West Bengal's Budget Presentation Today Amid Debt and Revenue Issues

Kolkata, Feb 12 (NationPress) Amidst the three primary issues of debt, revenue, and expenditure management, West Bengal's Minister of State for Finance (independent charge) Chandrima Bhattacharya will unveil the state budget for the fiscal year 2025-26 in the state Assembly on Wednesday.

According to the state finance department's figures, the total accumulated debt for West Bengal is expected to reach Rs 6,93,231.66 crore by March 31, 2025, a notable increase from Rs 6,30,783.50 crore as of March 31, 2024.

Interestingly, at the conclusion of the financial year 2010-11, the last under the previous Left Front government, the total debt stood at just over Rs 1.90 lakh crore.

Experts suggest that the escalating debt is a result of two overlapping factors: soaring revenue expenditures and the limited capacity for the state's own tax revenue generation. Balancing these elements is essential for effective debt management.

Recent findings from the NITI Aayog report titled 'Fiscal Health Index: 2025' have underscored the shortcomings in the state's debt management, particularly regarding the ratio of interest payments to total revenue receipts.

The report indicates that while West Bengal's debt as a percentage of Gross State Domestic Product (GSDP) has decreased from 40.7 percent in 2010-11 to 35.7 percent in 2018-19, the interest payments on the accumulated debt remain a significant concern.

“Interest payments constitute 20.47 percent of Revenue Receipts this year, limiting the state's capacity to allocate funds for developmental projects,” the report states.

The second major concern involves the limited sources of the state’s own tax revenue, which heavily relies on the state excise component.

As of March 31, 2025, the anticipated growth in the state’s own tax revenue is only nine percent, while the state excise component is projected to grow at an impressive 16 percent.

State excise is merely one of the twelve components contributing to the state's tax revenue. Analysts argue that the heavy reliance on just one component is not indicative of a robust economy.

This issue is also addressed in the latest NITI Aayog report, which highlights that while West Bengal’s tax revenue has been the primary income source for the government, boosted primarily by SGST collections, the state’s non-tax revenue has experienced a decline over the past five years.

Moreover, the report mentions that West Bengal’s reliance on grants-in-aid as a portion of revenue receipts has escalated from 17.6 percent in 2018-19 to 19.6 percent in 2022-23.

The final concern is related to expenditure management, specifically ensuring that expenditures are productive. The NITI Aayog report reveals that West Bengal’s spending on physical infrastructure as a percentage of total expenditure has dropped from 5.3 percent in 2018-19 to 3 percent in 2022-23, which is below the national average.

Equally alarming is the reduction in capital expenditure as a share of total expenditure, which has declined from 12.2 percent in 2018-19 to 8.3 percent in 2022-23, again below the national average.

Although social expenditure as a proportion of total expenditure remains relatively high at 28.2 percent during the reviewed fiscal period, this figure still falls short of the national average.

In the aforementioned report, the fiscal health of 18 Indian states was evaluated, with West Bengal ranking 16th among them.