Finance Commission to consider West Bengal’s request for restructuring debt2 min read . Updated: 17 Jul 2018, 09:31 PM IST
15th Finance Commission chairman N.K. Singh says as the interest payment on piled up debts is squeezing resources available for development, West Bengal wants a 'structural solution'
Kolkata: The 15th Finance Commission will consider West Bengal’s request for restructuring the state’s outstanding debt so that more funds are available for welfare schemes, the chairman of the panel, N.K. Singh, said on Tuesday.
West Bengal, which is one of the most indebted states in the country, had an outstanding debt of ₹ 364,018 crore at the end of March. This is projected to go up to ₹ 394,832 crore in the current year.
The state has budgeted for a payment of ₹ 47,719 crore to service its debts in the current year, compared with ₹ 47,272 crore in 2017-18. Of this, the state will be paying ₹ 27,136 crore towards interest alone.
Chief minister Mamata Banerjee told the panel on Tuesday that her government had in 2011 inherited an outstanding debt of around ₹ 200,000 crore from the Left Front’s 34-year unbroken rule.
In the past seven years, the state has paid ₹ 225,000 crore to service its debt, she said, while appealing for a debt restructuring so that more resources were available “for the development of the state" and for its people.
“The government of West Bengal has brought out very forcefully the need for the finance commission to look at the legacy issue of the debt overhang and innovative ways in which it could be addressed so that it does not become a permanent drag on the economy (of the state)," Singh said.
Because the interest payment on piled up debts is squeezing resources available for development, it wants a “structural solution", Singh said, adding that the commission has taken “serious note of this expectation" and will “explore within its mandate" ways in which it can be addressed.
Banerjee started her address to the commission by opposing its terms of reference: The use of the 2011 census data to determine the share of revenue for states. She said it was “very unfair" on states that have managed to contain population, while urging the commission to use the 1971 census to determine revenue sharing.
Singh had in his address to Indian Chamber of Commerce on Monday addressed the issue by saying that population has always been considered to determine “horizontal distribution" of revenue among states. Though
will rely on the 2011 census, it has within its terms means to provide incentives to states that have done well with population control, he said.
While pushing for debt-restructuring, Banerjee said that 90% of the state’s population, or almost 100 million people, have so far benefited from various development schemes. Recently, the state sanctioned new infrastructure projects, which will entail an investment of ₹ 18,000 crore in addition to the ₹ 25,755 crore of budgeted capital expenditure in the current year, she said.
Banerjee also demanded that the state’s share in the divisible pool of taxes be raised from 42% to 50% and that the divisible pool itself be expanded by including cess and surcharges.