Any budget, by definition, has two sides —revenue and expenditure. Amit Mitra, the finance minister of West Bengal, can justifiably be satisfied with the figures he has presented on the revenue side. The figures speak for themselves. Tax revenue has risen from Rs 27,000 crore to Rs 45,000 crore in the course of three budgets. His work in this sphere has taken tax to gross state domestic product ratio above five per cent. This particular ratio indicates how the growth in the economy is affecting the state government’s exchequer. For several years, this ratio languished at around four per cent, which meant that West Bengal was at the bottom of the tax to GSDP ratio list. Mr Mitra proposes to maintain and better his work in the collection of greater revenue. This optimism, in no way unreal, stands on two pillars. One is better and higher compliance to the tax regime. The other, connected with the first, is reforming and simplifying tax administration and collection. His budget shows that his target is to increase the collection of taxes by Rs 6,000 crore in the coming financial year. He aims to do this by simplifying VAT registration and also through reforms in the area of professional tax administration. It should be noted, however, that the projected growth in revenue in 2014-15 is around 14 per cent; this is much lower than the 27 per cent growth achieved in the current fiscal year over the previous one.
The other side of the budget, the expenditure side, cannot bring Mr Mitra any joy. The state’s finances remain in a parlous state. The finance minister’s revenue deficit target for the current financial year has been overshot by around 300 per cent. This reveals how terribly the state’s revenues are falling behind the state’s expenditure. The indebtedness of West Bengal is projected to grow by around 35 per cent. Mr Mitra has thus not succeeded in either halting or reversing these trends that exhibit the bad health of the West Bengal economy. This needs a cure and Mr Mitra has paid scant attention to this even though it should be on the top of his list of priorities.
The only way to improve the condition of West Bengal’s finances is a programme of industrialization. Mr Mitra did not even present an outline of such a programme in his budget. Perhaps he intends to do this wearing his hat as the minister of industries. But as finance minister, he needed to announce projects relating to infrastructure, which would make West Bengal an attractive investment destination. This raises doubts about his sincerity to pursue a policy of industrialization. Mr Mitra may feel satisfied with tweaking revenue figures in the budget but West Bengal expects something different from him. He needs to address these expectations.