Bengal did not backtrack on GST: Amit Mitra

Q: Your state has been one of the biggest proponents of goods and services tax (GST). What happened, what went wrong, why did the state backtrack on the GST bill?

Dr Mitra: I don’t think that the state backtracked at all. There was a special session called for a very difficult and important subject—changing the name of the state—and that involved 3-4 hours of discussion. There was also a dengue issue which the opposition wanted to raise and Mamata Banerjee was gracious in having discussed at the democratic level that required several hours. We had a third topic which related to centre-state relations vis-àvis flow of funds.

Now if you have to do a GST in the middle of that one-day session it will require at least 2-3 hours of discussion, according to demands made by both sides of the floor. West Bengal led by Mamata Banerjee has been the biggest supporter of GST. It was we who helped the most not only in the Lok Sabha, but in the Rajya Sabha as well.

In 2009 in our manifesto we had GST. I believe you only need 50% states to ratify and it has been ratified and after the assembly session where we could not accommodate because of the local serious pressures of name change of the state, I have chaired an empowered committee meeting as finance minister of West Bengal where we called all the industry associations, company secretaries, chartered accountants and small and medium enterprises. So this is a work in progress.

Q: By when do you think would this be passed by your assembly?

Dr Mitra: Well, it is a matter of the next assembly meeting, whenever it comes, we will bring it up, but at this time there is practically no need to go through this process as a binding issue, because the President has already given assent. We are the most important supporters of the GST for the people of India.

Q: Which is why it came as a surprise to many and they said that possibly there are some issues that you want to sort out before you pass the bill.

Dr Mitra: Issues are parallel issues, issues which relate to federalism in India …. nothing to do with GST. For example, over Rs6,000 crore has not been received by the state including 100 days work compensation, so it is an ongoing process.

We have taken 26% equity in a deep sea port. We are also building our own state ports, there is a conversation going on.

In centre-state relations, we stand for federalism, this is an ongoing process. It is a different track altogether. As far as we are concerned, the government-to-government relawhat tionship goes on with its processes.

GST is for national interest and therefore Mamata Banerjee stood in support of it. That will continue and I continue to chair the empowered committee of finance ministers on behalf of my state. What is happening as far as the empowered panel meetings are concerned in terms of the discussion or rather the differences as far as a rate is concerned? Some states say it should be raised up to as much as to 24%, some say it should be around

Q: 18%. How are those discussions going; where do you think it will settle?

Dr Mitra: I think the key point is there are multiple rates given by researchers, so the chief economic advisor to the government of India suggested 15-15.5% in the average rate, then you had at one time National Institute of Public Finance and Policy suggesting 27% and there is the Vijay Kelkar committee report, which came as the first report on GST, suggesting 12%. This is a matter of revenue neutrality so that state revenue is preserved. Different states may have different views but has happened is the empowered committee has fully given support unanimously to the fact that we have two principles.

Principle one: GST rate should not be such that common people get inflationary pressure. What’s the point of GST, which at the end of the day is for the people?

Principle two: it should not be so low that states do not get revenue, centre has to compensate for 5 years and they don’t have the money to compensate. Despite constitutional process they may get into a problem, so it should be an optimal rate, not a maximal rate.

Q: Where is that optimal rate coming up to?

Dr Mitra: This is exactly what the GST council will debate in the coming weeks. I am sure it will be a full debate.

Q: Do you think between 20-22% is where it should land in terms of a cap?

Dr Mitra: It would be very difficult for me to hazard a number as a guess. It would be pre-empting the views of other state finance ministers.

Q: If I talk to you as the finance minister of Bengal, what would your view be?

Dr Mitra: I would not present the view here. I would present it at the GST council. The reason is, we have to discuss it, we have to listen to each other, only then after listening to arguments of each other along with the Union finance minister who is the chair of the GST council, will we arrive at a decision. It is too pre-emptive today for me to just give you a rate. It would be unfair and wrong.

