Chief minister Mamata Banerjee on Wednesday compared the state’s debt with that of the Centre to counter the narrative that the Trinamul-led government had turned Bengal into a debt-ridden state because of its various welfare schemes.
During a news conference at Nabanna, Mamata and state chief secretary H.K. Dwivedi — who was formerly principal secretary, finance, for years — together swatted away the narrative that the state's debt burden assumed alarming proportions because of various welfare schemes.
“One has to understand that we have been carrying a legacy of indebtedness of the Left Front government.... New states like Telangana do not have this problem,” said the chief minister.
The chief secretary then rolled out numbers to elaborate on Bengal's debt burden.
He began by stating that Bengal had a debt burden of around Rs 2 lakh crore when the Trinamul government came to power in 2011, which stood at Rs 5.86 lakh crore at the start of the 2023-24 financial year.
Dwivedi went on to explain why instead of the gross debt figure, the focus should be on the debt-to-GDP ratio, a metric that compares the public debt of a country or state to the gross domestic product, which indicates the country's or the state's ability to pay back its debt.
“But it is unfortunate that the debt-to-GDP ratio is never discussed.... If a state’s GDP increases, the government borrows from the market to develop infrastructure. This is done by all the states and the Centre,” said the chief secretary before explaining how the state's debt-to-GDP ratio had improved considerably since 2010-11.
Trinamul toppled the Left Front to assume power in Bengal in 2011.
“The debt-to-GDP ratio of the state was 40 per cent in 2011. Right now, the figure is around 33 per cent. It had come down to 32 per cent but due to the pandemic that continued for two years, the figure has gone up to 33 per cent. No state could bring down the debt-to-GDP ratio during the same period,” said Dwivedi.
After hailing the state government's achievements in managing its debt, he spoke on how the Centre’s debt went up significantly over the past few years. In 2014-15, the Centre’s debt was Rs 62.42 lakh crore. The figure has now reached Rs 152.6 lakh crore.
“Its debt-to-GDP ratio has also increased during this period,” Dwivedi added.
The fact that the Centre's debt burden has nearly trebled in the last nine years despite record-breaking GST collections has been a matter of concern among economists.
Data available in the public domain reveals that in the first 66 years after Independence, the central government had a debt of Rs 55 lakh crore while between the financial years 2015 and 2023, it borrowed about another Rs 100 lakh crore. The debt-to-GDP ratio of the Centre had been 57.1 per cent at the end of March 2023.
After comparing the debt data of Bengal with that of the central government, the chief secretary went on to explain how the state has increased its capital expenditure and revenue generation in the last few years.
“The capital expenditure of the state in 2010-11 was Rs 2,200 crore and this year a total of Rs 35,000 crore has been allotted for capital expenditure.... It's a 15-time growth. Moreover, the state’s own revenue generation was Rs 21,000 crore in 2010-11 and the figure was Rs 90,000 crore in 2022-23,” said Dwivedi, trying to counter the charge that the government was spending only on "doles".
“So, the allegation of spending money only on doles is not true.... A better debt management by the state has helped us achieve this success,” said the chief secretary.
He pointed out that the budget allocation of the state was Rs 84,000 crore in 2010-11, which now reached Rs 3.40 lakh crore.
Nabanna sources said the explanation of the state’s financial situation was given as the government top brass felt that the Opposition's narrative about the state's finances created confusion.
“Bengal wants to draw investment to generate jobs in the state. In such a situation, a negative campaign about Bengal's finances will hurt the state government’s efforts (to draw investments). So, the actual financial condition was laid down,” said an official.
Some officials pointed out that the Opposition's negative campaign made the masses uneasy at a time when the state announced big schemes such as rural housing and rural jobs in the absence of central funds. “This explanation was needed to assure the masses that the state can take up schemes even if the Centre holds up funds,” said a source.