The Hindu Business Line : West Bengal economy: A not-so-rosy picture

WITH the Left parties being the major ally of the new Congress-led government at the Centre, it is but natural that they will have a major say in economic policy-making. To gauge the likely fallout of their influence, it may be relevant to see how the bastion of the Left, West Bengal, has been faring on the economic front.

West Bengal has joined the bandwagon of `poor States' — Uttaranchal, Uttar Pradesh, Bihar, Jharkhand, Chhatisgarh, Madhya Pradesh, Orissa, Assam and Tripura. The BIMARU States, which included Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh, now stands modified to BINABU — with West Bengal replacing Rajasthan.

And among the metros, Kolkata, the pride of the Bengalis, is just about holding out.

Based on 18 indicators, such as income, consumption awareness and market infrastructure, Kolkata ranks third among the major 10 cities — behind Mumbai at the top and Delhi.

On the agriculture front, West Bengal has something to smile about. It is No. 1 in rice production, contributing 14.6 per cent of the country's total production, No. 2 in potato cultivation (34.4 per cent of the total) and No. 1 in jute and mesta, contributing 71.6 per cent of the total output.

But in terms of per capita foodgrains production (2000-01), it ranks eighth and in per capita gross industrial output and value added in industries, 12th.

The Budget for 2004-05 estimates tax and non-tax revenues to grow at 18.4 per cent and 30.4 per cent respectively, generating Rs 1,904 crore.

Though the Budget presents a rosy picture, the reality is not so. The finances are in a shambles.

The revised estimates of Budget 2003-04 show that wages, pension and interest payments constitute 101 per cent of the revenue receipts and, of this, interest liability alone make up 43.3 per cent — the highest among 15 States. In 2003-04, sales tax revenues fell by Rs 36 crore, land revenues by Rs 15 crore, excise Rs 9 crore, revenue from taxes on goods and passengers Rs 4.2 crore and other taxes Rs 28 crore.

However, the revenue from electricity duty rose substantially, by Rs 210 crore. Stamp duty and motor vehicle tax collections also went up, by Rs 14 crore and Rs 40 crore respectively.

In the current year, the estimated annual interest liability is expected to be Rs 13,604 crore and the wage bill for government employees, Rs 12,000 crore; these work out to 35.3 per cent and 3.1 per cent, respectively, of the State's total Budget.

There is hardly any possibility of introducing entry tax, value-added tax and tax on services, but the Government seems optimistic about furthering growth and productivity and generating five-lakh extra jobs through diversification of agriculture; pisciculture, for instance, is expected to create 70,000 jobs.

Cutting subsidies to the State's electricity board and the transport sector, lowering non-Plan expenditure, reducing interest payments gradually, containing the growth in salaries and pensions within 5 per cent and 10 per cent respectively and steadily increasing the State Domestic Product (touching 7.6 per cent) would go a long way in addressing the financial crisis.

Revenue receipts make up more than two-thirds of the total revenue of the State. The other channels of revenue include borrowings from the Centre, the market and the contingency fund and through small savings and remittances.

As the finances are in disarray, the State may find it difficult to focus on developmental work.

In 2002-03, the State Government did not spend Rs 3 crore of `grant allocation' meant for various highway projects; a benefit that would have accrued to the residents.

In a study of 19 States based on 46 parameters, including infrastructure, education, health, investment, consumer market, and law and order, across eight categories, West Bengal was ranked 14 during the period 1991-2001, with Goa placed first and Bihar, the last.

Though the State has an impressive record in land reforms and decentralisation, its economy has slid perceptibly over the years; about 75 per cent of the registered SSIs in the State are sick. The private sector is wary about investing and the gross fiscal deficit as a percentage of State Gross Domestic Product was a whopping 8.5 per cent in 1999-2000, the highest among the States.

Bringing the economy on a par with the advanced States would be difficult unless, of course, the people of Bengal decide to take up the challenge. And this would entail a change in mindset.

(The author is a New Delhi-based project management consultant.)