What seems to have come as a big relief to the cash-strapped West Bengal government, the Centre has announced to enhance the state government’s market borrowing limit by further `6,000 crores for the current fiscal. Originally, West Bengal was allowed to raise `17,828 crores in 2011-12. Later, considering the fund crisis, the Union government in August had enhanced the borrowing limit for the year by `2,706 crores.
Speaking on the sidelines of a programme on Sunday, Union finance minister Pranab Mukherjee said: “We have decided to provide some extra flexibility to the state government in case of market borrowing. The amount which the previous Left Front government had borrowed during the months of April and May, the present government has been allowed to borrow the same amount. In addition, the government can also borrow the amount from the market that it has repaid already. We will also release the amount that has been sanctioned under the Backward Regions Grant Fund to West Bengal as soon as the state government submits its projects.”
Mr Mukherjee, however, admitted that the West Bengal government would face some problem as the Centre has decided to reduce the minimum share of states in the net collections under small saving schemes in a year. It would be reduced to 50 per cent from existing 80 per cent.
The previous Left Front government had made three market borrowings on April 7, 20 and May 5 respectively to raise `5,173 crores in total. The state government has repaid around `1,000 crores as principal amount to its earlier market borrowing in the current fiscal till now. With Mr Mukherjee’s announcement on Sunday, the state government will now able to borrow this additional amount of around `6,000 crores in the current fiscal in addition to its market borrowing limit. However assuming office on May 20, the Mamata Banerjee-government has borrowed `10,000 crores which means the state government has already raised `15,173 crores in the current fiscal. According to the sources in the state finance department, this further enhancement of the market borrowing limit will lead the state towards more acute financial crisis.
“In the current fiscal, the state government will have to repay a total interest of `15,093.34 crores to all kinds of loan. In addition, it will have to repay `5,776.58 crores as principal amount. Taking these two together, the repayment for the year will sta-nd at `20,800 crores. If we borrow more in this fiscal, the quantum of repayment will increase next year and the state will plunge into more acute debt trap,” sources elaborated.