West Bengal Budget 2025-26 to be Tabled Amid Concerns
West Bengal's Minister of State for Finance (Independent Charge), Chandrima Bhattacharya, is set to present the state budget for the financial year 2025-26 in the Assembly on Wednesday. The budget comes at a critical time when concerns over mounting debt, revenue constraints, and expenditure management continue to weigh heavily on the state’s financial stability.
According to data from the state finance department, West Bengal’s total accumulated debt is projected to rise to Rs 6,93,231.66 crore by March 31, 2025, marking a sharp increase from Rs 6,30,783.50 crore recorded on March 31, 2024. The debt burden has grown significantly over the past decade, as the debt at the end of the 2010-11 financial year, under the previous Left Front government, stood at just over Rs 1.90 lakh crore. Economists argue that this sharp rise in debt is a result of a combination of high revenue expenditures and limited avenues for tax revenue generation. Without addressing these structural issues, effective debt management will remain a major challenge for the state government.
The latest Fiscal Health Index: 2025 report by NITI Aayog has flagged concerns over West Bengal’s debt management, particularly with regard to interest payments. The report highlights that interest payments alone account for 20.47% of the state’s total revenue receipts in the current fiscal year, significantly limiting the government’s ability to allocate funds toward developmental initiatives. While the state’s debt as a percentage of its Gross State Domestic Product (GSDP) has declined from 40.7% in 2010-11 to 35.7% in 2018-19, the growing interest burden remains a pressing fiscal concern.
The state’s limited sources of tax revenue have further compounded its financial challenges. While West Bengal’s overall tax revenue is projected to grow by just 9% between March 31, 2024, and March 31, 2025, the state excise component alone is expected to grow at a much higher rate of 16% during the same period. Economists have expressed concerns over the government’s increasing reliance on excise revenue, arguing that such dependency on a single component within the tax structure is unsustainable. State excise is only one of the 12 revenue components, and over-dependence on it highlights weak revenue diversification.
The NITI Aayog report further points out that while tax revenue remains a crucial source of income for the state, primarily through the State Goods and Services Tax (SGST), West Bengal’s non-tax revenue has been declining over the past five years. Additionally, the state’s reliance on grants-in-aid has increased from 17.6% of revenue receipts in 2018-19 to 19.6% in 2022-23, underscoring the growing dependence on central assistance to meet financial obligations.
Apart from concerns surrounding debt and revenue generation, the quality of government expenditure in West Bengal has also come under scrutiny. The report highlights a worrying decline in capital and infrastructure expenditure as a proportion of total spending. West Bengal’s spending on physical infrastructure has dropped from 5.3% of total expenditure in 2018-19 to just 3% in 2022-23, significantly lower than the national average. Similarly, capital expenditure has fallen from 12.2% in 2018-19 to 8.3% in 2022-23, raising concerns about the state’s ability to invest in long-term economic growth and development.
While social sector spending stood at 28.2% of total expenditure in the fiscal under review, the figure remains below the national average. This suggests that despite relatively higher spending on welfare measures, West Bengal is struggling to match national benchmarks in public welfare investments.
In its fiscal health assessment of 18 Indian states, NITI Aayog ranked West Bengal 16th, highlighting the state’s weak financial position relative to its peers. The combination of rising debt, weak revenue growth, and declining capital expenditure has placed the state among the lowest-ranked in terms of fiscal stability. As the government prepares to present the budget, analysts and industry experts will be closely monitoring for measures aimed at improving revenue collection, reducing debt, and increasing productive expenditure. However, given the current financial challenges, the government may have limited room to introduce new spending initiatives.
The budget presentation is expected to provide clarity on the government’s fiscal strategy, particularly on how it plans to balance its expenditures while ensuring long-term economic growth. Whether the new budget addresses these concerns effectively remains to be seen, but with the state’s fiscal health under pressure, the upcoming financial roadmap will be crucial in determining West Bengal’s economic trajectory.
