Behavioural biases that damage your investments!

Defying fiscal stress, the West Bengal government has lined up several welfare projects as outlined earlier before the assembly elections, state chief minister Mamata Banerjee said on July 7, but not before pointing out that the state is yet to get about Rs 60,000 crore on different heads from the Centre. In her party’s manifesto before the assembly elections, Mamata Banerjee had promised a bonanza for the common man in the state. After the budget for FY22 was presented by parliamentary affairs minister Partha Chatterjee, the chief minister said that her government has finalised all the welfare schemes and have started rolling them out despite fiscal stress.

Bonanza

Mamata said her government has allocated the following amounts for various social sector schemes that the party had promised

Rs 10,000 crore for woman and child programmes.

Rs 2,000 crore for enhanced allocation of Rs 10,000 a year for direct cash assistance to farmers.

Rs 1,200 crore for delivering ration at the doorstep.

Rs 1,400 crore for free ration.

Rs 1,970 crore for health insurance scheme (Swasthya Sathi).

Rs 250 crore for credit card for student education loans at 4% interest rate.

Rs 18,000 crore

“A total of more than Rs 18,000 crore has been allocated for welfare schemes that we promised,” she said.

Incidentally, the chief minister flagged off the student credit card scheme earlier this week. According to this scheme, the government will subsidise the interest rate on education loans. The student will pay 4% while the government will bear the rest of the interest burden to the bank.

Basic income

However, in terms of expenditure, the most ambitious scheme entails a direct annual cash support of Rs 6,000 per family. The amount will be double (Rs 12,000) if the family belongs to the scheduled caste or scheduled tribe.

According to the Trinamool Congress manifesto, the state’s monthly average consumption is Rs 5,249 and the basic assistance of Rs 600 would be 10% of that amount for a general category family and for a SC or ST family the amount would be more than 20% of the monthly consumption.

The money would be paid to the female heads of 1.6 crore families. The support would be available to all households except those who have at least one Income Tax paying member and those owning land more than 2 hectares.

TMC has calculated an annual expenditure of Rs 12,900 crore every year on this count.

Mamata has also promised to help set up 10 lakh news self-help groups. Loans will be given for these SHGs.

Cash-strapped

But funding the welfare projects might be a challenge for the government since the state suffers from a high degree of fiscal stress.

Figures in the budget for 2021-22 presented by the chief minister in February reveal that the government is supposed to spend Rs 63,700 crore alone on debt repayment which will consume 84.46% of the state’s own tax revenue.

The expenditure under the three heads of debt servicing, salary and pension amounts to Rs 144,128 crore which consumes 74.27% of the state’s revenue receipts leaving very little money for development work.

Central dues

Mamata also alleged that her government is yet to get its share of revenues from the Centre.

“In 2020-21 West Bengal was supposed to get Rs 58,962.55 crore as share of the Central revenue but received only Rs 44,737.1 crore. The previous year, the state got Rs 11,000 crore less than what it was supposed to get. Bengal is also waiting for Rs 33,314 crore for various centrally sponsored schemes. That works out nearly Rs 60,000 crore,” she said.

She also reeled out performance figures of the Union government and the state government on parameters such as fiscal deficit, revenue deficit, debt/GDP ratio and claimed better performance on each count.

“This is a government of doles. But there is no scope for proper relief for the common man,” said BJP legislator and economist Ashok Lahiri after a glance at the budget.