New Delhi: The implementation of a plethora of cash-draining welfare schemes is apparently drying up the coffers of the West Bengal government, with the state budget deficit increasing every year. This has led Chief Minister Mamata Banerjee to instruct her MPs and Ministers not to request any “development work” in the state for the next two years.
According to the West Bengal government budget document for 2021-22 (financial year), the state is facing a budget deficit of over Rs 60,000 crore. This is a 29% increase from the budget deficit it recorded in 2020-21. The annualized increase in West Bengal’s budget deficit since the last three fiscal years has been over 30%, which shows that the government is spending far more than its total revenue, in turn forcing the state government to contract borrowing to meet spending demands in the state.
Sources in the government of West Bengal said that the increase in government expenditure is due to the large number of social welfare schemes that have been launched by the government of Bengal in the last five to six years, some of which include direct cash transfers to beneficiaries.
According to government estimates, the Lakshmi Bhandar scheme, which was a sounding promise of the Mamata Banerjee government and was launched in September last year, will cost the state treasury a colossal sum of Rs 18,000 crore. Government sources say that this additional burden on government coffers is likely to further increase the state budget deficit, which may well be reflected in the upcoming West Bengal budget session.
The West Bengal Assembly is expected to announce the state budget (2022-23) in March. The West Bengal Government Lakshmi Bhandar Scheme provides a direct cash transfer of Rs 500 to all female residents of Bengal every month and an additional cash transfer of Rs 500 to all females who belong to Schedule Caste or Schedule tribe. The West Bengal government said some 1.6 crore beneficiaries have so far been registered for the scheme in the state.
Apart from this, the other cash transfer scheme which has been initiated by the government of West Bengal includes the Krishak Bandhu scheme in which the government provides cash transfer of Rs 5,000 to Rs 10,000 per acre to farmers, and will cost the public treasury Rs 3,600 crore.
Other social welfare schemes which draw funds out of government coffers include the Kanyashree scheme where every girl between the ages of 13 and 18 who goes to school receives Rs 750 per annum and once she has completed her studies after 18, each girl receives a one-time grant of Rs 25,000. According to the government, this has been implemented to reduce the school dropout rate and encourage girls’ education.
In total, these programs, excluding the Lakshmi Bhandar program, cost the Mamata Banerjee government more than Rs 20,000 core every year.
Apart from this, the much criticized ‘dole’ which is bestowed on Durga Puja committees every year also costs the Bengal Treasury hundreds of crores. The Government of West Bengal pays Rs 50,000 annually to more than 28,000 Durga Puja Committees as part of “Relaxing the Hands of Puja Committees”.
Increased spending on social welfare schemes has led to increased borrowing by the state government. According to the state budget document for 2021-22, the government is expected to have borrowed more than Rs 115,000 crore from various sources. The borrowing of money has been increasing year on year for the past three years. From borrowings of Rs 75,600 crore made by the state government in 2019-20, it increased to Rs 115,673 crore in 2021-22.
Borrowing also places the burden of debt repayment and interest payments on the public treasury. The government of Bengal pays between Rs 80,000 and Rs 90,000 cr in debt repayment and interest to its borrowers every year. Sources in the Bengal government said it is likely to increase in budget expenditure this year.
Rising state government spending and near-constant income are causing much development work to be stalled in the state, says opposition along with Trinamool Congress MPs (TMC)
Many TMC MPs who were recently scolded by Chief Minister Mamata Banerjee during her administrative review meetings for asking for the allocation of development work in their constituencies, privately complain that their constituents are unhappy because they (MPs) cannot meet the expectations of their constituents for something as small as the construction of a gravel road or the construction of river levees.
Earlier this month, in an administrative review meeting, Mamata Banerjee had categorically asked all her MPs and leaders not to ask her government for any new (development) work for the next two years, as she had said she was already spending a lot of money on welfare schemes and the government had no money to spare.
“For the next two years, don’t ask for new projects or jobs. A lot has been given, complete them first. You all just come and ask, do you even think where am I going to get so much money from? The government is already giving thousands of crores to the people of Bengal through social welfare programs, the Lakshmi Bhandar program is also going to cost the government a lot of money.I know how I manage to give salaries and pensions; it costs thousands of rupees. So don’t ask for anything more, you have all received a lot,” Mamata Banerjee recently told one of her MPs. According to the budget document, the government of Bengal contributes almost 80,000 rupees every year. crores of rupees in wages and pensions to its employees.