The Union Finance Minister Arun Jaitley, during his visit to Kolkata, had criticised the previous Left Front (LF) government of following "populist" policies and pushing the State to a debt trap. The former Finance Minister under the LF government, Asim Dasgupta, today released official data to show that Mr Jaitley's allegation were completely baseless and politically motivated. We provide the figures that he released herewith.
First, the data show that it is the central government that appears to be following a debt-centred policy and not the previous West Bengal government (see Table 1). In 2011, if the per capita debt for India was Rs 32,231, the per capita debt in West Bengal was far lower at Rs 21,115. West Bengal was ranked only 10th among all States with respect to per capita debt. Further, in 2011, if the debt/GDP ratio of the central government was 50 per cent, the debt/GSDP ratio of the West Bengal government was only 40 per cent. Here again, West Bengal was ranked only 8th among all States.
Secondly, it is the central government's policies that are responsible for pushing States into debt traps (see Table 2). Central government forces the States to borrow all of the small savings mobilised in each State. The State governments are thus forced to pay the high interests for these loans even when cheaper loans are available elsewhere. In 2011, of the Rs 1.93 lakh crore outstanding debt of the West Bengal government, Rs 78,800 crore was constituted by small savings. West bengal had the highest small savings collections for any State. Hence, this constituted a huge additional burden on the State's finances. Political parties like the Congress, BJP and Trinamool Congress have been part of the central government over the years, and they should be held responsible.
Thirdly, the total outstanding debt of West Bengal until March 31st, 2011 was Rs 1.93 lakh crore, while the corresponding figure for the central government stood at a whopping Rs 39 lakh crore (see Table 3). In other words, Mr Arun Jaitley would do well to fix the debt trap that the central government has fallen into rather than blaming States like West Bengal, which have been victims of a discriminatory policy of fiscal federalism over the years.