New Delhi, July 16: An agreement between Union finance minister P. Chidambaram and his Bengal counterpart Asim Dasgupta has led to a Rs 3,000 crore windfall for the eastern state.
Bengal will now be able to access as loan the entire amount of small savings its citizens make.
The Centre’s largesse fulfils a longstanding demand of Bengal and Maharashtra, which generate the highest quantum of small savings in the country. The benefit extends to other states as well, but most have not been keen to borrow under this head.
Under a debt swap arrangement aimed at helping states replace their high-cost loans with low-cost loans, only 40 per cent of the small savings made in their territories could be borrowed.
In March this year, total small savings deposits across the country touched Rs 374,666 crore.
In his budget speech, Chidambaram had said he proposed “to consult states on allowing them to increase their open market borrowings and reduce their dependence on loans from the central government”.
The decision is the first sign of a thaw between the Congress and the Left which have been at odds over some new reform measures, including the move to raise foreign direct investment in civil aviation, insurance and telecommunications, and the resolve to press ahead with the sale of the residual stake in Bharat Aluminium.
Earlier, Manmohan Singh met CPM leader Harkishen Singh Surjeet for a 45-minute unstructured discussion on “politico-economic issues”. The meeting, to sort out matters like the Left’s objection to airport privatisation, was slated for July 4 but was put off, to the Left’s dismay.
Some days ago, the Left made it clear it would side with the BJP to vote against an amendment to the Insurance Regulatory & Development Authority Act. Since it is a money bill, a defeat would force the government to resign. This was followed by a warning from Sitaram Yechury not to take Left support for granted, prompting today’s meeting between Singh and Surjeet.
Sources said the meeting took place at the instance of United Progressive Alliance chairperson Sonia Gandhi, who, they said, felt the earlier policy of ignoring Left objections was imperilling the government’s unity.
The outcome of today’s meeting is a mystery since both sides kept mum, but it appears the CPM had much to cheer about.
Another pointer to a thaw in relations was news that small saving schemes will remain the exclusive preserve of post offices. The Left has been insisting on this as it feels the Centre’s move to let banks sell small savings could compromise states who borrow at fixed rates from these schemes.
Dasgupta said the Centre had informed him that the post office’s monopoly will continue for all major schemes.