As Centre opens purse strings, Suvendu Adhikari government cuts deficits; runs into loans, debt

Unveiling his Budget proposals in the House, the Finance Minister said, “Our government has inherited a massive debt of Rs 8,15,891 crore as a legacy. This is potentially a crippling debt. However, with the support of the Government of India and fiscal reforms, we will try to put it on a sustainable path.”

One of the key themes of the Budget, invoked repeatedly by Dagupta during his speech, was the advent of a “double engine government” in the state after the BJP’s resounding victory in the Assembly polls last year, which ended the 15-year rule of the Mamata Banerjee-led Trinamool Congress (TMC) government.

According to a financial statement of the BJP government, the state Budget had estimated the central government’s grants-in-aid of Rs 37157.57 crore for the financial year 2025-26, which was revised downward to Rs 22,068.85 crore. However, in the estimation of the current Budget, the central grants-in-aid jumps by about Rs 49,325 crore to Rs 71,393.19 crore for 2026-27.

A senior finance department official said, “The Suvendu Adhikari-led BJP government is not only going to get funds from the Centre for VB-G RAM-G scheme, but also for PMAY-G and gramin road projects. The previous TMC government had not accepted central schemes like Ayushman Bharat or

PM-Kisan. Instead, it had started its own schemes with funds from the state government’s exchequer. Now, in all such schemes, the Central government would give full financial assistance or clear its entire share promptly.”

Dasgupta proposed to reduce the revenue deficit to Rs 21,984 crore in 2026-27, which was Rs 41,164 crore in the revised Budget of the Mamata government last year. In the 2025-26 Budget estimates, this figure stood at Rs 35,314 crore.

However, one of the major economic challenges facing the Adhikari government is the public debt. While noting the massive “legacy debt” of Rs 8,15,891 crore left by the previous government, it has also proposed to raise market loans to the tune of Rs 80,444.55 crore in 2026-27. which may take the state’s debt to about 9 lakh crore.

Highlighting the 2026-27 Budget, a state government’s statement said, “For the first time in years, all three headline fiscal ratios of West Bengal decline simultaneously in a single budget. The revenue deficit falls from 2.07% to 1.02% of GSDP – a reduction of more than 1 percentage point in one year. The fiscal deficit is held at 2.91% of GSDP (down from 3.40%), comfortably within the FRBM 3% ceiling. The debt-to-GSDP ratio eases from 38.29% to 37.98% – the first downward movement in years.”
The statement also claims,”These are not aspirational targets: they are projections embedded in 2026-27 Budget. The revenue deficit improvement reflects both the sharp rise in Central transfers now flowing to the state and rationalisation of revenue expenditure. Together, they signal that the structural repair of West Bengal’s public finances – inherited in distress – has moved from intent to arithmetic.”