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How West Bengal put brakes on growing fiscal deficit

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With only a few days to go before the state budget, it would be interesting to watch how state financial advisor Amit Mitra put brakes on the growing fiscal deficit in the state.

Experts are of the opinion that the state financial condition was showing signs of recovery despite the outstanding liabilities but the financial burden caused by the social schemes announced by the state is having a negative impact on the financial health of the state.

The revenue deficit has been pegged at Rs 26,755.25 crore which is more than three per cent of the Gross State Domestic Product (GSDP) limit. Going by the past trend, the figure is likely to increase further. The fiscal deficit shot up from Rs 52,350.01 crore in 2020-21 to Rs 60,863.96 crore in 2021-22. The upswing in deficit is expected, considering that both the state’s tax and non-tax revenues have plummeted during the pandemic.

The state’s own tax revenue dropped from Rs 60,669.37 crore in 2019-20 to Rs 59,886.59 crore in 2020-21 and its share in central taxes plunged from Rs 48,048.40 crore to Rs 44,737.01 crore during the same period. The period also witnessed a fall in non-tax revenue from Rs 3,212.90 crore to Rs 2,466.31 crore.

Given the pandemic-induced fall, the budget estimate of Rs 50,070.29 crore as state’s share in central taxes, Rs 75,415.74 crore as its own tax revenue and Rs 4,611.72 as its non-tax revenue, appear unrealistic, which means the current fiscal may end with a higher revenue deficit as well as an increased fiscal deficit.

With an estimated fiscal deficit of 4.03 per cent of its GSDP, West Bengal is among those few states that have crossed the three per cent threshold limit. In 2020-21, the percentage was 3.86 as against 2.94 per cent in 2019-20. Not only that, the GSDP growth rate at 2011-12 constant prices went up from 4.17 per cent in 2012-13 to 6.13 per cent in 2015-16, 7.2 per cent in 2016-17, and 6.41 per cent in 2018-19 but again plunged to 5.6 per cent in 20-21. However, it still consistently remained below the national average.

Interestingly enough, Bengal’s debt-GSDP ratio stood at its peak in 2010-11 at 41.9 per cent, according to a NITI Aayog-sponsored survey conducted by IIM Calcutta. This was the highest in the country. Since then, the ratio has gradually come down and stood at 34.75 per cent in 2018-19 but in the 2020-21 financial year it again shot upto 38.8 per cent indicating the pressure on the economy of the state.

A comparative study shows that the states with the highest debt-GSDP ratio in FY22 are Punjab (53.3 per cent), Rajasthan (39.8 per cent), West Bengal (38.8 per cent), Kerala (38.3 per cent) and Andhra Pradesh (37.6 per cent). All these states receive revenue deficit grants from the Centre.

Former chief economic advisor to the central government and BJP MLA Ashoke Lahiri said: “What is worrying us more is a constant increase in the primary deficit (fiscal deficit minus interest payment). Figures from RBI show that GSDP to primary deficit was 0.4 per cent in 2019-20. In a year that shot up to 1.4 per cent and in 2021-22 that is 1.9 per cent. This points to the fact that even if the interest burden is removed, the state continues to borrow more”.

The precarious financial condition of the state was evident from the sudden increase in market borrowing. The market borrowing of West Bengal so far in the fiscal year 2022 is 20 per cent higher on a year-on-year basis, according to a report by the CARE Ratings. Only Nagaland, up by 71 per cent, had a higher borrowing during the period than West Bengal.

Haryana (by 11 per cent), Sikkim (by 7 per cent), Jammu and Kashmir and Maharashtra (by 4 per cent each) and Rajasthan (by 3 per cent) are the few other states that have higher borrowings so far in the current fiscal than the comparable period of a year ago. In the case of other remaining states, it is lower than last year.

According to the statement issued by the Reserve Bank of India, the state is likely to borrow 12 times raising around Rs 20,000 crore from the market between the period of January 1 and March 31 making it obvious that the state government is struggling hard to negotiate the expenses caused by the social schemes launched by Chief Minister Mamata Banerjee.

Interestingly enough, in the period between April 2020 and December 2020 when the state revenue plummeted to all time low because of the pandemic situation and the consequent lockdown, the state raised around Rs 35,000 crore from the market but during the current financial year between April 2021 to December 2021, it went for a market borrowing of Rs 52,500 crore. During the same period in 2019, the state borrowed Rs 28,000 crore via State Development Loan.

Incidentally, when the 34-year rule of the Left Front came to an end in 2011 and Mamata Banerjee became the chief minister, the accumulated debt of the state was Rs 1.93 lakh crore. But, according to the state government’s budget figures, the accumulated debt is likely to go upto Rs 5.5 lakh crore by the end of the 2020-21 financial year.

