report) that the gross receipt of Rs 65,847 crore by the West Bengal government comprised non plan grant by the Centre, grant for Central plans and schemes and grant for centrally-sponsored schemes—all of which could not be used for committed expenditure of the state. Thus the state was left with Rs 59,462 crore, which could be spent for the committed expenses. With state’s committed expenses at Rs 56,031 crore, 94 per cent was spent for the same, said Mitra.


Dasgupta’s rejoinder was this: If you start adding capital payment, you must also add total capital receipt. Add Rs 21,794 crore to the revenue of Rs 65,848 crore (2011-12) and the sum goes up to Rs 87,642 crore. After spending Rs 56,031 crore on salaries, pensions, loan repayments and so on, around Rs 33,000 crore would still be available for plan expenditure.


That is no modest amount. This way you would have spent 63% of gross earning and are left with 37 paise from every rupee earned. True as that might be, here is what our worrying slice of numbers is saying. If salaries and pensions (plus interest) are equal or higher than revenues, then there is a problem on hand.


West Bengal's Salary And Revenue Equation

Bengal Needs Help


Whichever way you look at it, if salaries, pension and interest are eating up almost all the revenue expenditure and in at least one case surpassing it, there is a problem. (Not that other states are not in a similar boat.) But it also demonstrates the precarious condition of state finances. And the fact that there is no way a Government can play an effective role in building infrastructure and capacity. Particularly one like West Bengal which needs all the help it can get.

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