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May 20, 2011 was a momentous day. That day, Mamata Banerjee took over as the 11th chief minister of West Bengal after ousting the Left Front from its 34-year perch in power. As the new chief minister walked the short distance to Writers' Building from Raj Bhavan, where Governor M K Narayanan had sworn her into office, the surging crowds hemmed her in and, unknown to everyone around, she received abrasions on her arm.
It was only in the antechamber at Writers' Building, where ministers and bureaucrats awaited her, that they noticed she was hurt. Unlike most others who clucked their tongues and expressed concern, Amit Mitra, sworn in as minister minutes earlier, quickly got into action. He got a first-aid kit and nursed Banerjee's wound.
It was perhaps an omen of things to come, for in the years since that incident, Mitra has managed to fix to quite an extent the festering wound that was the financial condition of the state. (WEST BENGAL’S STORY IN NUMBER)
The former secretary general of the Federation of Indian Chambers of Commerce and Industry was a prize catch for Banerjee and her party. His clean, corporate image lent credibility to the Trinamool Congress, a party that had earned the reputation of notoriety for having driven Tata's Nano project out of Bengal.
When Mitra slipped into the role of the state's finance minister in 2011, he was well aware that he had a tough job at hand. The state's gargantuan debt of more than Rs 1,50,000 crore was a fact known to all; Mitra had talked about it in his campaign too. But what he perhaps didn't know was that he would be left handling not only this debt, but also the one arising out of the chief minister's Ma-Mati-Manush policies, which would entail sops without the safety net of tax restructuring.
Marking many firsts
Three years on, it is easy to see what Mitra has achieved on fiscal reforms after assuming office. One of the first things he did was to replace high cost debt with low cost. Within the first six months, the state repaid more than Rs 1,100 crore of the loans taken through the West Bengal Infrastructure Development Finance Corporation at an interest rate of more than 10 per cent. The state opted instead for market borrowing through the Reserve Bank of India at a lower 9.28 per cent. It also repaid a high-interest loan of Rs 300 crore taken from a consortium of banks, saving, in the process, Rs 15 crore for the state exchequer.
Next, he introduced a slew of tax initiatives centred on e-governance in the commercial tax directorate. The e-enabled system was aimed at minimising human interference and eliminating corruption.
That apart, Mitra also relied on the politician's favoured measures to generate revenues. He imposed high taxes on lotteries against zero tax earlier, collecting an additional monthly income of Rs 5 crore. He increased taxes on tobacco-related products. Sales tax on liquor sold at MRP was raised from 23 per cent to 27 per cent, and for liquor without MRP, from 37 per cent to 50 per cent.
In 2012, when Mitra presented his first Budget, no one expected any bold decisions because by this time people knew the profligate tendency of the government's Ma-Mati-Manush thrust. But to everyone's surprise, it soon became evident that the intent of the government was to harness every possible source of revenue.
Mitra reintroduced an entry tax in West Bengal, a tool abolished in many states. The state benefited to the tune of almost Rs 1,200 crore in the first year. It's another story that a fight with the West Bengal Taxation Tribunal Bar Association over the state's coercive collection methods shrank the kitty to Rs 800 crore in the last fiscal.
In his second Budget, Mitra took important steps on tax reforms. The lower value added tax (VAT) rate was raised from 4 to 5 per cent while the upper rate of VAT went from 13.50 per cent to 14.50 per cent. The state also raised the VAT on tobacco products and cigarettes from 20 per cent to 25 per cent.
The results of these steps are evident. Budget documents show that West Bengal recorded a tax revenue growth of more than 40 per cent in 2012-13, with collections at Rs 32,808 crore, on the back of digitisation of the tax collection system. Under Mitra, the tax revenue rose from 4.5 per cent of gross state domestic product, or GSDP, in 2010-11 to 4.7 per cent in 2011-12, 5.2 per cent in 2012-13 and to 5.4 per cent 2013-14. In comparison, in the last six years of the Left Front rule, the state's tax revenue languished at under 4.5 per cent of GSDP.
Deficit indicators too showed a big change. West Bengal's average revenue deficit to GSDP between 2008 and 2010 under the Left Front was 4.8 per cent. In the three years since, the ratio has gone down to 2.9 per cent. Similarly, the state's average gross fiscal deficit to GSDP ratio between 2008 and 2010 was 5.1 per cent, which has slid to 3.6 per cent on average between 2010 and 2013.
"The finance minister was in a tight spot since the beginning of his tenure," says Dipankar Dasgupta, former professor of economics at the Indian Statistical Institute. "The only option he had was to increase revenue sources. The state's resource base is small, but given his limited options, he has done reasonably well."
Mitra's efforts to rejuvenate the state's finances have not missed the eye of key players either. "Changes in state finances are visible," says Abhirup Sarkar, chairman, WBIDFC. "The state's revenue base was stagnant for a long time, but the new government has clearly revived it."
Last December, Mitra took on the additional responsibility of looking after commerce and industry from heavyweight colleague Partha Chatterjee. And though the industry can't stop whining about inaction on the policy of not facilitating land acquisition for projects or in repealing the Urban Land Ceiling Act, the new minister may have succeeded in resolving a nine-year logjam over management of the Haldia Petrochemicals Ltd (HPL).
There is no official word on this yet (possibly because of the model code of conduct during elections), but bankers say that the state may have finally succeeded in making peace with The Chatterjee Group's Purnendu Chatterjee, one of the two principal promoters of HPL, the other being the West Bengal government, by offering him the HPL chairmanship. Officials, however, point out that this simple solution could have come about a long time back. The state, in the interim, decided to sell its shares and it was the Group of Ministers headed by Mitra that was looking into the divestment. The GoM has also ratified IOC as the only "valid" bidder. Controversies aside, if there is a truce between the two warring sides, Mitra could still take some credit.
Little effect
One area that Mitra hasn't yet been able to address with any vigour is West Bengal's attraction to industry. Last year, he got some of India Inc's biggest names - Reliance Industries' Mukesh Ambani, Godrej Group's Adi Godrej, JSW Steel's Sajjan Jindal, RPG Enterprises' Harsh Goenka, ICICI Bank's Managing Director and Chief Executive Officer Chanda Kochhar and TCS' N Chandrasekharan - to meet Banerjee at an investors' meet in Mumbai. However, more than six months since the meet and four after he assumed the role of industry minister, there is no sign of any major new investment coming to the state.
"Amit Mitra understands industry's problems, but he needs the hands-on support of the chief minister to bring about changes," says the chief executive officer of a company. "So far, it has been a hands-off approach of the government whether in terms of land acquisition, or other aspects of the industrial policy." What Mitra has failed to assure industry about is where it stands in the list of Banerjee's priorities.
If Asim Dasgupta, the long-standing finance minister under the Left Front rule, was known for his sharp oratory, his successor is known for his reticence. But then Mitra is not a natural politician who loves the limelight. So much so that he allows even the customary post-Budget press conferences to be hijacked by the chief minister or simply calls them off. And yet his penchant for the low profile has helped him ascend to a position of power in a state where it is the chief minister who hogs the headlines.
A month ago, just ahead of the Lok Sabha polls, he was made the national spokesperson of his party. Yet, unlike politicians who revel in the opportunities afforded by such a post, Mitra has not interacted much with the media, prompting his critics to ask, "Is the spokesperson on mute?"
Mitra is different from the regular politician in other ways too. For one, he lives in a 2,200-square feet flat in a housing complex meant for bureaucrats on Iron Side Road in Ballygunge. "His neighbours are the chief secretary, additional chief secretary and principal secretaries," a bureaucrat says. No other state minister lives in this posh locality.
