Bengal budget offers Rs 350 crore salve to note recall wounds

KOLKATA:In an attempt to establish her credentials in national politics and address the "pain of demonetisation", Mamata Banerjee's government in Bengal allocated Rs 250 crore to provide a one-time grant of Rs 50,000 to 50,000 migrant workers, who lost their jobs due to demonetisation, to establish alternative businesses.

Banerjee has not not only been vocal about criticising the demonetisation scheme, her government took the issue ahead by announcing sops for those who were impacted by it and state Finance Minister Amit Mitra's budget speech mostly dealt with the adverse effects of the note recall.

Mitra proposed a Rs 100 crore corpus to "mitigate the suffering" of farmers in Bengal who were affected by demonetisation. Banerjee's government is the first state government to announce a special corpus of Rs 350 crore for those who were affected by the note ban. This was the first budget since Banerjee started her second stint as Bengal's chief minister and also the first one after demonetisation.

"Demonetisation has forced thousands of skilled workers from different parts of the country to return to the state. These workers are presently living in a pitiable condition," said Mitra.

Although the budget does not reflect any major tax reform or tax burden for generating the extra funds, the government will need to create the special corpus. Banerjee, however, said that her government does not believe increasing "unnecessary tax pressures“ on people. “We are a family . Everyday we cannot have great food. At times, the family compromises great food. At times, the family compromises to help a member in distress. We will do the same. We will manage the funds from our available resources and stand by those who are in acute pain after demonetisation,“ said Banerjee after the budget, adding that her government provided compensation of Rs 3 lakh each to the families of those who died while waiting at ATM queues in the state.

Mitra announced relief for small business by changing VAT slabs. "Small businesses and startups were adversely affected by demonetisation. In order to give them relief during this time of distress, I propose to increase the threshold from Rs 10 lakh to Rs 20 lakh," said Mitra.

Asked about the impacts on the state's exche quer by the Rs 350 crore demonetisation corpus and the VAT relief, Mitra pointed out that the administration reforms will lead to "ease of doing business" and result in more tax collections.

With an eye on the 2018 panchayat elections, Mitra's budget focused on several schemes benefiting small businesses, skilled workers including migrant labourers and farmers. Mitra, however, claimed that the schemes were carried out to counter effects of demonetisation on these sectors.

The government will soon conduct a survey to prepare a list of beneficiaries for the schemes. Other administrative reforms on VAT registration, submission of a separate VAT (audit) report, speeding up VAT reform cases and setting up of new VAT offices were also announced.