No big package, Centre offers help to Bengal through projects

NEW DELHI: West Bengal chief minister Mamata Banerjee may have to wait for a grand package to help her tide over the state's acute financial problems. Instead, the Centre has offered her help through specific projects.

Officials say keeping in view the tight fiscal situation, the Centre would only be able to help her with resources if she comes up with specific projects. They said similar help is also expected to be offered to other debt-ridden states such as Kerala and Punjab. They said some announcements are expected shortly on the issue.

Banerjee had demanded a package to tide over the acute financial problems in the state. She had said she inherited a treasury which was in a shambles. The West Bengal government is finding it difficult to pay large sections of its employees.

"It is difficult to announce a huge package at this point in time. There are other states also who may need help," said a finance ministry official, who did not wish to be identified.

"The West Bengal government has been given the option that they can approach the Centre for assistance in specific projects which they think are important for development of the state," the official said. The Trinamool Congress, which is a key member of the UPA coalition, had adopted a tough stand on the issue of petrol price hike and had threatened to walk out of if its demand for a reduction in prices was not met.

Finance ministry officials said various options were discussed with the West Bengal government and the Centre's fiscal situation was explained to them. The government has already said it would be difficult to meet the fiscal deficit target of 4.6% of gross domestic product this year.

Earlier, officials had said that a fiscal package would not be a one-time payment but would be spread over a period of time and would come with conditions.

There is a view within political circles that Kerala and poll-bound Punjab should also be given some assistance. The Kerala government has submitted a long wish list to the Centre. Officials said they had identified specific projects where they would want the Centre to help.

West Bengal's finances have been weak for some time now while Punjab and Kerala fare marginally better. The three states had demanded a debt recast which was rejected by the Centre.

Soon after Banerjee's historic win, the UPA government had offered to assist the state to rebuild its economy and finances. But facing a weak fiscal situation, the Centre has rolled back some of its initial enthusiasm.

Data shows that the three states have a very poor track record on deficit. West Bengal posted the highest fiscal deficit in 2010-11 among the non-special category states.