Cash transfer schemes dry up Mamata’s coffers, stall development work

New Delhi: The implementation of a plethora of cash-exhaustive social welfare schemes is seemingly drying up the coffers of the West Bengal government, with the fiscal deficit of the state increasing every year. This has resulted in Chief Minister Mamata Banerjee instructing her MLAs and ministers not to ask for any “developmental work” in the state for the next two years.
According to the West Bengal government’s Budget document for 2021-22 (financial year), the state is facing a fiscal deficit of over Rs 60,000 crore. This is an increase of 29% from the fiscal deficit that it recorded in 2020-21. The annualised increase of fiscal deficit for West Bengal since the last three financial years has been more than 30%, thus showing that the government is spending much more than its total earning, in turn forcing the state government to take loans to meet the demands of expenditure in the state.
Sources within the West Bengal government have said that the increased spending of the government is due to the large number of social welfare schemes that have been launched by the Bengal government over the last five to six years, some of which includes direct transfer of cash to the beneficiaries.
According to government estimates, the Lakshmi Bhandar scheme, which was a poll promise of the Mamata Banerjee government and was launched in September last year, will cost the government exchequer a whopping Rs 18,000 crore. Government sources say that this additional burden on the government’s coffers is likely to further increase the fiscal deficit of the state which could well be reflected in the upcoming budget session of West Bengal.
The West Bengal Assembly is likely to announce the budget (2022-23) for the state sometime in March. The Lakshmi Bhandar scheme of the West Bengal government provides direct cash transfer of Rs 500 to all women residents of Bengal every month and an additional Rs 500 cash transfer to all women who belong to the Schedule Caste or the Schedule Tribe. The West Bengal government has said that some 1.6 crore beneficiaries have so far been registered for this scheme in the state.
Apart from this, the other cash transfer scheme that was launched by the West Bengal government includes the Krishak Bandhu scheme wherein the government provides a cash transfer of Rs 5,000 to Rs 10,000 per acre to farmers, and will cost the state exchequer Rs 3,600 crore.
The other social welfare schemes which lead to cash outflow from government coffers includes the Kanyashree Scheme where every girl child aged 13 to 18 years and goes to school is paid Rs 750 annually and once they complete their school after 18 years, each girl child receives a one-time grant of Rs 25,000. This, the government says, has been implemented to curb the dropout rate from school and to encourage education amongst girls.
In total, these schemes, excluding the Lakshmi Bhandar scheme, cost the Mamata Banerjee government more than Rs 20,000 core every year.
Apart from this, the much criticised “dole” which is given to Durga Puja committees every year also costs the Bengal exchequer hundreds of crores. The West Bengal government disburses Rs 50,000 each to more than 28,000 Durga Puja committees every year as part of “easing the hands of the puja committees”.
The increased spending on social welfare schemes has led to increased borrowings by the state government. According to the state’s budget document for 2021-22, the government has expectedly borrowed more than Rs 115,000 crore from various sources. The borrowing of money is witnessing a year on year rise since the last three years. From Rs 75,600 crore borrowings made by the state government in 2019-2020 it has increased to Rs 115,673 crore in 2021-22.
The borrowing is also leading to the burden of debt repayment and interest payment on the state exchequer. The Bengal government is paying between Rs 80,000 to Rs 90,000 cr as debt repayment and interest to its borrowers every year. Sources in the Bengal government said that this is likely to go up in this year’s budget outlay.
The increased expenditure of the state government and the nearly constant income is leading to many developmental works in the state getting stalled, says opposition as well as Trinamool Congress (TMC) MLAs
Many TMC MLAs who were recently seen being scolded by Chief Minister Mamata Banerjee during her administrative review meetings for seeking the allocation of developmental works in their constituencies, are complaining in private that their voters are unhappy as they (MLAs) are not being able to meet the expectations of their voters for something as small as building a metalled road or building river embankments.
Earlier this month, in an administrative review meeting, Mamata Banerjee had categorically asked all her MLAs and leaders not to ask her government for any new work (developmental) for the next two years as she said that she was already spending a lot of money on welfare schemes and that government did not have any money to spare.
“For the next two years, do not ask for any newer projects or work. A lot has been given, complete those first. You all only come and ask, do you even think from where will I get so much money? The government is already giving thousands of crores to the people of Bengal through welfare schemes, the Lakshmi Bhandar scheme is also going to cost the government a lot of money. I know how I am managing to give salaries and pensions; it costs thousands of rupees. So don’t ask anything more, you all have been given a lot,” Mamata Banerjee was seen telling one of her MLAs recently. According to the budget document, the Bengal government is paying almost Rs 80,000 crore as salaries and pensions to its employees every year.