News analysis. Did Mamata reject a godsend opportunity to correct her image?

Opposition is crucial to brand Mamata Banerjee. As Opposition leader, she never agreed with the State government, even for the cause of protecting prized investments. As Chief Minister of West Bengal, she hasbeen consistently opposing the Centre.

It was, therefore, expected that she would oppose the reform initiatives of the Modi government, be it in agriculture marketing, electricity, public distribution (PDS), municipal affairs etc — more so after the Centre tagged them with the extra net borrowing window of 3-5 per cent of the GSDP.

What is unfortunate, however, is opposing such reforms may not benefit either the State or her political career. The weaknesses of brand Mamata became apparent in the 2019 Parliamentary election, when BJP improved its tally by six-times. The 2021 Assembly election may prove tougher.

Long-pending reforms

The primary intention behind the recent Central initiatives was strengthening India as one market and boosting the ‘ease of doing business’, thereby improving its attractiveness to the global investor community, which is now showing sufficient intent to reduce value concentration in China.

The proposals are not new and were pursued by successive governments in Delhi. Theoretically, there was not much scope to oppose such initiatives either, except that they are in State control and States were reluctant to change.

All studies recommended scrapping of the State APMC Acts that denied the farmer’s right to sell produce at highest price even within a State, blocked investments in processing and aggregation, and helped intermediaries to lap up 70 per cent of the value.

Similarly, State politics, cutting across party lines, denied distribution sector reforms. Huge private investments in efficient generation suffered, creating a big hole in the pockets of banks.

Failure to generate revenues made local bodies funds-starved, limiting their ability to offer quality services like piped drinking water. The UPA government proposed digitisation to plug leakages in the PDS. Modi wants to also make it portable to ensure right to food to migrants.

The lack of reforms does not help the long-term interests of the States. But, in a democracy, where a variety of elections keeps the political class busy almost through the year, short-term management often takes precedence over revenue generation, as is reflected in swelling debt across the nation.

Politics of conflict

Yet, some States are ahead in bucking the trend. Since 1991, Maharashtra, Gujarat, Haryana, Punjab, Tamil Nadu, Karnataka, undivided Andhra Pradesh etc were the most proactive in creating an investor-friendly atmosphere. Over the last decade, Rajasthan, Odisha, Chhattishgarh and Sikkim have joined this list.

Himachal Pradesh, Uttarakhand, Gujarat, Rajasthan, UP, Karnataka and Tamil Nadu relaxed APMC norms in varying degrees. MP is the latest State to reform the APMC Act. Till now 17 States — including Left-ruled Kerala — have joined the “one nation, one ration card” programme.

But West Bengal has remained a glaring exception to change. The Left Front government of Jyoti Basu (1977-2000) took four years, since 1991, to invite private investment. Buddhadeb Bhattacharjee’s (2000-2011) was keen to reform. But he was blocked by a political ecosystem that his party (CPM) itself nurtured.

His plan to reform the APMC Act was blocked by Front partner Forward Bloc, which held the agri-marketing department. The dream to attract automobile investment ended in a nightmare. Most big-ticket investments fled. The decision to allow local bodies to collect water tax was reversed by Mamata herself.

All these put West Bengal in an enviable situation. According to Niti Aayog, West Bengal and Tamil Nadu had the lowest (1.6) total fertility rate in 2016. This was distinctly lower than Bihar’s 3.3 and Jharkhand’s 2.6 and the national average of 2.3.

But as the Covid migration rush proved, West Bengal is a major source of cheap migrant labourers to the country. The vast real estate market in South India sources labour from Jharkhand, Bihar and West Bengal.

Though the State has been claiming fast growth for last two decades, the local job market suffers. Over 400 nurses left Kolkata’s private hospitals in last few days. They were getting barely ₹17,000-18,000 a month. Their home States — Manipur, Odisha etc — offered more.

State of denial

West Bengal’s situation is bad. On one hand, debt grew more than double in 10 years; on the other, in the absence of adequate fresh investments, it has limited source of revenue. Whatever headroom was there to increase State excise collections, has been almost fully utilised over last few years.

But Mamata will not budge. In the past, she didn’t allow implementation of Centrally-sponsored schemes — Ayushman Bharat, Pradhan Mantri Fasal Bima — and instead launched State-sponsored versions. Now, will she deny her voters the advantages of even portability of ration card?

Insiders suggest, she has already calculated her finances. The government has two working windows. Covid-19 has eaten away the April-June window, and the November-March window may be shortened by election. This means that the discretionary expenditure of the government will be less this fiscal.

On the revenue side, the Budget for 2020-21 estimated GST revenues at 14 per cent annualised growth, which is guaranteed to be compensated by the Centre. However, own tax on account of State excise, stamp duty etc and the 42 per cent central devolution will be down.

Estimates suggest that the differences between receivables and payables will be either negligible or will be adequately covered by available credit window. The Centre allowed an additional 0.5 per cent credit window this year without any precondition for reform.

Will it click?

The big question is: will such resistance pay? The final answer will be out next year. But the indications are not right for Mamata at this juncture.

The controversy over Covid-19 data and clandestine burning of dead bodies; spontaneous protests against alleged manipulations in distribution of food through PDS; inadequate handling of the issue of return of migrants — nothing is going right for her.

The world around Mamata has been changing for the last few years. Set theories in politics for last few decades were proving useless. Covid brought a godsend opportunity to reposition her brand image. As it seems, she has rejected the opportunity.

COMMENT NOW