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Asim fires a cash question at govt

Calcutta, Jan. 24: Former finance minister Asim Dasgupta today sought a clarification from the government on the repeated assertions by the chief minister that payouts on loans were preventing her from carrying out development work.

Dasgupta, the longest serving finance minister in Bengal, cited data presented by his successor Amit Mitra last March to suggest that the government had enough resources at its disposal even after bearing the burden of past debt and salary and pension obligations.

“If the budget numbers are looked at properly, it becomes clear that the government had around Rs 34,000 crore to spend on various projects,” Dasgupta told a news conference. “I detect a self-contradiction in different statements from the state government,” he added.

According to budget estimates, the receipts for the year 2012-13 will be Rs 100,366 crore, while the combined outgo under the two major heads — salaries and pensions and obligations on account of past debt — is Rs 66,328 crore. (See chart)

Dasgupta’s arithmetic suggests that the government’s own figures have projected a balance of Rs 34,038 crore over the major expenses (interest, principal and salary and pension).

The projected figure goes against what chief minister Mamata Banerjee has been saying. “If the government earns Rs 21,000 crore and has to pay Rs 26,000 crore interest, from where will development projects be funded? How can I pay salaries? If I don’t pay the teachers, how will they teach?” Mamata had said on January 21 at a government programme in Canning in South 24-Parganas.

The Rs 21,000-crore figure that Mamata had quoted is the state’s own tax revenue in 2010-11. This, according to Mitra’s budget, will be around Rs 31,222 crore this year. Both Mamata and Mitra have already started claiming credit for the higher projected mop-up this year.

The amounts look good on paper but Mamata’s task of paying salaries and funding development is easier said than done because of multiple reasons. Not all the projected cash is in the government’s hands yet. Besides, a rash of populist measures has ensured that the government has little leeway.

“The statements from the government on the state’s finances are incomplete and also, to some extent, misleading as the budget numbers present a different picture. The question that we want to ask is what are the problems? Are there any off-budget spendings?” asked Dasgupta, a PhD in economics from the Massachusetts Institute of Technology.

As finance minister, Dasgupta himself had come under criticism from the Opposition for presenting zero-deficit budgets year after year and yet accumulating debts.

The Telegraph has published several reports in the past few months highlighting how the government was incurring off-budget expenses by organising fairs, paying monthly honorariums to imams and muezzins and doling out grants to clubs.

Finance department officials have said that the outgo on these expenses — not accounted for in the budget — could be as high as Rs 500 crore by the end of this year.

An additional burden of Rs 500 crore for a government that has a budget size in excess of Rs 1 lakh crore may look negligible on paper. But the amount is significant as the government’s receipts come with a lag.

Besides, some of the components on the receipt side are tied to projects for which money is released in tranches following submission of utilisation certificates of funds released in earlier phases.

“This government’s performance in utilising funds under plan heads or under special grants for projects has been dismal and that’s why there has always been shortage of funds to carry out development projects. The government cannot blame the earlier Left regime or the Centre for this,” said an official.

For instance, the state government has failed to fully use the money it received under the special backward region grant funds (BRGF), a package of Rs 8,756 crore allotted by the Centre for Bengal in 2011.

The first allotment of about Rs 2,500 crore reached the state in January last year but a few days ago, the state sent utilisation certificates for only about Rs 750 crore and sought the second instalment.

“As the state could not submit certificates showing that it had already utilised 50 per cent of the funds, it would be tough to get the full allotment this year,” said an official.

As with the special BRGF, different departments — such as backward class welfare and agriculture — too failed to submit utilisation certificates for grants from the Centre.

With poor fund utilisation slamming the brakes on expenditure under plan heads, the government kept spending under the non-plan head, for which Mitra had set aside Rs 82,000 crore in his budget. Recently, Mamata admitted that the money under the non-plan head was almost exhausted.

The admission explains why the state government has embarked on a borrowing spree by tapping Rs 17,300 crore from the market till date, exhausting around 80 per cent of the total borrowing limit with two more months to go.

The state government had also resorted to taking ways and means advances — a special facility available from the RBI to bridge the daily income-expenditure gap — at least on 50 occasions till December.