‘Spend force’ with empty pockets

Kolkata: As chief minister, Mamata Banerjee has only added to the list of sops-and-goodies beneficiaries created by the Left Front government under Jyoti Basu. Basu’s government had allocated above-ceiling land to the landless, made education up to Class XII free and introduced dole for unemployed youth.
Mamata created new beneficiaries despite her government getting caught in a debt trap.Consequence: A 211% jump in Bengal’s subsidy component in the last two fiscals.
Finance minister Amit Mitra said in the Assembly last Friday that general subsidies are up from Rs 2,276cr in 2014-15 to about Rs 7,079cr in 2016-17. Subsidy component accounts for 15.5% of the state’s resources of around Rs 45,000cr.
This surge is despite Mamata’s grouse that her government must shell out Rs 27,000cr (or 60% of the state’s generation this fiscal) on servicing debts. Add to this the salary component that’s grown by 6.6% over 2014-15 and is pegged at Rs 32,000cr (or 71% of the state’s generation). Together, Bengal’s spend on salaries, debt servicing and subsidies is around Rs 66,000cr, Rs 21,000cr more than what it generates.
How then does Mitra balance his books? The key is increased borrowings and central tax devolution. The state’s borrowings reached Rs 277,579cr March 31, 2015, up by Rs 85,000cr from the outstanding of Rs 19,2000cr the LF left behind.

Mitra harps on this when handing out subsidies. Last year, he argued that the decision to give bicycles free to school students would create a demand for about 1.5cr annually. If a manufacturer receives a bulk order, it’ll prod him to start a unit here. Similarly, he was hopeful pump makers would set up shop after the state decided to distribute 10 lakh pumps to farmers.
Mocking Mamata, CPM state secretariat member Sujan Chakrabarty says: “This government doesn’t bother about industry. Nor is it bothered about deaths in north Bengal’s tea gardens. Instead, the government spends on fairs, freebies. The CM spends crores on clubs and keeps dearness allowance to state employees pending.”
Do these freebies help the ruling party expand its support base? Only to the point till sops match popular aspirations, says emeritus sociology professor Prasanta Ray, Presidency University. He drew a line between sops during LF rule and Mamata’s government. “The Left gave sops and doles with a particular class in mind. Mamata has taken it forward, targeting groups — women, youth, children. Many countries practise such targeted subsidy,” Ray says.