Shambhu Ghatak | Economist | Formerly with Planning Commission and Brunei Govt thinktank |
West Bengal’s 2026–27 final budget arrives dressed in good news. The fiscal deficit is down to 2.91% of GSDP in 2026–27 (Final B.E.) from 3.4% in 2025–26 (R.E.). The revenue deficit has more than halved, to 1.02% from 2.07% between 2025–26 (R.E.) and 2026–27 (Final B.E.). The debt-to-GSDP ratio has eased, if only slightly, to 37.98% in 2026–27 (Final B.E.). Finance Minister Dr. Swapan Dasgupta, presenting the new administration’s first full budget, has framed this as the fruit of “active fiscal reforms” applied to a “crippling” inherited debt of ₹8,15,891 crore. It is a tidy story: a new government inherits a mess and begins cleaning it up.
The trouble with tidy stories is that budgets rarely cooperate with them. Pull the fifteen-year data—which the government’s own Finance Department and NITI Aayog have published—and a more complicated picture emerges, one in which the recent improvement looks less like a rupture with the past and more like the continuation of a trend that was already there.
Start with the fiscal deficit. In 2010–11, it stood at 4.24% of GSDP. It fell steadily, hitting 2.62% by 2015–16, years before the current administration existed. A pandemic-driven spike pushed it back up to 3.91% in 2020–21, after which it settled into an average of 3.3% from 2022–23 to 2024–25, before this year’s dip to 2.91%. The revenue deficit-to-GSDP ratio tells a similar story: from 3.75% in 2010–11 down to an all-time low of 0.94% in 2018–19—again, long before any change of government—before COVID-19 pushed it back up and the current budget brought it down again. None of this is to say the new numbers are unreal or that reforms undertaken do not deserve credit. It is to say that West Bengal has been oscillating between fiscal tightening and fiscal slippage for over a decade, largely in step with the business cycle and the pandemic, and the latest improvement fits comfortably inside that oscillation rather than marking a clean break from it.
The debt figures make the point even more starkly. In absolute terms, the state’s fiscal deficit has grown 3.2 times since 2010–11, and total debt has grown 4.4 times, reaching ₹8,15,891.35 crore in the final 2026–27 budget. That the debt-to-GSDP ratio has nonetheless declined—from over 40% in 2010–11 to under 38% now—reflects the fact that GSDP itself has grown even faster, roughly 4.7 times over the same period. This is not fiscal discipline in the sense of the state borrowing less; it is the state’s economy outgrowing its borrowing, a dynamic that owes as much to nominal growth and inflation as to any finance department’s ledger management. Therefore, framing a ratio improvement driven substantially by denominator growth as an achievement of “reform” is, at minimum, incomplete.
There is also a structural problem the headline ratios do not capture: what NITI Aayog’s own March 2025 assessment flagged as West Bengal’s chronic weakness in raising its own money. The state’s own-tax revenue sits at just 5.1% of GSDP against a state median of 6.3%; own non-tax revenue is a thin 0.1% against a median of 1.2%. Transfers from the Centre make up 58% of total receipts—among the highest dependency ratios of any major state. The new budget’s professional-tax restructuring—raising exemption thresholds for salaried employees, self-employed professionals, and small businesses—is a sensible administrative simplification. It remains to be seen whether these measures improve the state’s own tax revenue. The real driver of this year’s improved receipts is not better tax mobilization but a sharp jump in Central Grants-in-Aid, which increased 1.5 times from the interim to the final budget estimate. That money is welcome, but it is not Bengal’s own revenue, and leaning on it does nothing to fix the underlying revenue weakness NITI Aayog identified.
Then there is the burden of running the state at all. Committed expenditure—salaries, pensions, and interest payments- has climbed from ₹1,39,201.64 crore in 2024–25 (actuals) to ₹1,62,190.05 crore in the final budget of 2026–27, still eating up almost half of revenue receipts. Interest payments alone have risen from ₹45,405.66 crore in 2024–25 to ₹53,033.97 crore in 2026–27 (Final B.E.).
None of this, however, is an indictment of the present government alone—the roots of Bengal’s fiscal strain run back well before 2026. West Bengal’s revenue deficit and own-tax weaknesses long predate 2026, and the CAG’s own audit reports show the state routinely missed its self-imposed fiscal targets under the previous administration too—meeting its debt-to-GSDP ratio ceiling in only one year out of five between 2016–17 and 2020–21, and never once eliminating the revenue deficit despite almost two decades of trying. This is a problem that has outlasted every government in Bengal, regardless of which party has ruled.
What this budget deserves, then, is neither the celebratory reading the government would prefer nor a cynical dismissal. It deserves precision. Genuine fiscal prudence would mean widening the state’s own tax base rather than its exemptions, building non-tax revenue beyond incremental gains in land and mining receipts, and reducing—not just managing—the share of the budget locked into salaries, pensions, and interest payments. Until those fiscal reforms are undertaken, improvements in the headline ratios remain vulnerable to being undone by the next downturn or the next election cycle, exactly as they have been for the past fifteen years. The numbers in this budget are real. What is required now is more honesty than either the government’s talking points or its critics’ skepticism currently offer.
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