Poll war won, tougher days await Mamata as chief minister

With COVID cases spiking and sinking resources, the govt may have to put some of the poll promises on the back burner

In the end, the Trinamool Congress’ win was much easier than predicted but tougher days await Chief Minister Mamata Banerjee. The 66-year-old firebrand leader was sworn in as Chief Minister for the third consecutive time on Wednesday (May 5).

The biggest and immediate challenges for her government will be: tackling the deadly second wave of COVID-19, the pandemic’s crippling effect on the economy, and a burgeoning debt burden. And, there are huge expectations to fulfill. 

In its election manifesto, the TMC promised to further extend its social welfare outreach wooing farmers, youth, and women. A slew of subsidies, sops, and freebies dished out by the TMC government, encompassing almost all basic aspects of life from childbirth to death, played a big role in Mamata’s landslide victory in the recent elections.

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The second wave of COVID-19 will not only put an additional expenditure burden on the state’s exchequer, but it will also impact revenue generation. One huge task will be to procure 3 crore vaccines, worth ₹1,200 crore, from the Centre, according to the state’s health department. This is in addition to free vaccines supplied by the Centre to inoculate the 45+ age group.

Sources said the state had to spend about Rs 5,600 crore to handle the first wave. While the state received ₹400 crore from the Centre’s National Health Mission and the State Disaster Response Mitigation Fund, the rest of the amount was borne by the state government, sources said.

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Already in the last fiscal the market borrowing by the state amidst the first surge of Covid increased by little over 4 per cent, pegged at about ₹50,000 crore. Another worry is that the state’s debt to GDP ratio increased to 42.9 per cent in 2020-21 fiscal from 34.78 per cent last year.

Due to the second surge of Covid 19, more virulent in nature, the government will be compelled to spend significantly to curb the spread. “If the situation goes out of control, the government may have to rethink in rolling out its new set of welfare schemes immediately,” said a senior finance department official.

In the vote-on-account, which Mamata Banerjee presented on behalf of her ailing finance minister Amit Mitra in February this year, the state already opened its exchequer for populism, hardly leaving any scope for further “ungainful expenditure,” the official added.

At least ₹1,000 crore has been earmarked in the interim budget for pension for all people aged above 60 years and widows.

Another ₹1,500 has been allocated to continue disbursement of free rations beyond June this year due to the pandemic situation. It increased the annual assistance to each farming family under the ‘Krishak Bandhu Scheme’ from ₹5,000 to ₹6,000. The party has promised to further increase it to ₹10,000.

The TMC’s election promises also include a minimum income guarantee scheme. Under the scheme, the government will provide a monthly assistance of ₹500 a family for the general category and ₹1,000 for Scheduled Caste, Scheduled Tribe and OBC. The senior-most female member of the family will get the amount.

The manifesto also promised an education loan of ₹10 lakh per student at a subsidised interest rate of 4 per cent through a credit card.

Thanks to the pandemic, the state’s gross state domestic product already declined from 7.26 per cent in 2019-20 to 1.20 per cent in 2020-21.

The state’s own tax revenue collection also dipped from ₹60,669.37 crore in 2019-20 to ₹58,142.72 crore in 220-21. The government estimated to mobilise tax revenue of ₹75,415.74 crore in 2021-22.

The estimate is now likely to fall way short of expectation as the estimation did not take into account such a massive surge in COVID-19, the official added.

“The priority now is to spend our resources in augmenting health infrastructure, vaccinating as many people as possible and providing basic services,” said the official, hinting that the rollout of welfare schemes announced in the manifesto might be put in abeyance, at least for some time.

“We really don’t know from where the money will come to finance strings of welfare schemes if the revenue collections deplete again. We will have no other options but to borrow again,” the official added.

Another major challenge is to expedite the completion of ongoing infrastructure projects to rejuvenate the economy, he added. “At present infrastructure projects of ₹1,85,000 crore are under various stages of completion. We need to complete them on a priority basis to keep our economic growth moving,” he added.

All these concerns are likely to be addressed when the new government will present its full-fledged Budget.

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With Finance Minister Amit Mitra opting out to be part of the new ministry, it is not yet clear who will steer the state’s economy at this crucial juncture.

It is not going to be easy, certainly.

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