Sound and fury

As a slew of States, besides West Bengal, go to the poll tomorrow, it is a good time to ask a basic question: Is the political discourse attuned to addressing basic socio-economic concerns of the States? It is hard to answer as the manifestoes of all parties in the fray have promised far beyond the usual power, roads and water to houses for all and government jobs for every family, but without providing a roadmap on how these will materialise. Surely, more was expected in view of the prevailing Covid-induced economic crisis but parties have disappointed in their macro outlook, confining themselves to populist sops. Nor have they looked at addressing endemic issues in States.

West Bengal is an instructive case. From being an industrial powerhouse post-Independence it is at best an average State, its economic and social indices aligned with the all-India trend. As a recent CARE Ratings report on State finances points out, its per capita income at ₹1.16 lakh is barely more than half of Tamil Nadu’s and below the all-India level of ₹1.34 lakh. Rural daily wages in West Bengal at ₹291 are way below Tamil Nadu’s ₹438 and Kerala’s ₹670, while unemployment is reported at 6.7 per cent, reflecting the all-India level. The gap in governance indices between the southern and the eastern States, which include the quality and spread of health and education, has not been bridged by successive governments. Assam’s story is no different. A per capita income of ₹0.91 lakh and a rural wage level of ₹263 tells a story, like West Bengal’s, of grinding poverty. Both States have seen large outmigration. A plan for sustainable development of the north-eastern State is called for. West Bengal, too, needs a viable industrial development plan to lift its surplus workforce from farming. Informed debates on the development agenda for each State have been scarce. Most regional parties have been unable to draw up coherent long-term economic goals.

The pandemic has raised questions on the fiscal elbow room of States. The Centre has been allowed more fiscal space than the States, even as the 3 per cent target has been relaxed for both. The Fifteenth Finance Commission has drawn up a glide-path for the Centre under which the current fiscal deficit of 7.5 per cent of GDP for 2020-21 will be brought down to 4 per cent by 2025-26. It is, however, noteworthy that the States, which account for about 55 per cent of total government expenditure, have pared their fiscal deficit to 4 per cent of GDP in these hard times, despite the drop in revenues. A glide-path to 2.8 per cent of GDP over five years seems stringent and could impact both welfare and capital expenditure. This could impact governance in States. The pursuit of long-term goals can become all the more difficult if there is little money in the pipeline.