Friday, November 11 2005 18:30 Hrs (IST) - World Time -

Kolkata: Union Finance minister P Chidambaram today (November 11, 2005) slammed the West Bengal government on its 'unsustainable' fiscal health and urged all states to set their fiscal houses in order by following the roadmap laid down by the 12th Finance Commission.

''West Bengal is one of the most debt stressed states. Interest payment by the state alone accounts for 48 per cent of revenue collection last year. It has an unsustainable revenue deficit position,'' the finance minister said at the 105th AGM of the Bharat Chamber of Commerce here.

Noting that the West Bengal government has not yet adopted the Fiscal Responsibility and Management Act (FRMA) even though the 12th Finance Commission recommended it, he said ''the chambers of commerce should impress upon the state government to achieve fiscal discipline.''

Both the revenue deficit (3.63 per cent) and fiscal deficit (5.10 per cent) as proportions of state GDP, he said was much higher than the national average and ''the state should adopt a fiscal correction path to be eligible for debt relief.''

Turning to other state governments, the union finance minister said ''the 12th Finance Commission has recommended a roadmap so that each state can achieve fiscal discipline and it also has given a liberal debt relief scheme.''

With the Centre 'willingly accepting a huge burden' imposed by the Commission to lessen the burden of states, the latter should utilise the opportunity ''to set their fiscal houses in order,'' he said.

Critical of the wasteful expenditure by the Centre as well, Chidambaram said ''fiscal deficit should be brought down within three per cent by 2008-9 and revenue deficit wiped out'' to make way for governmental savings and further boost economic growth.

The finance minister also denied the repeated allegations by Marxist ruled West Bengal government of low devolvement of funds to the state by the Centre.

While the 11th Finance Commission has been generous to the states, ''the 12th Finance Commission has been extremely generous,'' he said.

West Bengal had received a total of Rs 35,652 crore from the Centre under all heads during the 11th Finance Commission (2000-2005), while under 12th Finance Commission (2005-2010), the state is projected to receive 30 per cent more funds at Rs 50,877 crore.

During the current fiscal till November 10, 2005, the state has been released a total of Rs 14,158 crore including a plan assistance of Rs 1,242 crore.

The FM also dismissed as 'misconceptions' complaints by BCC president Santosh Rungta that 'farm credit has largely remained on paper'.

The total bank credit to the farming sector, he said has surpassed the targeted Rs 1,05,000 crore in 2004-5 to achieve Rs 1,15,000 crore disbursement.

''I'm confident that the banks will achieve a much higher target of Rs 1,41,000 crore set for this year,'' he said.

Stating that farm credit in West Bengal also increased from Rs 2,129 crore in 2004-5 to Rs 3,295 crore last year,'' he said the state was expected to get 30 per cent growth in agricultural credit this year.