January 25, 2015
Bengal’s debt conditions improve under Trinamool
West Bengal’s public finance and debt conditions were under adverse conditions when Mamata Banerjee took over the Government. However under the leadership of Mamata Banerjee, Chief Minister of West Bengal and Amit Mitra, Finance Minister of West Bengal along with a dedicated teams of officials the situation has improved in the last 3 years.
Note: Figures for 2012-13 are Revised Estimates and for 2013-14 are Budget Estimates. The averages used in the RBI Publication include the estimates.
In the RBI publication “State Finances-Study of Budgets 2013-14”, the ‘Debt Sustainability Indicators’ and ‘Debt Servicing Indicators’ have improved for Bengal. The results are here for everyone to see:
The Debt-GSDP ratio was 44% in 2008-09 and 2009-10 has decreased sharply over the years. It stands at 40.1% in 2011-12, 37.5% in 2012-13 and at 34.6% at 2013-14.
Interest payment to GSDP ratio has fallen down from 3.8% (2005-06 to 2009-10) to 2.8% (2010-11 to 2013-14).
Interest payment to revenue receipts has also decreased from 37.9% (2005-06 to 2009-10) to 25.8% (2010-11 to 2013-14). Revenue receipts means the taxes, duties and fees levied by the government and also includes interests on investments made by the government or dividends earned by the state.
The growth of GSDP (g) is higher than the effective rate of interest (i), ie g-i >0. In WB, g-i, is now at 8.3(2010-11 to 2013-14) and has increased from 4.6 (2005-06 to 2009-10). If GSDP grows at a higher rate than the effective rate of interest, then it reflects a better situation of public finance. The surplus has grown sharply over the years.
