While the earnings of the Central government are increasing through the collection of “cesses and surcharges”, the “receivables of the State” from the Centre are only falling since the Bharatiya Janata Party (BJP) government came to power in 2014, noted West Bengal Chief Minister Mamata Banerjee. Ms. Banerjee wrote a letter to Prime Minister Narendra Modi claiming that the State government had been deprived of an outstanding amount of nearly ₹50,000 crore under several heads.

One of the key factors was that the Centre was increasingly relying on “cesses and surcharges”, which had gone up from 6.17% of the Gross Tax Revenue in 2014-15 to 18.4% in 2019-20. “Since these do not form a part of the kitty of Central taxes, their devolution to States does not happen” thus reducing the “receivables of the State”. But more fundamental challenges were evolving out of the delay in paying GST (Goods and Services Tax) compensation to the States, the CM stated.

‘Negative impact’

GST compensation of November 2019 was cleared in February 2020, “having a serious negative impact on the management” of the States’ finances, the letter noted. In addition, “Bengal is being denied of ₹11,212 crore of devolution funds from the Centre during the financial year 2019-20,” as estimated in the previous Budget. Devolution of Central taxes had fallen over the last two years as well. An amount of ₹2,330.01 crore Special Backward Regions Grant Fund had also not arrived, the letter noted.

Altogether, the State had been “deprived” of an amount of nearly ₹50,000 crore, Ms. Banerjee noted. However, over the last decade, the State had “repaid a staggering loan of ₹3 lakh crore towards debts and interest…left behind by the previous Left Front Government”.

Despite working against odds, the State GDP (Gross Domestic Product) was 10.4%, higher than the national GDP and Index of Industrial Production (IIP) was 3.1% (April-November) as compared to national IIP of 0.6%. The State was also significantly ahead of the Centre in the services sector, Ms. Banerjee noted.