Bengal Budget for social sector spending of over ₹5,000 crore

Our Bureau Kolkata | Updated on February 10, 2020

Keeping an eye on the upcoming Assembly elections in 2021 and in a bid to counter the saffron surge in West Bengal, the State Finance Minister, Amit Mitra, presented a Budget targeting heavy social sector spending of over ₹5,000 crore.

Most beneficiaries of the social sector spending is targeted at the backward sections primarily the SC and ST electorates and the tea garden workers – two prime electorates that Trinamool Congress wants to woo – and the MSMEs.

A major reason for targeting these electorates is the party’s poor show in Constituencies dominated by them during the 2019 Lok Sabha polls. The BJP surge across these areas has been quite prominent too.

Social sector spending

Allocation of ₹2,500 crore have been made towards providing a monthly old age pension of ₹1,000 for SC persons (above 60 years), under the new ‘Bandhu Prakalpa’ scheme. This will benefit at least 21 lakh people, the Finance Minister said while reading out the Budget.

Another ₹500 crore has been allotted towards the ‘Jai Johar Prakalpa’ where a monthly pension of ₹1,000 will be given to STs (Scheduled Tribe) above the age of 60, and not covered under any existing scheme.

A similar ₹500 crore has been proposed to be allocated towards a social security scheme targeting the unorganised workers in construction, transport and other sectors. The scheme will be fully fund by the State government who will make a monthly payment of ₹55 per beneficiary thereby covering health insurance premium, compensation for accident benefits, any other free health benefits, contribution towards Provident Fund, and others. This scheme replaces an existing one where the beneficiaries made a monthly contribution of ₹25 and the state government paid an additional ₹30 per month.

Around ₹600 crore has been allotted towards two projects aimed at generating employment in the State — while ₹100 crore has been set aside as a corpus to incentivize MSMEs; another ₹500 crore will be used to provide ‘soft loans and subsidy’ for youths taking up income generating projects. According to Mitra, 100 MSME parks, at a cost of ₹200 crore will also be set up in addition to existing 52 and upcoming 39.

A major beneficiary of the State Budget is also the tea garden workers. The Finance Minister, in his Budget for 2020-21 has announced that funds will be provided for construction of housing to permanent workers who do not have their own homes there. An allotment of ₹500 crore towards this project, called ‘Chaa Sundari’.

The state government has also announced that it will provide free electricity to the ‘Life Line Consumers’ that is domestic users whose consumption is less than or upto 75 units in a quarter (for three months). This will cost the exchequer ₹200 crore.

State finances

Meanwhile, the State is expecting a near 12 per cent rise in its revenue receipts for 2019-2020 (revised numbers) to ₹163,259 crore, which include state tax revenues, non tax revenue, State’s share of union taxes and duties and grants-in aid (from Central government). Revenue receipts in 2018-19 stood at ₹145,975 crore (approximately).

For next fiscal (FY21), revenue receipts is expected to rise by 10 per cent to ₹179,398 crore over revised estimates of FY-20.

Incidentally, GST collections (SGST and CGST added-up) account for nearly 29 per cent of the revised revenue receipt numbers of the state government or ₹46,486 crore for FY20. There is a one percentage point improvement over last fiscal when GST collections accounted for over the 28 per of revenue receipts. In FY21, share of GST (SGST and CGST) to revenue receipt is expected to remain around 28-29 per cent of the total.

The SGST and excise duty collections continue to remain major components, accounting for 46 per cent and 18 per cent, of the revised state tax revenue collections of ₹65,806 crore for the fiscal 2019-20. Tax revenue receipts are projected to rise to ₹70,807 crore next fiscal.

Debt position

For the current fiscal, West Bengal’s outstanding debt (including PF, Reserve Fund and Deposits) is expected to witness a 10 per cent jump, year-on-year to ₹431,786 crore. In FY19, it stood at ₹393,300 crore. A similar 10 per cent growth is projected in outstanding debt for the coming fiscal (FY21).

On the other hand, the state government is expected to repay ₹7,402 crore of loans – principal amount – to the Central government while another ₹17,834 crore is expected to repaid to other institutional loans that include market borrowings. This apart, the state government will also repay interest (on loans taken from Centre and through market borrowings) worth of ₹31,306 crore during FY20.

Overall loan repayment is expected to be to the tune of ₹56,542 crore this fiscal, the Budget document stated.

For the current fiscal the state will have a revenue deficit of ₹6,171 crore and a fiscal deficit of ₹34,116 crore.

Published on February 10, 2020

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