The state government’s dying effort to negotiate the huge cost of non-planned expenditure came to the fore when recently chief minister Mamata Banerjee directed all the departments to cut down on unnecessary expenditure beyond the approved budget and not to take any new project without the approval of the state Chief Secretary or the finance department. The announcement was an obvious indication that the government is trying to negotiate the financial burden caused by the non-planned expenditure of the dole politics announced by the chief minister Mamata Banerjee before the election.

After coming to power for the third time- Chief Minister Mamata Banerjee announced two major schemes – ‘Lakshmir Bhandar’ and ‘Swastha Sathi’ for all – the schemes that demand a huge financial involvement. ‘Lakhmir Bhandar’ is a project where the state is supposed to give Rs 1,000 to the women belonging to SC/ST/OBC and Rs 500 to the women belonging to General caste. The government has allocated a budget of approximately budget of Rs 12,900 crore for around 1.8 crore women who have so far registered themselves for the scheme.

Initially the government had an estimate that nearly 2 crore beneficiaries will register for ‘Lakshmir Bhandar’ project but so far, the government has received an application of 1.63 crore of which 1.52 crore has been approved. Nearly 7 lakh applications have been cancelled. The government has spent more than Rs 800 crore for the project and going by the figure the finance department estimates that the state government will have to cough up another Rs 5,600 crore which might in turn lead to a staggering figure in a full financial year.

Countering the Centre’s Ayushman Bharat, the state launched its own scheme – ‘Sasthya Sathi Prokolpo’ where some citizens of the state were given an annual health coverage of five lakh rupees. After coming to power in 2021, the chief minister opened ‘Swastha Sathi’ for all the citizens of the state leading to a quantum leap in the expenditure. Even a year back when the estimated budget for this project was around Rs 925 crore, this year the allocation touched an astronomical figure of Rs 2,000 crore annually.

According to experts, with the decline of the revenue generation, multiple market borrowings have now become the essential compulsion of the West Bengal government now to meet its recurring expenses.

They are of the opinion that the state is struggling with the non-plan expenditure mostly to meet the promises made by Chief Minister Mamata Banerjee during her election campaign.

National News

SC asks HCs to ensure timely upload of reasoned judgments

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New Delhi, Sep 9: The Supreme Court has directed High Courts across the country to ensure that reasoned judgments are uploaded without delay after the pronouncement of operative orders.

A bench of Justices J.B. Pardiwala and Sandeep Mehta termed the delay a “matter of grave concern” after noting that the Punjab and Haryana High Court pronounced its decision on February 18, 2016, but uploaded the full judgment only on July 18, 2018 — a gap of about 2 years and 5 months.

“Over a period of time, it has been the practice of a few High Courts to pronounce the operative part of the order without the reasoned judgment and after a substantial length of time, the reasoned judgment is uploaded. This practice has been deprecated by this court in many of its judgments and orders,” the Justice Pardiwala-led Bench said.

Citing the apex court’s earlier ruling in Anil Rai v. State of Bihar, it said: “Delay in disposal of the cases facilitates the people to raise eyebrows, sometimes genuinely, which, if not checked, may shake the confidence of the people in the judicial system. For the fault of a few, the glorious and glittering name of the judiciary cannot be permitted to be made ugly.”

The Supreme Court directed that its judgment be circulated to all High Courts, reiterating the guidelines laid down in the Anil Rai case requiring judgments to be delivered without delay.

“We hope that we may not have to come across any matter wherein there is a delay at the end of the High Court in uploading the reasoned order, more particularly after the operative part of the judgment is pronounced,” the bench observed.

Earlier in August, a bench of Justices Sanjay Karol and Prashant Kumar Mishra had voiced strong concern over long delays by High Courts in pronouncing judgments after hearings are concluded, warning that such a situation erodes “litigants’ faith in the judicial process”.

The Justice Karol-led Bench noted that it is “repeatedly confronted” with cases where proceedings are kept pending in the High Courts for over three months, and in some instances for more than six months or even years.

Disposing of a special leave petition (SLP) concerning a criminal appeal pending since 2008 in the Allahabad High Court, the apex court had termed it “extremely shocking and surprising” that the judgment was not delivered for nearly a year from the date when the appeal was heard.

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Crime

Kalyan Advocate Suicide Case: Shiv Sena (UBT) Leader, Co-Accused Seek Anticipatory Bail; Husband Opposes

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Of the five accused named in the alleged abetment to suicide case of activist-advocate Sarita Khanchandani, two have approached the Additional Sessions Court seeking anticipatory bail. The pleas, however, have been strongly opposed by the deceased’s husband, Advocate Purshottam Khanchandani, who claimed that the accused have criminal antecedents and pose a high risk of tampering with evidence.

