Immediately after coming to power in West Bengal in the 2011 assembly elections ending the 35-year rule of the Left Front in the state, chief minister Mamata Banerjee announced the Kanyashree Scheme. This annual as well as one-time payment to girl students coming from a particular economic bracket, was to encourage them to go for higher studies and prevent early marriages.
The announcement was considered as a political masterstroke since it boosted Mamata Banerjee’s popularity among the women voters in the state, especially those coming from the lower and the lower middle income groups.
Even at that point of time some economists questioned the financial sustainability of the scheme considering the huge recurring payout from the state exchequer. But their voices of rational economic logic were silenced because of the massive popularity of the scheme, which also bagged a UN award for its uniqueness.
That was just the beginning. Kanyashree was followed by several other dole schemes like free cycles, free tablets, free crop insurance and free mediclaim scheme for all irrespective of the financial background.
The latest was the Lokkhir Bhandar, the monthly dole scheme ranging from Rs 500 to Rs 1,000 for women of the state. Although initially the scheme was restricted for women from a particular economic bracket, later the chief minister opened the scheme for all women.
It can be said that these dole schemes undoubtedly helped the Trinamool Congress and Mamata Banerjee to increase their popularity and vote share in the successive elections. However, by then a major vacuum was created in the state exchequer which is evident in the skyrocketing increase in the accumulated debt of the state government during the last 11 years of the Trinamool Congress regime.
A simple comparison quoting figures from the budget documents of the state government during the different financial years will highlight the precarious debt situation of the state. At the end of the financial year 2010-11, which was the last financial year under the Left Front regime, West Bengal had an accumulated debt of Rs 1.95 lakh crore.
Now, in March 2022, as the current finance minister, Chandrima Bhattacharya presented the budget for the financial year 2022-23, she projected in the budget estimates that the state’s total accumulated debt will rise to Rs 5.86 lakh crore from Rs 5.28 crore as per the revised estimates for 2021-22. This means that by March 2023, when the Trinamool Congress will complete an uninterrupted 12 years of rule, a massive Rs 3.90 lakh crore will be added to the accumulated debt figure that the Trinamool Congress inherited from the Left Front in 2011.
Therein lies the question on how long the state government will be able to continue with the freebies depending on the market borrowings. The question also lies on whether once the state government will be forced to discontinue many of the schemes because of lack of funds, will that discontinuation politically backfire on the ruling party.
The finance minister feels that there lies the uniqueness of the innovative thinking of the state government under the leadership of Mamata Banerjee that despite the dual pressure of interest on the loans left back by the Left Front regime and the constant non-cooperation of the Union government in realizing central funds, the state government has been successfully able to continue with the welfare schemes. “I can guarantee that despite hardships faced by the state government not a single welfare scheme will be discontinued in the future,” he said.
A Trinamool Congress veteran Lok Sabha member said that these welfare schemes differentiate between the state’s ruling party and the ruling party at the Centre.
According to him, while on the one hand the Union government is curtailing the budgets for different welfare schemes and facilitating its corporate friends by waiving off bank loans, the West Bengal government is going in a totally opposite direction by ensuring the welfare of the people notwithstanding the economic hardships.
However, economists are of the opinion that this unbridled expenditure on the dole schemes without any alternative source of revenue generation other than state excise has pushed the state government towards a virtual debt trap.
“The state government seems to be blissfully ignorant about the alarming rate of debt to gross state domestic product, which is already hovering over 30 per cent. The day is not far when fresh loans will be utilized only for servicing old debt and that will be the debt trap situation for the state government in economic terms,” said economics teacher P.K. Mukhopadhyay.
Investment consultant and financial analyst Nilanjan Dey said that if the state government is really serious about continuing with at least some of these welfare schemes, it should concentrate on generating the state’s tax revenue from sources other than state excise. “The answer is in attracting big ticket investment both in manufacturing and services, which will add to the state revenue and also generate employment. But again, that will depend on how progressive the state government will be in amending its land and special economic zone policies,” he said.
Political analyst Rajagopal Dhar Chakraborty feels that once the state government will be forced to discontinue the dole schemes because of lack of funds, it will politically backfire on the ruling party.
“The problem with dole or freebies
politics is that as long as the state government continues with the dole schemes, the ruling party is the hero for the voters. But once such schemes have to be discontinued because of economic compulsions the same hero overnight turns into a villain. People will neither understand the economic compulsions nor will remember the benefits of the schemes reaped by them for so many years,” he said.