electric vehicles: Bengal Budget: FM expands cash transfer, provides tax sops to tea sector and electric vehicles

The Mamata Banerjee government Friday sought to expand the scope of direct cash transfers in the state budget, harnessing a proven 2021 poll template to boost popularity ratings with the electorate and stimulate bottom-of-the-pyramid demand.

The state’s new finance minister Chandrima Battacharya proposed to add widen cash transfers to 21 lakh widows, while the state already provides guaranteed income to 1.53 crore women in the age group of 25-60 years through “Lakshmir Bhandar” scheme with annual financial involvement of around Rs 10,000 crore, creating a hole in the state’s finances. The budget provides Rs 960 crore more for the expanded widow pension scheme over the current outlay of Rs 1560 crore.

The budget also seeks to provide relief to the tea sector and its workers, and incentivized investments in battery operated two-wheeler and four-wheeler vehicles. Tax relief has also been offered to reduce carbon emission.

The rise in government spending is, however, likely to put the state finances in more stress. The government looks to borrow 6.5% more at Rs 114959 crore in FY23 to meet the proposed higher expenditure even as the revenue deficit is budgeted to fall to Rs 28,280 crore in FY23 from Rs 32,964 crore in the current fiscal. Bhattacharya placed a Rs 2-crore deficit budget as she planned to provide Rs 3,21,030 crore in the next fiscal.

She expects revenue receipts in FY23 to increase to Rs 198,047 crore, compared with the revised estimate of Rs 176,031 crore for FY22.

“We are following the demand side stimulation model by putting cash money in the hands of common people through digital platforms, as has been done by developed and developing economies of the world,” Bhattacharya said.

According to the government’s estimates, the state’s economy is likely to grow

12.82% in FY22 on a low base while the national economy is expected to record a positive growth of 9.18%. India’s GDP contracted 7.25% in FY21, while the state claimed its economy to have grown by 1.06%.

“We have consistently shown positive growth in government’s spending for infrastructure development, social sector expenditure, agriculture and allied sector expenditure. We are back with hope and optimism,” said Bhattacharya, the minister of state with independent charge of the finance department.

Former finance minister Amit Mitra relinquished his portfolio on health grounds while he has been asked to advise the new FM.

The government has embarked upon an ambitious project to develop Deocha Pachami coal block, which is one of the largest coal blocks in the world and will provide energy to the rapid industrialization of the state besides bringing in huge employment opportunities in the mining sector per-se as well as in allied and ancillary establishments. It would be interesting to see how the government pacifies the ongoing agitation by the locals who are likely to get displaced on account of the project.

The government also said that it has identified over 1,000 acre for developing the proposed deep sea Tajpur Port. “It will harness huge logistics potential, attract further investment in allied infrastructure and industrial development and provide employment opportunities,” the FM said.

The minister proposed to provide relief to the tea Industry, tea estates and lakhs of tea workers dependent upon the tea industry for their livelihood, in form of exemption in payment of rural employment cess and education cess. She has also proposed to waive the agricultural income tax for FY23 to give relief to tea gardens, especially the small ones. In order to incentivize investment in battery operated two-wheeler and four-wheeler electric vehicles, she proposed to exempt registration fees and road tax for the next two years. Registration fee and road tax on CNG vehicles are also on offer over the same period.

The exemption of 2% rebate on stamp duty and 10% rebate on circle rate of land / property has been extended for another 6 months up to September 30. This is likely to provide relief to home buyers.

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