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August 26, 2014

State on the right track for Fiscal Consolidation: Amit Mitra

State on the right track for Fiscal Consolidation: Amit Mitra

West Bengal is on right track for fiscalconsolidation and steadily progressing towards achieving the goal, feels statefinance minister Amit Mitra. He said, “the figure itself will reveal the truththat Bengal is one of the best managed states in fiscal matters in the recentyears.”

He argued, “Though, Mr Jaitley has come downheavily on the Trinamool government for continuing with the fiscal indisciplineof Left regime, the reality is just opposite.”

Debt to GSDP ratio is decreasing

The minister pointed out that debt aspercentage of gross state domestic product (GSDP) has gone down by over 4%since the new government took over. The ratio was 39.54% in 2010-11 in actualterms and has gone up marginally to 39.62% in 2011-12. “But since then it is ona decline. The revised estimate for the debt to GSDP ratio for 201314 is35.33%,” added Mitra. The minister is hopeful that in 2014-15 it will be evenlower as per estimate to 33.73%.

He pointed out that the reduction was madepossible because the growth rate of debt stock has almost halved in the lastfour years. The growth of debt stock was 15.58% in 200910. It came down to11.75% in 2010-11, the first year of implementation of FRBM (FiscalResponsibility and Budget Management Act) in the state. In 2012-13, the firstfull year of the Trinamool government, it dipped further to 10.63%.The revisedestimate for 2013-14 was 9.16%.

Growth in capital expenditure

The finance minister claimed that there isa 'U' turn in capital expenditure, which has a multiplier effect. “From anegative growth in capital expenditure in 2010-11 of 18.74%, we have achieved agrowth of 64.53% in capital expenditure in actual terms in 2012-13. The revisedestimate for 2013-14 is 103%. These are all developmental expenditure likebuilding rural roads, schools, health facilities,” he added.

According to him, the lowering growth ofdebt stock coupled with higher level of capital expenditure and higher growthof GSDP of over 7% has resulted in shrinking fiscal deficit of the state. “Thefiscal deficit of the state has exactly halved in last four years. I do notknow about any state where this has happened,” Mitra said. The state's fiscaldeficit was 6.5% of GSDP in 2009-10, which came down to 3.38% in 2011-12. In2013-14, it was 3.08% of GSDP as per revised estimates.

Figures at a glance

Fiscal discipline yielded results

“This was possiblebecause of huge growth in revenue owing to simplification of system throughe-governance and strict fiscal discipline and higher allocation fordevelopmental expenditure. Incidentally, the state's own tax revenue has beenestimated at Rs 45,413 crore during 2014-15 as per budget estimate, compared toa collection of Rs 21,128 crore in 2010-11.”

“In 2013-14 itself, our collection was Rs39,100 crore. Mr Jaitley as FM of this country should know these facts. Itspeaks for itself,” he added.

Successful Singapore trip

Commenting on the Singapore trip, the FMwho has additional responsibility of commerce and industries department, saidas many as 13 MoUs and letters of intent were signed during the trip which inany standard is a good performance. “On August 27, a meeting has been called.Our chief minister is really eager to follow up in every level as far asSingapore trip is concerned. All the members of the business delegation toSingapore have been called for an interaction that day,” he added.

The article was first published in The Times of India on August 26, 2014