Mamata looks to UPA in a bid to kick-start West Bengal economy

Mamata looks to UPA in a bid to kick-start West Bengal economy

New Delhi: Mamata Banerjee, the recently elected chief minister of West Bengal, arrives in New Delhi to seek a fiscal package for the state, which has a debt burden of around 2 trillion.

Banerjee, the former Union railways minister, who defeated the Communist Party of India (Marxist)-led state government in the April-May polls, will be in Delhi for three days and will meet finance minister Pranab Mukherjee and deputy chairman of the Planning Commission Montek Singh Ahluwalia. The Trinamool Congress is part of the ruling United Progressive Alliance government and expectations are that this would enable Banerjee extract more resources for the state.

In the run-up to her visit, which begins on Monday, the chief minister had held a meeting with finance minister Pranab Mukherjee in Kolkata on 29 May. Given the existing debt burden, it is likely that Banerjee would pitch for a greater share of grants and more resources under existing Central government programmes.

The state’s fiscal situation is in a precarious state with non- Plan expenditure or spending on subsidies and salaries accounting for 93% of the total revenues. The state’s 11th Plan for 2007-12 has been projected at 63,779 crore, which include both state’s resources of 46,985 crore and Central assistance of 16,794 crore.

Analysts maintain that West Bengal is in urgent need of a fund infusion.

Biswajit Dhar, director general of Research and Information Systems, said, “West Bengal needs specific assistance from the Centre preferably short term funds to get going. They need to get the overdraft situation under control. Infrastructure will be possible only with help from the Centre, which will allow West Bengal to come up in the medium term."

In its last term in office, the Left Front government had made an effort to attract industrial investments. Accordingly, the then chief minister, Buddhadeb Bhattacharjee, had invited Indonesia’s Salim Group and the Tata group to set up a chemical hub and an automotive plant for the manufacture of Nano. But both projects got mired in land acquisition rows with protests triggering violent stand-offs between farmers who had to give up their land and the state authorities.

Both projects were abandoned and became symbols of the inability of the state government to successfully steer the state towards industrialization. The state’s infrastructure remains woefully inadequate and parts of the state are overrun by Maoists insurgents adding to the challenges of providing development. In the past the Left government had blamed its inability to meet targets due to the Centre failing to provide adequate funds.

Banerjee, who had led the protesting farmers in Singur, now faces the challenge of reviving West Bengal’s decaying industries, taming its strong workers unions and replenishing its coffers by attracting investment.

To underline her commitment to transforming the state’s industrial landscape, she has appointed as her finance minister the industry friendly Amit Mitra, a former secretary general of the Federation of Indian Chambers of Commerce and Industry. Last week, Banerjee, along with Mitra, met Japanese businessmen in a bid to woo investment into the state. With a large number of those who voted for her coming from the youth and working category, the pressure to deliver on her election promises of creating more jobs and stimulating economic growth is high.

But for immediate relief, she needs assistance from the Centre for schemes such as the National Social Assistance Programme, the Backward Region Grant Fund and the Rural Krishi Vikas Yojana and use it to build a stronger economy.

N. Bhaskar Rao, head of Centre for Media Studies, said the good rapport between Banerjee and finance minister Mukherjee will “allow her to get funds". But he warned that other states too could make similar demands which could put Mukherjee in a spot. According to reports, state governments in Punjab and Kerala are facing a similar fiscal crisis as West Bengal.

According to Pratap Bhanu Mehta, head of the New Delhi- based Centre for Policy Research think tank, “even if the Centre is generous. it still won’t be enough to bail out the state" because of its debt burden.

PTI contributed to this story.