I am not asking you to give me a rate and say that this is the rate that we will finalize because obviously it is a discussion, there are so many states and Union territories that would be discussing it. But from the perspective of a finance minister of a state, if you look at your revenue, if you look at the taxation system and stuff, where do you think the cap could come up to?

I don’t think I can hazard a number for you because as chairman of the empowered committee I cannot say, I just cannot give you a number. Let it come up in the GST council which is happening very soon, let it be discussed.

It is a national issue, this is a very serious issue. I have given you the principle which the empowered committee has defined unanimously—not so high that the industry passes that on to the consumer and there is inflationary pressure. In fact, during the discussion of the empowered committee with the chambers of commerce, one of the questions raised by finance ministers was, when taxes are raised industry tends to pass on those taxes to the consumers and why should they bear it?

Q: When taxes get lowered, will the industry pass this on to the consumers?

Dr Mitra: So, I would say that we have defined the principles at the empowered committee of all finance ministers across political parties and across states.

Q: For the panel there are two months to discuss and come up with a consensus as far as all the issues are concerned. Do you think that is a fair enough time?

Dr Mitra: It depends on the intensity with which this is conducted. If you are going to do it on a war footing every day, every week where everybody becomes available, attempt will be to see how this can come up within a certain space of time. Also it will depend on the number of industrial issues that come up. For example, today an industry has 5% value added tax (VAT) and now it is going to face X percent revenue neutral rate (RNR), that industry may be employing 20 million people, that industry will come up and say to you please don’t change my 5% to a much higher number.

So, that has to be discussed in the GST council. There may be categorization of areas, where there are sin goods, there are luxury goods, there are non-luxury goods, all this has to be defined to the satisfaction of the entire GST council.

So, all this will come on the table and already the empowered committee has received many representations. It will go into 6,000-7,000 pages of representations from the industry because we invited that as there should be dialogue. All this has to be collated, structured, made into some kind of a framework and then on principles this will be discussed at the GST council.


Edited Excerpts from an interview published in Livemint


Mamata Banerjee balancing industry and people’s rights: Amit Mitra

On the historic day when Chief Minister Mamata Banerjee handed ‘parchas’ to 9,117 farmers at Singur, state industry and commerce minister Dr Amit Mitra brought out her ‘balance statesmanship’ in which she invited the Tata Group to invest more in the state.

“Chief Minister wants larger margin of investment from the Tata Group. She even had taken two business heads from the Tatas along with her to Munich – a tour to find fresh German investment,” said Dr Mitra at Bengal Chamber of Commerce and Industry meet on Wednesday.

Presenting the growth statistics, Mitra said that the traders’ fraternities of Germany are impressed with the figures. They will come to discuss investment in next Bengal Global Business Summit in January 20-21, 2017.

“We have given jobs to 68 lakh people and the process is still going on,” Mitra said at the BCCI gathering adding the state had largest bank funding in the Micro, Small, and Medium Enterprise (MSME). The MSME contributes 95 per cent of Garman economy. “So, MSME can take a major role in the economy,” Mitra said.

Giving the statistics, Mitra said the present Gross State Domestic Product (GSDP) of the state is Rs 9.5 lakh crore, which was Rs 4.60 lakh crore during the Mamata Banerjee government, had taken the office.

The figure is more than double. The fiscal deficit has reduced from 4.24 per cent to 2.68 per cent, which is an achievement. The revenue deficit of the state has reduced from 3.75 per cent to 1.03 per cent and moving towards zero. The income from state owned taxes have doubled. It was once Rs 21,129 crore, but now figuring at 42,920 crore.

The planned expenditure has increased 3 times; it was around Rs 14,650 crore, but now standing at Rs 54,069 crore. The social expenditure of the state has also grown up 4.5 times from the previous figure.

It has increased 7 times in agriculture, 4 times in physical infrastructure. The capital expenditure have increase from Rs 2,226 crore to Rs 15,947 crore.

