Scrap-and-scrape agenda - New CM needs to axe an order and then raise resources

If Mamata Banerjee wants to spend on anything other than salaries, pension and reimbursements after stepping into Writers’ Buildings on Friday, she will have to pass an order overruling one the Buddhadeb Bhattacharjee government had issued on April 6. Amid the financial crisis, the state government had passed the order — signed by joint secretary (finance) A.K. Chakraborty — as part of austerity measures that had banned clearing of funds except for payment of salaries, wages, honoraria, stipends, office phone and electricity bills and medical reimbursements till June 30 this year. “I don’t know if a new government can run with such restrictions,” wondered a senior state government official. “One of the first things that Mamata will have to do once she comes to Writers’ is issue an order overruling the present one on financial embargo.” While she can revoke the order in one stroke, marshalling the resources to keep the government running will be easier said than done. Back-of-the-envelope calculations reveal that the state government will require around Rs 4,100 crore over the next 45 days — including Rs 3,000 crore as salaries and pensions for the month of May — but it has a reserve of only around Rs 1,198 crore. Mamata will have a tough time borrowing from the markets as the state has already borrowed over 50 per cent of its annual ceiling of Rs 15,390.64 crore in the first month, leaving only Rs 8148.64 crore for the next 11 months. It has also hit the ceiling of Rs 1,494 crore in ways and means advances from the Reserve Bank of India. Every year, the RBI stipulates the amount the states can borrow from the apex bank to tackle mismatches in its earnings and expenditure. “Revenue collection from taxes, excise and other duties, the primary source of revenue for the government, is yet to take off as it is only halfway through the first quarter of the ongoing financial year,” a senior finance department official said. With the other borrowing avenues drying up, the only option left for Mamata is to seek a bailout package from the Centre to tide over the crisis. “We have heard that the new chief minister has already spoken to the Union finance minister about this. Let’s see what deal she gets from the Centre,” an official said. Unless Mamata manages to get some funds, it will not be possible for her to deliver on her primary promise — sushashon or good governance. The state government has 24 departments and while preparing the budget, the finance minister allocates funds for each of these wings. Although outgoing finance minister Asim Dasgupta had earmarked funds for these departments, the delivery of services was suffering because of the austerity measures that began around seven months before the April 6 order was passed. Finance department insiders told The Telegraph that senior officials had been making phone calls to treasury officers in state government offices across Bengal since last September, delivering instructions to rein in expenses. All this while, the government kept borrowing to pay salaries. “The Left Front government had become almost non-functional in the last two years and they could afford to pass such absurd orders. But Mamata will have to deliver on so many promises,” said a senior PWD official. The government’s cash crunch has hit the PWD and its projects as it has over Rs 390 crore pending from the finance department and several of its projects are stuck midway. “Departments like panchayat, municipal affairs, urban development and backward classes welfare need over Rs 500 crore within the next 30-45 days for carrying on with pending work,” a finance department official said. As the plan for reviving Bengal — reeling under a debt burden of Rs 2 lakh crore — will not be launched before an actual assessment of the fiscal position of the state, the finance department officials are working overtime to prepare a status report for Mamata. Finance secretary C.M. Bachhawat has been holding regular meetings with secretaries and other officials of the 24 departments at the Writers’ in a “stocktaking exercise”. “Bachhawat is trying to prepare an exhaustive status report so that the new cabinet knows what it has to deal with at the very start,” said an official from the backward classes welfare department. The department needs around Rs 65 crore for paying scholarships to underprivileged tribal students in districts like Bankura, Purulia, West and East Midnapore, Birbhum, Murshidabad and Jalpaiguri. Courtesy- The Telegraph, Kolkata, 19/05/2011