Accused Dhananjay Bodare, Shiv Sena (UBT) Kalyan district president, in his bail plea questioned the credibility of the suicide note recovered by Sarita’s family. Bodare described the note as “vague and omnibus,” alleging that it mentions several individuals collectively without assigning specific roles to any of them.

FPJ has accessed the detailed anticipatory bail application, which have challenged the suicide note alleging it to be‘so-called suicide note to be a vague and omnibus in nature’, which states:” Names of several individuals have been mentioned together in the notice without any details or attribution of acts. “

The ABA copy further reads, “The deceased, her husband, and daughter are all advocates by profession and well-versed with law. If there was any abetment, they would have produced the suicide note immediately. Instead, its discovery days later—after police initially refused to register abetment charges—raises serious doubts about its authenticity. The note appears to be an afterthought, fabricated to falsely implicate the applicant,” the plea argues.

The application further points out that initially, after the incident on August 28, no abetment offence was registered despite public allegations on social media by the family. The alleged suicide note was claimed to have been found on September 1, following a purported recovery of the deceased’s “lost mobile” and CCTV footage showing her writing in a diary.

Opposing the pleas, Advocate Purshottam Khanchandani, advocate Sarita’s husband,  alleged that Bodare and others, have allegedly  systematically harassed Sarita over a property dispute. He claimed that Bodare had allegedly illegally encroached on government land, built an unauthorized Shiv Sena Shakha, and attempted to capture part of Sarita’s property.

The objection states, “The accused deliberately created an atmosphere of fear and pressure, instigating Sarita to take the extreme step. They used political clout and even filed false cases under the Atrocities Act to force her to withdraw an FIR. They also defamed her through derogatory social media posts,” the reply reads.

The husband further alleged that Bodare rewarded co-accused Ulhas Falke by appointing him as Shakha Pramukh of the unauthorized shakha and used threats and nuisance to terrorize Sarita. The reply also cites Bodare’s alleged involvement in rioting, land encroachment, criminal intimidation, and violations under the Water Pollution Act.

The husband  asserted that custodial interrogation of the accused is essential for an effective probe, as they may possess vital evidence. He warned that granting anticipatory bail could allow them to tamper with evidence, influence witnesses, and derail the investigation.

“Bodare is one of the masterminds of this crime and has been absconding since the FIR was registered,” the reply reads.

Another accused, Raj Chandwani, also sought anticipatory bail, arguing that the FIR does not attribute any specific role to him and that his arrest would cause hardship to his family. His plea too was opposed by Khanchandani.

The court has reserved its order on the anticipatory bail pleas.

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National News

Sonia, Rahul Gandhi cast their votes for VP election

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New Delhi, Sep 9: Leader of Opposition (LoP) in the Lok Sabha, Rahul Gandhi, and Congress Parliamentary Party (CPP) Chairperson Sonia Gandhi arrived at the New Parliament Building in New Delhi to cast their votes for the Vice Presidential election on Tuesday.

The election is witnessing the contest between the NDA nominee, Maharashtra Governor C.P. Radhakrishnan, and the INDIA bloc candidate, former Supreme Court judge B. Sudershan Reddy.

Congress National President Mallikarjun Kharge arrived to cast his vote. He was accompanied by Union Minister Nitin Gadkari, and both were seen smiling and walking hand-in-hand.

Congress Wayanad MP Priyanka Gandhi Vadra was also seen arriving to cast her vote for the Vice-Presidential election.

Other parliamentarians of the NDA and the INDIA bloc were also trooping in to cast their votes.

Union Ministers Kiren Rijiju and Ram Mohan Naidu Kinjarapu, along with Shiv Sena MP Shrikant Shinde, have been appointed as official election agents for the process.

Counting of votes will be held later in the day, after which the results will be announced.

This election holds significant political weight, as the Vice President also serves as the Chairman of the Rajya Sabha, making the role crucial in the functioning of Parliament.

The electoral college for the Vice Presidential election comprises 781 members, including 542 elected members of the Lok Sabha and 239 members of the Rajya Sabha (233 elected and 12 nominated, with six vacancies across both Houses).

All votes carry equal value, and voting is conducted through a secret ballot, as per established parliamentary procedure. The majority mark needed to win is 391 votes.

The Vice President’s post fell vacant after Jagdeep Dhankhar resigned on July 21, citing health concerns, on the first day of the monsoon session of Parliament.

Political observers expect a keenly watched contest, though the NDA is seen as having a numerical advantage in the combined strength of the two Houses.

However, all eyes remain on potential cross-voting and the outcome this evening.

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