Amit walks out of Arun meet

TT, New Delhi, Jan. 4: Bengal finance minister Amit Mitra today stormed out of a pre-budget meeting with Arun Jaitley after accusing the Centre of clamping a "financial emergency" through demonetisation and "sacrificing the country's growth".

Mitra, who had attended a meeting of the GST Council chaired by Jaitley earlier in the day, said the budget had become a "meaningless" exercise after Prime Minister Narendra Modi had made several policy pronouncements that ought to have come from the Union finance minister.

Mitra said there was a "political emergency that seems to have happened at every nook and corner on every matter".

"I am saying with a heavy heart that I walked out of the pre-budget meeting after my presentation as the country's growth is being sacrificed. Diamond workers have come back from Gujarat. The leather industry in West Bengal has collapsed. But the Centre is not bothered," Mitra told reporters as he left Vigyan Bhavan.

"There is a financial emergency that is not being talked about... even the data the finance minister gave on tax collections is from April to the end of November (which is a consolidated number) and not the disaggregated data after November 8," Mitra said.

The demonetisation announcement was made on November 8. Jaitley has claimed that direct and indirect tax collections this fiscal will surpass the budget estimate of Rs 16.3 lakh crore.

Indirect tax collections till November have leapt 26.2 per cent to Rs 5.52 lakh crore. Direct tax collections - largely income tax collected from individuals and corporations - swelled to Rs 5.57 lakh crore between April 1 and December 19, Jaitley added.

Officials accompanying Mitra said the Centre's inability to give post-demonetisation numbers weakened its argument that the move had triggered a sharp rise in the Centre's tax collections.

Jaitley had scheduled the pre-budget meeting with state finance ministers after the meeting of the GST Council.

The Bengal finance minister took the opportunity presented by the GST meeting to lobby for the inclusion of several state-specific issues in the budget. "I also told them that the tax collections in December in West Bengal last year (2015) were 11 per cent higher..., it is a negative growth of 2 per cent for December 2016. This implies Bengal has lost 13 per cent of potential taxes," Mitra said, adding that states were faced with a 30 to 40 per cent decline in their budgetary revenues.

At a news conference later, Jaitley riposted that "states which are governed well have earned well" and drew attention to the revenue buoyancy in Punjab and Haryana after the November 8 announcement.

The Bengal finance minister said there was no point in introducing GST now since it would be a "double whammy" for states after demonetisation.

Mitra argued that the resultant loss of revenue meant that the states would not be able to fund their social welfare programmes, crimping expenditure in crucial sectors such as health, education, water, and physical infrastructure.

"The financial crisis is derailing the economy. Who is responsible for that?" Mitra asked.

He said the leather industry in Bengal had collapsed.

Over 12 lakh power looms in Maharashtra have closed down, forcing migrant workers to return to their homes in Bihar, Uttar Pradesh and Telangana. In the case of Maharashtra, the red chilli industry has shrunk by 30-40 per cent while Nagpur's orange farms have withered.

Other states argued that the budget would have to come up with ways to make more resources available to states, especially after the Centre decided to scrap the decades-old classification of expenditure into plan and non-plan categories in the forthcoming budget.

States that have been battling a resource crunch for several years demanded that they be allowed to borrow more and even offered to pay