“The construction of 10,663 km roads is underway, including 10,000 km rural roads. We have 99 per cent electrification in our states except Sundarbans where two Mouzas are still to be electrified, 6,000 new schools have made, 46 new government colleges have set up, 15 new universities including 8 private universities have come up here,” the industry and commerce minister added.


কৃষকদের অধিকার রক্ষা ও শিল্পোন্নয়নের ভারসাম্যের নীতিতেই মুখ্যমন্ত্রীর সাফল্য

কৃষকদের স্বার্থ রক্ষা ও শিল্পোন্নয়ন এই দুইয়ের ভারসাম্য বজায় রেখেই শিল্পকে এগিয়ে নিয়ে যেতে চান মাননীয়া মুখ্যমন্ত্রী মমতা বন্দ্যোপাধ্যায়। দেশ বিদেশের বিভিন্ন শিল্প সংস্থাকে রাজ্যে বিনিয়োগের জন্য আহ্বান জানান মুখ্যমন্ত্রী। কৃষি ও শিল্প দুইয়ের ভারসাম্য বজায় রেখে মুখ্যমন্ত্রী যেভাবে বাংলাকে উন্নয়নের দিশা দেখানোর কাজে এগিয়ে চলেছেন তা এক অর্থে প্রশংসনীয়।

বুধবার বেঙ্গল চেম্বার অফ কমার্সের এজিএম অনুষ্ঠানে এসে শিল্প মন্ত্রী অমিত মিত্র বলেন, “মুখ্যমন্ত্রী চান টাটা গ্রুপ বাংলায় আরও বেশি বিনিয়োগ করুক। মুখ্যমন্ত্রী মমতা বন্দ্যোপাধ্যায়ের ডাকে সারা দিয়ে টাটার প্রতিনিধি দল জার্মানির মিউনিখে গিয়েছিলেন”।

বৃদ্ধি পরিসংখ্যান উপস্থাপনা করে ডঃ মিত্র বলেন, জার্মানির ব্যবসায়ীরা আমাদের পরিসংখ্যানে খুশি। আগামী বছর ২০১৭ সালের জানুয়ারি মাসে আয়োজিত বেঙ্গল গ্লোবাল বিজনেস সামিটে তারা আসবেন এবং এবিষয়ে আলোচনা করবেন।

“আমরা ৬৮ লক্ষ লোকের কর্মসংস্থান করেছি, প্রক্রিয়া এখনও চলছে। জার্মান অর্থনীতিতে ক্ষুদ্র ও মাঝারি শিল্পের অবদান ৯৫ শতাংশ। সুতরাং, MSME অর্থনীতিতে গুরুত্বপূর্ণ ভূমিকা নিতে পারে,” বলেন অর্থমন্ত্রী।

GSDP পরিসংখ্যান দিয়ে অর্থমন্ত্রী বলেন, বর্তমানে রাজ্যের GDP গ্রোথ ৯.৫ লক্ষ কোটি, ২০১১ সালে যা ছিল ৪.৬০ লক্ষ কোটি। অর্থাৎ দ্বিগুনের চেয়েও বেশি। রাজ্যের আর্থিক ঘাটতি ৪.২৪ শতাংশ থেকে কমে হয়েছে ২.৬৮ শতাংশ যা নিঃসন্দেহে একটি সাফল্য। রাজস্ব ঘাটতি শতকরা ৩.৭৫ থেকে কমে ১.০৩ হয়েছে, ক্রমশ তা শুন্যের দিকে এগোচ্ছে। রাজ্যের আয় বেড়ে দ্বিগুন হয়েছে। আগে ছিল ২১.১২৯ কোটি টাকা এবং এখন তা হয়েছে ৪২.৯২০ কোটি টাকা।

