West Bengal has gained foothold among the top three states in India with an all-round turnaround due to a GSDP (gross state domestic product) growth of 9.1% on-year in fiscal 2018 and has ranked among the top six states with high GSDP growth and low fiscal deficit, according to global analytics company, CRISIL’s latest report.
This should be great news to Mamata Banerjee and the West Bengal government that has failed to project itself as a progressing state in terms of perception, where Gujarat (led by Narendra Modi and a publicity blitzkrieg often projecting it as a model state of growth) has forged ahead. With this data, Banerjee will now have plenty to talk about her government prioritising growth, reducing fiscal deficit, debt burden and at the same time spending high on education, health and social security and welfare.
According to the report, three macroeconomics yardsticks – growth, inflation and fiscal deficit – form the “basic grid” of its analysis of the states, and in terms of rankings, and “it is clearly indicated that West Bengal has gained a foothold into the top three with an all-round turnaround – GSDP grew 9.1% on-year in fiscal 2018 compared with 4.8% earlier, even as inflation dropped sharply to sub-4% from 7%; and fiscal deficit to 2.4% from 3%”.
Gujarat and Karnataka remained among the top three performing states in 2018, and Madhya Pradesh (which was among the top three earlier), slid in fiscal 2018 due to GSDP slowdown and slippage on fiscal deficit.
“Between fiscals 2013 and 2017, Gujarat, Madhya Pradesh and Karnataka were the top growing states, on average. All three managed to maintain GSDP growth higher than the all-India GDP growth in fiscal 2018.
West Bengal, Jharkhand and Bihar had ranked at the bottom in the past five years. Among these, Bihar and West Bengal saw growth rise much above all-India growth in fiscal 2018, while Jharkhand remained at the bottom.
Which sectors spurred growth in the fastest-growing states? In Gujarat and Karnataka, manufacturing was the main driver, while in Madhya Pradesh, agriculture and allied activities drove growth on average. Among the laggards, West Bengal was dragged down by mining, Jharkhand by electricity and other utilities, and Bihar by construction activities.”
West Bengal’s performance has been impressive in narrowing the fiscal deficit. According to the CRISIL report, “10 of the 17 states overshot the FRBM limit (set under the Fiscal Responsibility and Budget Management Act) in fiscal 2018. Fiscal deficit was the largest in Bihar, Punjab, and Odisha, and the smallest in Gujarat, Maharashtra and West Bengal.
West Bengal is third among all states when it comes to spending on health and tops all states when it comes to spending on social security and welfare. (This has been concluded on the basis of spending in the area as a percentage of state’s total spending with figures sources from state budget documents, RBI study of state budgets, CEIC, CRISIL). The state comes second in spending on urban development and third in spending on rural development.
Also, interestingly, the debt ratio in West Bengal from fiscal year 2013 to 2018 has decreased. According to the CRISIL report, “On the whole, debt ratios of only four states – Gujarat, Maharashtra, Uttar Pradesh, and West Bengal – were better off in fiscal 2018 over 2013.”
Debt ratio narrowed in these states West Bengal and Gujarat were able to rein in their primary deficit and improve debt ratio. Unlike most other states, West Bengal did not participate in the UDAY (Ujwal DISCOM Assurance Yojana). On the other hand, despite participating in UDAY, Gujarat did not incur any debt obligation.
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