KOLKATA: The West Bengal government has started preparations to approach the market this week to borrow approximately Rs 4,300 crore to pay the 25% Dearness Allowance (DA) to state government employees and pensioners, following a Supreme Court order issued on May 16.
The state requires around Rs 10,425 crore to comply with the apex court’s order by June 27; or else it may face contempt of court proceedings. On the contrary, complying with the order will push the state into a larger debt trap with a total outstanding debt of Rs 7,06,531.61 crore, as per the revised budget estimate for 2024-25.
When the Mamata Banerjee government came into power in May 2011, the state had a total debt of around Rs 1.89 lakh crore. Over the last 14 years, the debt has nearly quadrupled due to inadequate mobilisation of financial resources and a significant jump in expenditure related to various welfare schemes, including ‘Kanyashri’, and ‘Lakshmir Bhandar’.
According to political observers, these schemes paid a huge dividend to Mamata Banerjee’s All India Trinamool Congress in the electoral politics both in Assembly and Lok Sabha polls by securing most of the women’s vote. However, at the same time, these schemes, along with ‘Swastha Sathi’, somehow depleted the exchequer somehow.
“Now it’s a Catch-22 situation for the West Bengal Government. If they fail to comply with the SC’s order, they will face contempt proceedings. Otherwise, West Bengal will plunge into an acute debt trap if the government taps the market to borrow the funds needed to pay employees’ DA,” a political observer said. The West Bengal government has set a budgetary target to raise Rs 81,972.33 crore from the market in the 2025-26 fiscal year.
In the last financial year, it borrowed Rs 80,000 crore from the market. According to sources in Nabanna, the state administrative headquarters, the government will have to pay 25% of the outstanding DA of the employees following SC’s interim order. For the serving employees, the amount may be deposited into their GPF accounts.
Since the state manages the GPF, the entire money will rest with the government, and if deemed necessary, it can also borrow from this fund. For the retired employees, the outstanding DA will be paid directly. According to the sources, the amount stands at approximately Rs 2,902 crore.
A dilemma for state govt as SC deadline looms
The state requires around `10,425 crore to comply with an order of the apex court by June 27; or else it may face contempt of court proceedings. On the contrary, complying with the order will push the state into a larger debt trap with a total outstanding debt of `7,06,531.61 crore, as per the revised budget estimate for 2024-25. “It’s a Catch-22 situation for the state govt,” a political observer said.