পরিকল্পিত ব্যয় ৩ গুণ বেড়ে গেছে; আগে ছিল ১৮.৬৫০ কোটি টাকা, কিন্তু এখন হয়েছে ৫৪.০৬৯ কোটি টাকা। রাজ্যের সামাজিক খাতে আয় প্রায় ৪ গুন বৃদ্ধি পেয়েছে। কৃষিখাতে বৃদ্ধি পেয়েছে ৭ গুন। মূলধনি ব্যয় ২,২২৬ কোটি টাকা থেকে বেড়ে হয়েছে ১৫.৯৪৭ কোটি টাকা।

শিল্পমন্ত্রী আরও জানান, “ ১০,৬৬৩ কিলোমিটার সড়ক নির্মাণের কাজ চলছে এর মধ্যে ১০,০০০ কিলোমিটার গ্রামীণ সড়ক। সুন্দরবন ছাড়া আমাদের রাজ্যে প্রায় সব জায়গায় ৯৯ শতাংশ বিদ্যুতায়ন হয়ে গেছে। ৬০০০ নতুন বিদ্যালয়, ৪৬ টি সরকারি কলেজ তৈরি হয়েছে। ১৫ টি নতুন বিশ্ববিদ্যালয় তৈরি হচ্ছে, এর মধ্যে ৮ টি বেসরকারি”।



Under Mamata, Bengal’s becoming a favourite investment address again – Dr Amit Mitra Interview

Edited excerpts of Dr Amit Mitra’s interview with Economic Times (published on August 30, 2016)


What’s the mood among industrialists?

Everybody I met today, including private equity firms, multinational corporations, acknowledge the change that has happened in West Bengal. The growth of gross value added (GVA) in 2014-15 has been a little over 10% when India’s growth has been 7.3%.


Tell us what happened in the financial year 2015-16?

We are perhaps looking at GVA growth of as much as 12%, when India has been growing at least 3 to 4 percentage points less. In 2010-11, our state’s nominal GDP was Rs 4,61,000 crore. In 2014-15, it has doubled to Rs 8,00,000 crore, and in 2015-16, our revised figures are Rs 9,39,000 crore.


How did this happen? What were the drivers?

There are three major drivers. The first is the government expenditure which translates into Keynesian multiplier. During 2010-11(the last year of the communist government), West Bengal’s planned expenditure was little over Rs 14,650 crore. The actual planned expenditure in 2014-15, (under Trinamool) had touched Rs 39,893 crore. In 2015-16, it is Rs 54,000 crore. So from Rs 14,000 crore to Rs 54,000 crore – it is quite a jump.


What’s it spent on?

Capital expenditure within planned expenditure, which is asset creation, was a negative 26% in 2010-11 under the communist regime. We reversed it. It is actually six times of what it was in four years. What it simply means to me as an economist is that Keynesian multiplier on asset creating expenditure, which means cement, steel — the whole down-the-chain industry which creates Keynesian multiplier is approximately 4 times in India. One of the factors that’s debated in the West is when private expenditure is slow, public expenditure can trigger private investment.

One element of this is private expenditure and it gets attracted once they see GDP growth taking place in a stimulated economy and the dipstick tests show there’s a lot of energy in the economy. So, these numbers — of planned expenditure and capital expenditure — are the triggers. Whereas in communist rule, capital expenditure was at a negative 26% during their last year, and it was shrinking. Planned expenditure was a puny Rs 14,000 crore. A climb to Rs 54,000 crore in five years – this has never happened in any state to my knowledge. And no one knows about it.


Isn’t there a flipside to the public expenditure? The looming debt trap which West Bengal is facing, which Mamata Banerjee herself termed as a death trap…

The debt is phenomenal — the debt left behind by the communist government was Rs 2,00,000 crore. Its bonds or small savings matured, I’m not talking about interest. I’m talking just about repayment of principal amount. In five years, we repaid Rs 42,000 crore, which is all from the Rs 2,00,000 crore left behind by the CPI(M). What we have borrowed has not come back to maturity.

