Kolkata, Feb 12 Amid the three major concerns of debt, revenue and expenditure management, West Bengal Minister of State for Finance (independent charge) Chandrima Bhattacharya will present the state budget for the financial year 2025-26 in the state Assembly on Wednesday.
As per figures of the state finance department, the total accumulated debt for West Bengal as of March 31, 2025, is slated to rise to Rs 6,93,231.66 crore, which is significantly higher than the figure of Rs 6,30,783.50 as of March 31, 2024.
Incidentally, at the end of the financial year 2010-11, the last financial year under the previous Left Front regime, the total accumulated debt was slightly over Rs 1.90 lakh crore.
Economists feel that the high accumulated debt reflects the combination of two parallel factors: skyrocketing revenue expenditures and limited avenues of the state’s own tax revenue generation. Without balancing these two factors, effective debt management is virtually impossible.
Even the lapses in debt management by the West Bengal government have been highlighted in the latest NITI Aayog report titled Fiscal Health Index: 2025', especially as regards to percentage of interest payments of the total revenue receipts.
As per the report, where the financial year 2022-23 has been mainly taken as the fiscal under review, although West Bengal’s debt as a percentage of gross state domestic product (GSDP) has declined from 40.7 per cent in 2010-11 (the last financial year under the previous Left Front regime) to 35.7 per cent in 2018-19, the real cause of concern for the state government on this count is the interest payment on the accrued debt.
“Interest payments account for 20.47 per cent of Revenue Receipts in the current year, constraining the ability of the state to allocate funds for development,” the report read.
The second area of concern is the limited avenues of the state’s own tax revenue, which is overwhelmingly dependent on the state excise component.
While the projected state’s own tax revenue growth as of March 31, 2025, over March 31, 2024, was pegged at just nine per cent, the corresponding growth in the state excise component alone as of the same period was projected at as high as 16 per cent.
State excise is just one of the 12 components of the state’s own tax revenue column. Economists feel that the over-dependence on just one of 12 components of the state’s own tax revenue is not at all a sign of healthy economics.
This factor has also been highlighted in the latest NITI Aayog report on this count. As per the report, while West Bengal’s tax revenue was the major source of income for the state government primarily due to collection under SGST and hence grew at an annual rate of 6.6 per cent over the past five years, the state’s non-tax revenue has witnessed a decline over the last five years.
At the same time, the report added, West Bengal’s reliance on grants-in-aid as a proportion of revenue receipts has increased from 17.6 per cent in 2018-19 to 19.6 per cent in 2022-23.
The third and final area of concern is expenditure management or rather ensuring quality expenditure by the state government. As per the NITI Aayog report, West Bengal’s spending on physical infrastructure as a proportion of the total expenditure has reduced from 5.3 per cent in 2018-19 to 3 per cent in 2022-23 which is lower than the national average.
Equality pathetic is the picture of capital expenditure as a proportion of total expenditure, which as per the said report, has reduced from 12.2 per cent in 2018-19 to 8.3 per cent in 2022-23 and is again lower than the national average.
Although the percentage under the head of social expenditure as a proportion of total expenditure had been comparatively higher in West Bengal at 28.2 per cent during the fiscal under review, the figure is again lower than the national average.
In the said report, the fiscal health of a total of 18 Indian states has been reviewed and West Bengal has ranked 16th among these 18 states.
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