Sunday, November 13, 2011

Revenue nudge to Mamata - Pranab cites Left lesson to convince Bengal

http://www.telegraphindia.com/1111113/jsp/frontpage/story_14743845.jsp
Revenue nudge to Mamata
- Pranab cites Left lesson to convince Bengal

Nov. 12: Union finance minister Pranab Mukherjee today advised the Mamata Banerjee government to generate more revenue, the public nudge couched in a reminder that the erstwhile Left regime had ignored his repeated appeals and pushed the state into a debt trap.

"The previous government took loans and went in for borrowings at random. I had repeatedly told Ashok Mitra and Asim Dasgupta (state finance ministers when the Left was in power) not to depend so much on loans but to increase state revenue. I had warned the government also. But they didn't listen.

"What was the result? Bengal has piled up a staggering public debt of Rs 2.03 lakh crore. So, mere borrowings won't do. The state must step up its revenue earnings… and the present government will have to keep that in mind as well," the Union finance minister told a panchayati raj convention in Murshidabad today.

What Mukherjee said in public today was the articulation of the advice the Centre has repeatedly given the Mamata government that has been banking on Delhi to bail it out of the financial mess.

However, Mamata has so far refused to raise taxes or tariff — a populist policy that the Prime Minister also apparently raised when Trinamul Congress MPs called on him a few days ago.

By drawing attention to the folly of the Left and the consequent debt trap, Mukherjee appears to be giving Mamata a saleable reason, if at all she needs one, to explore the possibility of hard decisions such as tax increases or tariff revisions.

Mukherjee has cited the very factor Mamata has been blaming — Left profligacy — to argue why the state government should generate more revenue.

Besides, he also sought to address a question Mamata has been asking: why the Centre allowed the Left to borrow so much.

"Pranabda has simply answered the query by saying he had warned the earlier CPM government against taking huge loans," a Congress minister said today. In the process, the Union minister also added how the new government should avoid repeating the Left's mistake.

Through her high-decibel campaign against the Centre and some sharp comments on the Prime Minister's refusal to commit himself to a price freeze, Mamata has already positioned herself as a friend of the common people and the most vocal champion of Bengal's causes.

The Centre has promised some help but it will take time. But the Mamata government will come under increasing pressure to take some hard decisions — not only to make ends meet but also to deliver the innumerable welfare schemes she has promised Bengal.

If Mamata is looking for economic logic that makes political sense, Mukherjee provided her one today.

Justifying the recent petrol price increase that Mamata had opposed, Mukherjee said the money so raised was used to subsidise kerosene, diesel and cooking gas that affect people from every strata.

Mukherjee painstakingly explained: "The price of petrol is Rs 73 a litre now. But it should have been Rs 43 per litre. Then why are people paying Rs 30 more? Because, the Centre collects close to Rs 15 per litre as tax and the state's share of tax is a little more than Rs 15. The tax collected by the Centre is spent for providing subsidy to diesel, kerosene and LPG consumers."

Then he asked a question the Mamata government has been skirting so far — be it proposals to raise power tariff or milk prices.

"So, how will we run the country without taxes?" Mukherjee asked.

In reply to a question, state commerce and industries minister Partha Chatterjee referred to finance minister Amit Mitra. "Matters relating to finance should be answered by him," Chatterjee said. Mitra was unavailable for comment.

Fuel hike a reality: PM, Page 4

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