These are all 10-year debt which we repaid. The total amount we have borrowed during our regime is Rs 1,13,000 crore of which Rs 94,000 crore is for repayment and interest of that Rs 2,00,000 crore. Imagine, my last year’s repayment and interest was Rs 28,000 crore. This year, it is about Rs 33,000 crore. And the coming years when they borrowed the most in 2007-08, those bonds will come to haunt us.


Are your new borrowings at a lower cost?

At a much lower cost as we have borrowed from the market. We have borrowed at a much lower rate. At least 200 points difference. Having said so, our debt GDP ratio has come down.


How come?

Because GDP has grown phenomenally. So, while there’s no question that we are in a debt trap because we are essentially borrowing. Just Imagine, we have borrowed .Rs 1,13,000 crore of which Rs 94,000 crore has gone towards repayment and interest. We have thus borrowed for development about Rs 18,000 to Rs 19,000 crore in five years. So we haven’t borrowed much at all.


How did you fund the growth in GDP that you mentioned earlier?

Taxes have exactly doubled.


How did you manage to do that?

Tax collections went up from Rs 21,000 crore to almost Rs 43,000 crore in four years in our regime. We have implemented the largest e-taxation drive by any state in India during the period, and the central government has given us the highest award for that.


How does this e-taxation work?

Every part of the tax can only function transparently through the computer. For example, VAT registration and digitised signature cannot be done in paper. It has to be done compulsorily online. What did the government give you back? Dematerialised VAT certificate with digitised signature. Then the ease of doing business in the state.

Businessmen were complaining that they paid VAT and should be able to seek refund, but they don’t get it. So I said we’ll give you 90% of what you self-declare. Then I got information that some officer arrives at their offices — you know what that means. I’m perhaps the only finance minister in India who said on the floor of the house after consulting with the chief minister that no officer shall go to a dealer’s office without an official letter from the commissioner. Within three months, the loophole got plugged, and now it’s a perfect system.

WB Govt to appoint advisors for implementing infra projects

After returning from London, chief minister Mamata Banerjee has stressed on completing all ongoing projects in the state before the end of the financial year. The state finance department is engaging sectoral transaction advisers who will coordinate with different state and municipal level development agencies to help them find private partners to execute the projects on PPP model.

According to Nabanna officials, the finance department wants six transaction advisers for PPP projects in the state for different infrastructure sectors. The most important sector will be physical infrastructure that includes construction and transportation.

Urban (municipal) infrastructure sector includes water supply , treatment and distribution, drainage and sewerage and solid waste management. The third sector is industrial and related infrastructure like area development and commercial development, power and telecommunication infrastructure and the fourth sector is social infrastructure that includes non-construction activities like health, education, environment and ecology .

The state finance department will be the nodal agency for implementation and development of infrastructure projects under the PPP format. Officials said that the sectoral transaction advisers who will be selected will assist the government and state level agencies in executing the projects within a fixed time frame.


This is an excerpted version of the story that appeared in The Times of India on August 5, 2015

WB Govt paid Rs 76000 Cr on debt servicing, a legacy of Left: Amit Mitra

West Bengal Finance Minister Amit Mitra said that in the last four years, the Trinamool Congress (TMC) government had to spend Rs 76,000 crore on debt servicing, a legacy of the erstwhile Left government.

In real terms, the present government has taken only Rs 6,000 crore loans in the last four years, which was a very meagre amount compared to the previous government, he said.

The Chief Minister, Ms Mamata Banerjee has maintained that she inherited a huge debt left behind by the erstwhile Left government.

Dr Mitra explained how the state government had been able to multiply expenses in the sectors like social infrastructure, development of physical infrastructure, state plan expenses and capital expenditure.

The government has been able to raise the growth of Gross State Domestic Product (GSDP) above 5 per cent successively in the last four years of TMC rule as against below 5 per cent registered by the previous Left regime.