In Industry-Starved Bengal, Mamata Banerjee's Poll-Winning Welfare Schemes Face a Cash Crunch

With the Union government appearing keen to not give the state more funds, the Bengal government's 'earn less, spend more' strategy has run into a hurdle.

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The West Bengal assembly election in 2021 and the Uttar Pradesh assembly election in 2022 had a common catchword: labharthi or beneficiary. The word is not new in politics but in the last five years, it has become the magic wand for the populist governments.

Dole politics is common in states like West Bengal and Uttar Pradesh, which are backward in terms of industrialisation.

Before the 2021 West Bengal assembly elections, several political pundits and many heavyweight Trinamool Congress leaders were among those not sure if the TMC would return to power. But the results stunned them and the Bharatiya Janata Party.

A similar situation was seen in Uttar Pradesh. The state had witnessed administrative failure during the pandemic, and severe unemployment. But many have said that behind Adityanath’s return to the Lucknow secretariat for the second time is the politics of labharthis.

Free ration, supply of cooking gas, cash, and other incentives, along with Hindutva politics, secured Adityanath’s chair, it is believed. The same formula brought success to Mamata Banerjee during the assembly elections in West Bengal.

Leading up to the assembly elections in Bengal, the state saw anti-incumbency; corruption in panchayat, panchayat samities, and zila parishad levels; BJP’s huge campaign; and an exodus of a huge number of TMC leaders to the BJP.

In this critical condition, election strategist Prashant Kishor correctly assessed the value of Banerjee’s image. To defend the corruption allegations against the TMC leaders, their slogan became “Didi ke bolo” – a grievance cell claiming to have a direct channel to Banerjee. Besides this, Banerjee gave a call to every corrupt leader, instructing them to give back the cut money that they collected from beneficiaries and various welfare schemes.

To invoke the trust of the beneficiaries, she campaigned around the state alone. No leaders, other than nephew Abhishek Banerjee, were allowed to conduct separate rallies. In her campaign speeches, Banerjee spoke of the welfare scheme on which she had delivered, and promised a number of other schemes which she would implement upon her return to power.

Suvendu Adhikari, the former TMC leader and minister, joined the BJP just before the elections. He defeated Banerjee in the Nandigram constituency, playing the same beneficiary card. Suvendu is in charge of seven cooperative banks in the East Midnapore district. It is well-known that cooperative banks play a major role in the rural economy, and thus, with the same principle and a pinch of Hindutva politics, he defeated Banerjee.

Also read: Mamata Banerjee’s National Ambitions Aren’t Working Out How She Planned

Can Mamata bank on labharthi politics?

Now that Mamata Banerjee has returned to the throne, she needs to increase state revenues simply to continue the culture of dole politics. But how? The state has no big industry or investments. From 2011 to 2022, Banerjee had announced many times that industrialisation is her top priority. But statistics suggest that in terms of investment in any industry or business, West Bengal has a long way to go.

According to Anandabazar Patrika and the West Bengal Budget fiscal year 2023, the recent statistics released by the Central Industry and Business Ministry show that from January to July, investment amounting to Rs 1.7 lakh crore has come into India. However, West Bengal got only 1,663 crore – less than 1% of the total investment. So, the TMC government’s revenue mostly comes from state goods and services tax (SGST), stamps and registration fees, sales tax on petrol and diesel, and state excise.

Simply put, the TMC government is in a debt trap.

The government’s loan repayment amount is Rs 69,511 crore. The West Bengal government spends nearly Rs 28,000 crore annually on various welfare schemes like ‘Lakshmir Bhandar’, ‘Swasthya Sathi’, ‘Kanyasree’, and many pension schemes.

Out of these, the government spends more than Rs 14,000 crore on ‘Lakshmir Bhandar’ (which provides Rs 500 per month to general category families and Rs 1,000 per month to Scheduled Castes, Scheduled Tribes and backward classes), nearly Rs 7,000 crore on ‘Krishak Bandhu’, and Rs 4,500 crore on ‘Khadya Sathi’. Besides this, the state’s rural economy is heavily dependent on the central Mahatma Gandhi National Rural Employment Guarantee Act scheme.

It is no surprise that the BJP is trying to kill Banerjee’s labharthi politics. Recently, the BJP government blocked central grants for MGNREGA in West Bengal, alleging gross illegalities in the scheme. The Union government has also alleged that other central schemes are being run as if they are schemes of the state government.

Understanding the consequences, the TMC government is understood to be attempting to follow central directives. But that is going to take a while. Moreover, the Union government has directed the state to recover the money which has allegedly been pilfered by corrupt panchayat and zila parishad members.

Since December 2021, MGNREGS work has come to a complete halt in some states due to a stated lack of funds. Data tabled by the Ministry of Rural Development shows that West Bengal owes the Union government 65% of the funds pending to all the states. Despite chief minister Mamata Banerjee personally taking up the issue with Prime Minister Narendra Modi, the Union government has not relented.

The pause on MGNREGS work has led to an increase in grievances among masses in West Bengal. For an industry-starved state, welfare schemes hitting a roadblock will lead to social and political tensions.

The next big electoral test for the TMC is the panchayat elections, which are due in the months of April and May 2023. If this situation continues and the Union government does not release funds, then Banerjee’s government might face a difficult situation on the ground.

For the past few months, politics in West Bengal has been centred around the arrest of heavyweight TMC leaders like Partha Chatterjee and Anubrata Mondal, and the scams which have come to fore. However, the bigger and more pressing challenge for the TMC is to ensure that its beneficiary network remains intact.

The chief minister and the TMC chairperson is well aware of the situation. In administrative meetings, she has been appealing to the officers and secretaries of various departments to find ways of earning revenue. To enhance the capacity of taking loans, the TMC government is bringing amendments to the Fiscal Responsibility and Budget Management Act, which will allow the state to borrow more.

Today, The Telegraph has reported on how the Banerjee government has decided to sell off 32 land parcels across Bengal through online auctions in an attempt to generate around Rs 8,000 crore to fund its welfare schemes.

Will the ‘earn less, spend more’ strategy of the government prove to be Banerjee’s Achilles heel?

Bishwajit Bhattacharya is a Kolkata-based journalist.