Historic math and hidden factors How Mitra drove the ‘growth’

By DEVADEEP PUROHIT THE TELEGRAPH, Tuesday , March 12 , 2013

Calcutta, March 11: Finance minister Amit Mitra today claimed “historic” success by the government in increasing revenue by around 30 per cent, the figure creating an impression that economic activity in Bengal has grown significantly in the current financial year. But the fine-print suggests he should thank many factors other than increased economic activity in the state for the feat. “In this financial year, our revenue collection target was fixed at Rs 31,000 crore (taking the growth rate at 25 per cent). You will be happy to know that we will exceed the targeted tax collection (according to revised estimates) and cross the Rs 32,000-crore-mark. Even this is a historic all-time record,” Mitra said while presenting his second full budget today amid table-thumping from the treasury benches. Here are Mitra’s numbers: he set a tax revenue target of Rs 31,222.25 crore in his last budget for this financial year. The revised estimates say the revenue realisation touched Rs 32,405.21 crore – 30 per cent more than that in 2011-12. A closer look at what drove this 30 per cent growth tells a story Mitra did not recount today. A mixture of a new entry tax, a one-time spike in power duty, a surge in coal cess because of a change in central policy, the multiple increases in petro-product prices and a hard squeeze on the tipplers of Bengal is the principal factor behind the “30 per cent” jump. These five factors plus stamp and registration fee — a telltale sign of the state’s sole thriving business of real estate — account for Rs 4,769 crore. Few of these drivers can be termed as the results of the Mamata Banerjee government’s work. Rather, Manmohan Singh’s petro price policy, much maligned by the Trinamul Congress, has played a role in helping Mitra reach the “historic” landmark. If the largely serendipitous factors are taken out of the revenue pot, the revised budget figure will come down to Rs 27,636 crore against Rs 24,938 crore the year before. Or, from 30 per cent, the growth rate plunges to 11 per cent. This suggests that shorn of the serendipitous factors, the rate of revenue growth is expected to be more in line with — if not lower than — what the Left had clocked when it was in power. Besides, the 11 per cent growth reflects more faithfully the ground situation in Bengal, where the government’s hands-off land policy and its failure to attract big industry are showing up in listless economic activity. The new government has taken some revenue mobilisation initiatives like simplification measures and e-governance initiatives, which have thrown up positive results, but they alone cannot trigger a 30 per cent growth. “If one concludes that the 30 per cent growth in revenues means heightened economic activity in Bengal, there is a mistake,” said a senior state government official. According to him, an analysis of sales tax mop-up in the last few years can explain that there has been no remarkable change in the level of economic activity. Sales tax collection is a better indicator of economic activity. On the sales tax front, Mitra has failed to meet his budget target of 29 per cent hike. His mop-up this fiscal year is 19.5 per cent more than 2011-12 (actual). A year before -— between 2010-11 (budget estimate) and 2011-12 (actual) —sales tax collections had grown by around 29.6 per cent. For 2013-14, Mitra has projected a modest 12.9 per cent growth over the budget estimate of 2012-13. “It is evident that even the finance minister is lowering his sales tax growth target. This is not a good sign as the sales tax mop-up also includes earnings from petroleum products through cess and surcharge,” said an official. “This year’s rise is primarily because of some one-time spikes under some heads,” added another official. One of the key elements in the list is the local area entry tax that Mitra had introduced in his budget last year. Budget documents reveal that the mop-up on this account — mentioned as taxes on goods and passengers — has been Rs 1,250 crore. Such steep hikes can be seen under some other heads as well, which, officials warn, will not be available in other years. Take, for instance, the case of taxes and duties on electricity, under which the government has earned around Rs 800 crore extra in comparison to 2011-12. The high income from electricity duty, according to sources in the power department, had accumulated over two financial years as the state-owned power utilities had been unable to pay duty for most of 2011-12 because chief minister Mamata Banerjee had not allowed a power tariff hike till December 2011. The subsequent hikes in power tariff also helped. “The duty was paid in 2012-13 for both years, which is why the jump appears steep for one fiscal year,” said an official. Another significant component on the revenue side has been a Rs 400-crore-plus increase over last year in excise collection because of the government’s decision to allow some liquor off-shops to operate as on-shops and increase in bar timings. “All these factors contributed to ensure 30 per cent growth in revenue this year…. He is unlikely to get the same benefit year after year. The question is ‘what will happen to his budget arithmetic then’?” asked an officer. Unpredictable revenue is not the sole reason behind apprehensions about the budget arithmetic going haywire. The fiscal profligacy of the chief minister can burn a big hole in the expenditure projections of Mitra’s budget ahead of an election year. The budget documents reveal that Mitra got a taste of Mamata’s spending spree this year as the budgeted deficit on the revenue account almost doubled this fiscal year, from Rs 6976.01 crore to Rs 13,308.10 crore. According to Mitra’s budget estimates, the deficit for 2013-14 will be Rs 3,488.49 crore, around Rs 10,000 crore less than that this fiscal.

ALTERNATIVE ECONOMIC PERSPECTIVE IN THE BENGAL BUDGET

KOLKATA(INN): The budget placed in the Assembly for 2010-1011 by the state LF government’s Finance Minister, Dr Asim Dasgupta makes a precise policy statement that permeates the budget.

