Kolkata, June 22 (IANS) The first budget under a Bharatiya Janata Party (BJP) Government in West Bengal will be presented on the floor of the state Assembly on Monday afternoon by the new state Finance Minister, Swapan Dasgupta, a journalist-turned-politician, amid expectations of new measures for the state’s own tax revenue generation, better debt management and reformed policies to attract big ticket investments.
While apprehensions among common people surface before any budget about the possibilities of higher tax burdens, FM Dasgupta had tried to address the fear of the citizens on this count immediately after being allotted the state finance department portfolio earlier this month.
He clearly said that his target was to increase the state’s own tax revenue without imposing an additional burden on the people through an upward revision of the existing tax structure.
FM Dasgupta will start reading out his maiden budget speech from 12 noon today.
Dasgupta argued against the logic that the state’s own tax revenue can be increased only by raising tax rates and stated that at times, even a reduction in the tax rate can increase tax revenue.
“So, my prime target is to increase the state’s own tax revenue collection but without an upward revision in the existing tax rates,” he said.
Economic advisors find logic in Dasgupta’s argument on this count that the state’s own tax revenue could be increased without putting extra tax burden on the common people, provided the state finance minister concerned can open more channels for tax revenue generation instead of just depending on a couple of channels for that purpose.
During the previous Mamata Banerjee-led West Bengal government, the main complaint of economists was against the limited avenues for the state’s own tax generation, which were mainly dependent on two heads: State Goods and Services Tax (SGST) and state excise.
The new Finance Minister seems to be directly addressing that concern of economists about the fiscal health of West Bengal in the backdrop of a cash-strapped state exchequer, rising accumulated debt, and huge non-Plan expenditure.
Already, before presenting his first budget, he initiated a new system to make the state excise collection system transparent, corruption-free and higher revenue generating.
The state finance department last week had issued a notification making advance payments of all state excise-related duties mandatory for liquor manufacturers, breweries and bottling plants.
Technically, this means that, henceforth, all such units will have to pay the relevant state excise duties in full before any product is removed from the manufacturing company, brewery, or bottling plant concerned.
The new system had been introduced with the primary aim of sealing avenues of corruption in the collection of state excise and ensuring better revenue collection.
Regarding debt management, the biggest challenge for Dasgupta is putting in place efficient debt management amid the massive accumulated debt burden on the state, which is projected to increase to Rs 8.15 lakh crore by March 31, 2027, as against just Rs 1.99 lakh crore on March 31, 2011, which was the last year of the 34-year Left Front regime in West Bengal.
While economists feel that the only way to address this accumulated debt issue is a combination of higher tax revenue generation and massive curtailment in non-Plan and revenue expenditure, it is to be seen what kind of reforms will Dasgupta announce today on this front.
On the issue of attracting big ticket investments in the state, both for the manufacturing and the services sectors, certain major policy changes as regards to the reforms in the state’s land and Special Economic Zone (SEZ) policies are required to achieve that goal.
According to industry observers, in case of land policy, two major reforms are required. The first is repeal of the existing Urban Land (Ceiling and Regulation) Act, 1976 and the second is to do away with the existing policy that prevents any state role in land acquisition or land procurement for the industry.
This existing policy that prevented any state role in land acquisition or land procurement for the industry, had been a major disincentive for the investors to venture in West Bengal with a highly fragmented land holding structure.
“Amid this policy, the investor was unwilling to come forward with big-ticket investment in the state which required a huge plot of land at one go and take the trouble of negotiating with individual land owners for purchasing of that plot for the proposed industrial unit,” pointed out a city-based industry observer.
On the other hand, the state’s government’s “no Special Economic Zone policy” is a disincentive towards attracting investments in the services sectors, especially Information Technology Enabled Service (ITes) sector.
Now, it is to be seen whether Dasgupta’s maiden budget today addresses these crucial policies or not.
To recall, on February 5 this year, the previous Minister of State for Finance (Independent Charge), Chandrima Bhattacharya, had presented the interim (vote-on-account) budget in the Assembly.
The full budget could not be presented due to the West Bengal Assembly elections, which were then due in April. The results were declared on May 4, following which the new government was sworn in.
–IANS
src/rad
