Mamata government on borrowing spree as Centre holds back funds
With no financial assistance forthcoming from the Centre, the state government is now trying to take a loan from financial institutions to repair a large stretch of embankments breached during Cyclone Amphan.
Over the last five months, the state government has already borrowed ₹23,000 crore to tide over the double whammy of revenue loss and rise in expenses due to the twin impacts of COVID-19 and Cyclone Amphan.
“No earning, only burning,” is how Chief Minister Mamata Banerjee described the state’s financial situation in her inimitable style during a media briefing on Thursday (August 6).
Officials of the state finance department said the tightening of purse strings by the Centre is pushing the cash-strapped state to go into a borrowing spree to meet up the additional expenses it was forced to incur to battle the pandemic and also to provide relief and to mend damages caused by the cyclone.
To deal with the challenges posed by the pandemic, the centre from the State Disaster Risk Management Fund (SDRMF) gave West Bengal ₹417 crore and another ₹125 crore from the National Health Mission. Apart from that the National Bank for Agriculture and Rural Development (NABARD) provided ₹145 crore under Rural Infrastructure Development Fund as special liquidity support to boost rural health infrastructure.
As a cyclone relief package the Union government gave ₹1,000 crore to the state.
The officials claim the assistance it got is grossly inadequate considering that the state has so far spent ₹6,500 crore on Amphan relief and ₹2,500 crore on COVID-19 management.
The state government has pegged the total loss caused due to extremely severe cyclone Amphan at ₹1.02 lakh crore.
The cyclone that ripped through the state in May among others also breached 170 km of river embankments, mainly in South 24-Parganas and North 24-Parganas districts.
“These embankments need immediate repairing which will cost around ₹2,000 crore. But the state does not have the fund to carry out the work. We were expecting a comprehensive financial package from the Centre to start the reconstruction work as was promised by Prime Minister Narendra Modi after conducting aerial survey of the damage. But as it seems unlikely that the money would come any time soon from the Centre, we have decided to secure a loan to do the repair works,” said an official of the finance department.
He said the state government has already initiated parallel discussions with the World Bank and NABARD for the loan. “We will take (the loan) from whoever gives the better deal,” he added.
The financial situation would have been a little better if the Centre had released ₹53,000 crore pending funds and the GST compensation.
On the austerity measures taken by the state government considering its precarious financial health, the official said until September all the departments have been asked to make do with 50 per cent allotments.
The maximum withdrawal limit from the deposit accounts of the development authorities under the urban development and municipal affairs department has been fixed at ₹5 crore per month.