Dr Dasgupta notes that in the environment of the price rise affecting the country, the welfare role of the state government, operating as it does in a limited power framework, has to be strengthened.

The main direction of the budget is thus to increase generation of employment and the income of the common people, especially the poorest of the poor.

Production has to be increased and to increase the production in agriculture and industry must be done in such a manner that employment and income of the mass of the people shall ne widely increased, special focus being on minority communities, backward classes and women.

In the case of agriculture, land reforms shall continue creating more opportunities for the poor kisans and lessening whatever remains of monopoly control in the countryside. Dasgupta maintained that the highest employment generation in the rural area continued to be from the land plots of small and marginal farmers, a thesis we recall he had propounded at a seminar way back in 1985 as a member of the state planning board.

Acquisition homestead land for the poor kisans will continue. Irrigation facilities shall increase further along with use of improved seeds, organic and bio-fertilisers, and newer agricultural techniques. The rate of growth of the state-level GDP has gone up to 4.2% as compared to (-) 0.2% for the country as a whole.

Production of cereals and lentils as well as vegetables and fish and fruits has increased as an ongoing process. The plan outlay for agriculture has been fixed as Rs 228 crore from Rs 178 crore in the last FY.

The allocation for irrigation has been increased, as has been that for forestry. The credit system for the rural banks has been made more user-friendly with adequacy of funds flow. The procurement price for agricultural products has bee widened. The average daily wage rate in the villages has gone up to Rs 83 and is increasing further.

With the demand emanating from the internal market, including a powerful rural market, increasing. Industrial development has grown apace. The potential for a take-off has been created for sectors related to small, medium, and large industries.

The investment last year in the industrial sector, Rs 7000-odd crore has been realised from 121 industrial units and has created more than 45,000 additional employments.

However, in the realm of employment generation, the self-help groups that number 10.46 lakhs top the list. They have created an additional 3.5 lakh employment last year.

Other highlights of the budget are:

• Poor APL people supplied with rice at Rs 2 per kilo

• Wage for unemployed workers of closed units increased

• An additional 44 sector workers added to the pool of unorganised workers’ benefits

• Minorities’ development budget head has been doubled

• Assistant teachers, para teachers’’ pay increased

• Newer employment schemes in the cities in the pattern of rural employment planning

• 4200 additional schools to be set up

In concluding his budget statement, Dr Asim Dasgupta said that in the path of development being chalked out by the Left Front government from 1977, the honour and privileges of the mass of the people had always been held high. The masses shall overcome as always the obstacles created by the urban and rural stakes, and the ‘people shall create history’ in the days ahead. (B PRASANT)

West Bengal budget tries to help people in meltdown: Finance Minister

Kolkata, March 20: Providing sops to a cross section of people, West Bengal Finance Minister Asim Dasgupta Friday presented a Rs.70-million deficit budget in the state assembly for 2009-10. Referring to the “severe worldwide recession”, Dasgupta later told reporters that the “budget is aimed at helping the common people to increase their purchasing power in this difficult time”.

However, the budget proposals did not include any tax rebate. In a bid to provide some relief to the “poorer people” during the global economic meltdown, the budget proposed to distribute rice at Rs.2 per kg for Below Poverty Line card holders through ration shops. “This scheme would continue year after year…and the state government has allocated Rs.422 crore (Rs.4.22 billion) as subsidy for the entire year for this programme,” Dasgupta said in his speech.

While listing the industrial achievements of the state last year, Dasgupta refered to the Tata Nano project not materialising in Singur “due to opposition from a section of the people”. “It is necessary to mention that the realised investment and employment generation would have increased further, if the small car manufacturing unit at Singur could have completed the remaining part of investment and could be linked with the production of downstream units.”

The state government has decided to create a land bank to facilitate setting up of large-scale units in the state by purchasing relatively infertile land from the farmers at a fair price and thereafter by acquiring land in some remaining cases after consulting the farmers. “For this purpose, a decision to create a corpus fund of Rs.500 crore (Rs.5 billion) has been included in the strategy to combat recession,” Dasgupta said.

The state government has decided that it is necessary to create an internal market for information technology (IT) and information technology enabled service (ITeS) units and not make the development of this sector so much dependent on exports. It has allocated Rs.250 million for IT and ITeS and its expansion up to the village level. “As part of the strategy to combat recession, the state government has decided to launch a new scheme of construction and development of housing for the poor and low-income groups with an outlay of Rs.1,000 crore (Rs.10 billion),” he said in the speech.

The state government has planned to appoint 50,000 additional teachers at primary school level. At present, there are 145,000 existing teachers at primary level.

Interim budget failed to address meltdown issues: Bengal finance minister

Kolkata, Feb 16 :The interim budget presented by External Affairs Minister Pranab Mukherjee did not address the problem of rising unemployment in the country due to global economic crisis, West Bengal Finance Minister Asim Dasgupta said here Monday.

“The budget failed to address consequences related to global economic crisis,” he told reporters at the Writers Buildings - the state secretariat. He said the central government need to “seriously” review the economic policies formulated by it.

Though the government has declared its plans for National Rural Employment Guarantee Act, irrigation and other rural development schemes, that could not address the problems faced by the state governments on these accounts, he added.

“We know there are certain limitations of the interim budget. We hope all these problems will be addressed properly when the full budget is done after elections,” Dasgupta said. “We hope the main budget will be done more democratically.”