West Bengal Budget: Revenue up, but deficit increasing

The revenue deficit for 2023-24 has been pegged at Rs 30,924.09 crore, with fiscal deficit and outstanding debt at Rs 65,838.92 crore and Rs 6,47,825.52 crore, respectively – an increase of 6.36% and 10.52%.

Twelve years ago, in 2011 when Mamata Banerjee assumed power in West Bengal, the state’s outstanding debt was around Rs 1, 92,000 crore. Chief Minister Banerjee and the then Finance Minister and now Economic Adviser to CM, Amit Mitra, called it “a huge burden to the government”. But, now the outstanding debt amount increased more than 300% in the last 10 years of the TMC rule, making it her government’s biggest challenge.

According to the state Finance Department’s data, the TMC government accumulated debt on an average of more than Rs 20,000 crore, subject to repayment after 10 years. “The increase in the market borrowing loans of the Government of West Bengal from 2016-17 onwards will be one of the main increases towards repayment of those loans from 2021-22 onwards. The liability of the state will steeply rise from 2021-22 onwards. The repayment obligations will take place within 10 years, which indicates huge fiscal stress,” a senior officer of the Finance Department said.

In 2015-16, the state government took market loan of Rs 23,696.79 crore, which increased in the next five years to Rs 56,992.00 crore (2019-20). “The state government will have to put in place a mechanism for augmentation of resources, exploring new sources of revenue and prioritising expenditure. This will ensure that debt which matures in these critical years is met through an appropriate debt repayment strategy and fresh borrowings are channelised for development expenditure only. But, the new social schemes for vote bank is the main hindrance towards achieving the solutions,” the senior official added.

To minimise revenue deficit, the state government this year used two tools – one to maximise excise collection and the second to increase its own revenue collection.

“The state government has to decrease the sops to manage the revenue deficit and debt situation of the state. But, it is reluctant to do so. The government instead is increasing expenditure in the social sector. The new Laxmir Bhandar scheme alone will cost the exchequer more than Rs 20,000 crore ,” another official said.

According to Finance department estimates, the state excise department will not only meet its target of state excise collection for the financial year, ending March 31 this year, but will surpass it. As per the budget estimates for the fiscal ending March 31, 2023, the target for state excise collection was Rs 16,500 crore and as per records of the excise department, the collections under this head will be Rs 17,921.56 crore at the end of March this year. “The previous Left Front government had put on us a burden of over Rs 2 lakh crore debt. We are streamlining the revenue structure and we are hopeful we will overcome the revenue deficit in coming years,” Finance Minister Chandrima Bhattacharya said.