The Telegraph
Friday , December 28 , 2012
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CM: State’s non-plan coffers empty
Crunch despite hike in funds

Dec. 27: Mamata Banerjee today said her government had exhausted funds under non-plan heads, a sign of indiscriminate spending despite the finance minister increasing the allocation substantially in this budget.

“Non-plan taka ja khoroch hoy sheta nei (funds for non-plan expenditure are not available),” she said at a government event at North Bengal Agriculture University in Cooch Behar’s Pundibari.

Expenditure under the non-plan head includes spending on salaries and pension and various other day-to-day expenses. Plan expenditure is incurred by the state on building durable assets such as highways, civic infrastructure and irrigation and water supply projects. Plan expenditure adds to the productive capacity of the economy.

Economists stress on higher spending under the plan head as such expenses result in creation of assets that contribute to both economic growth and overall development.

Asked about the chief minister’s focus on the non-plan head, a city-based economist said: “She never talks about proposed plan expenditure, which the finance minister raised by only 11.6 per cent to Rs 23,771.44 crore. Not just lower allocation, the government has done poorly in releasing funds. It is yet to release around Rs 15,000 crore under the plan head.”

Finance minister Amit Mitra, a stickler for fiscal prudence in his earlier avatar as Ficci secretary-general, had “tried his best” to increase allocation under the non-plan head, a Writers’ source said.

The budget documents show that Mitra had set aside around Rs 82,000 crore under the non-plan head in this year’s budget, increasing the allocation by approximately 36 per cent from 2011-12.

“Drying up of non-plan funds around three months before the end of the financial year is a clear indication that the government has not been spending its resources judiciously,” the city-based economist said.

Last month, The Telegraph had reported how fiscal profligacy by the state government had resulted in out-of-allocation spending by the government.

Although Mamata admitted that the non-plan funds had shrunk, she put the blame on the Centre.

“Whatever we earn is going towards paying interest and repaying debt. We have been asking for a moratorium on interest payment for three years or a debt restructuring,” she said.

“The RBI, under instructions from the Centre, is deducting interest. They don’t even ask the state government whether it is in a position to pay. Those who are speaking against the government should be asked where the government will get funds from,” Mamata said at the rally.

The government has already spent around Rs 25,000 crore for salary and pension. It has exhausted over 60 per cent of non-plan funds in eight months under heads such as salaries, pension, interest and part-repayment of the principal loan amounts, said sources.

Reeling from a debt burden of over Rs 2.2 lakh crore, the state is paying around Rs 23,000 crore in interest and partial repayment of principal this year.

“Ask them why they allowed the CPM to take loans. We are not begging for funds, we are not asking for any special package. We are asking for what is our right. If I had the money, I could have provided 2 lakh jobs in the past 18 months,” she added.