The West Bengal fisc is in a mess, despite the fact that a professional economist is in charge of the state’s finances. The West Bengal government finds itself incapable of meeting some of the financial obligations it has brought upon itself over the years. The parlous condition of the state’s finances is clear from the decision to impose cuts in the puja bonus, the freezing of dearness allowance arrears and most recently, the order to hold back payment of salary outstandings to employees for another year. The simple conclusion is that the state’s committed expenditure has far outstripped the state’s revenues. The West Bengal government has one pat and convenient explanation for this state of affairs. It says that the Central government has hiked salaries, the West Bengal government has had to follow suit and hence the ways and means problem. The explanation sounds convincing but bypasses an extremely important question. It was in no way obligatory on the part of the West Bengal government to raise the salaries of its own employees in the wake of the Central government hike. The West Bengal government carried out the increase without looking into its own resource position, and did so because of populist reasons. Frightened of alienating its own employees, most of whom are also left voters, the Left Front government lacked the moral courage to announce that its revenue position did not permit the payment of salaries at the Central government level.
The moral failure is rooted in populism. This consists of furthering the earnings of voters even when such an increase is not warranted by revenues. This kind of politics brooks no economic logic and shows no concern about the economic health of the state. Its sole concern is the pampering of votebanks. This has now backfired and has done so at a time when the chief minister, Mr Buddhadeb Bhattacharjee, is keen to initiate economic reforms. His attempted departure from populism may cost him dear in terms of votes, though fortunately for him, the next hustings are reasonably far away.