The Hindu : National : Deficit budget for West Bengal

Online edition of India's National Newspaper
Wednesday, Mar 23, 2005

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National

Deficit budget for West Bengal

By Marcus Dam

KOLKATA, MARCH 22. The West Bengal Finance Minister, Asim Kumar Dasgupta, presented a Rs. 5 crore-deficit budget for 2005-06 in the Assembly here on Monday.

The total Plan expenditure is to be increased to an unprecedented level — by about 68 per cent — to Rs. 7,051 crores.

The proposals aim to generate "at least six lakh additional jobs... This is a budget of employment generation," he said. The growth rate of the State Domestic Product has been targeted at eight per cent. The additional resource mobilisation under tax revenue is estimated at Rs. 100 crores.

"The main social objective of the budget is to increase employment generation through enhancement of production in agriculture and allied sectors and industries."

Financial crisis

The State is going through a financial crisis that needs to be overcome. "The recommendations of the 12the Finance Commission have not resolved the major problems in Centre-State relations and the gains for West Bengal have been partial and transitory," Dr. Dasgupta said.

He was referring to the recommendation to increase the State's share of the Central taxes which boiled down to only "an insignificant improvement" and that relating to interest relief on Central loans which kept "unsolved" the main problem of Central loan burden, which is due to the burden of small savings-related Central loans."

The State will also go in for "pre-payment of loans of all-India financial institutions and other loans to the tune of Rs. 2,415 crores for reducing our debt burden next year."

An initial deficit of Rs. 105 croresis expected to be largely off-set by the introduction of Value Added Tax which will lead "to enhancement of revenue through the widening of the tax payer base and ensuring better tax compliance."

In response to a request to compensate for a possible loss of revenue during the initial transition period, "the Centre has agreed to compensate 100 per cent of the loss in the first year, 75 per cent in the second and 50 per cent in the third year of introduction of VAT, the loss being computed on the basis of an agreed formula," he said.

"In the context of overall industrialisation, and keeping in view the importance of investment in large- and medium-scale industries, it has been decided to continue the existing incentive schemes in the beneficiary industries even after the introduction of VAT," Dr. Dasgupta said.

The Plan outlay for industries has been raised from Rs. 66.5 crores in the current year to Rs. 145.1 crores in the next.

The proposals also provide for substantial increase in the outlays for health, education, power, improvement in infrastructure and agriculture.

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