The cash-strapped West Bengal authorities, already burdened with money owed of over Rs 800,000 crore, has introduced a 4 per cent hike in dearness allowance (DA) for civil servants, even because the Trinamool Congress-led authorities stays in arrears with excellent dues from 2008 to 2019 and expects to fund enlargement of social schemes with an extra mortgage of Rs 100,000 crore.
The Mamata Banerjee authorities on Thursday tabled the vote, or interim funds, even because the Supreme Court docket directed it to pay 25 per cent of the excellent sum between 2008 and 2019, estimated at Rs 14,000 crore, by March 31.
Presenting the outcomes of the vote, state Finance Minister Chandrima Bhattacharya mentioned the 4% DA hike would quantity to an extra fiscal burden of Rs 750 million, bringing the overall funds expenditure for 2026-2027 to Rs 400,000 crore. Nevertheless, the federal government didn’t make any provision relating to pending DA dues.
Because of the vote, the state’s income deficit for 2026-27 shall be Rs 21,759 crore, a lower from the earlier 12 months. A income deficit is when income expenditures exceed income receipts, resulting in deficit financing by way of borrowing.
Income deficit from 2021 to 2022
The precise income deficit in 2024-25 was Rs 39,727 crore, however as per the revised estimates, this determine elevated to Rs 41,164 crore in 2025-26. Nevertheless, the Supreme Court docket’s resolution may improve the income deficit to almost Rs 32,000 billion in 2026-27, finance ministry officers mentioned.
Though the income deficit stays excessive, the federal government’s debt steadiness is rising 12 months by 12 months. In 2024-2025, the excellent debt of the state authorities was 6.99 billion rupees, which elevated to 7.62 billion rupees (estimated revision) in 2025-2026, and additional elevated to eight.15 billion rupees in 2026-2027.
The DA improve and related extra prices to the Treasury are amongst a number of applications expanded by way of a poll initiative. Whereas 40,000 rupees has been allotted for the flagship Laxmier Bhandar scheme, which supplies an extra 500 rupees a month to girls from poor households, an extra 40,000 rupees shall be earmarked for the Bangla Bari scheme, which supplies housing to poor households.
The state authorities has already disbursed Rs 74,000 crore within the first 50 months of the Laxmier Bandar scheme, benefiting 2.2 crore girls who acquired Rs 1,000 a month every (SC and ST girls acquired Rs 1,200 a month). Below the Bangla Bari scheme, every family shall be given 1.2 million rupees to construct a pucca home, and the federal government introduced final month that an extra 3.2 million rupees of houses can be constructed over the subsequent two months, on prime of the 1 billion homes already constructed.
The federal government additionally introduced spending over Rs 10,000 crore on varied different social welfare schemes. Amongst them is the renaming of the state’s personal rural employment assure scheme, the Mahatmashree scheme, from Karmashree, following the Heart’s renaming of the Mahatma Gandhi Nationwide Rural Employment Assure Scheme to ‘Vikshit Bharat – Assure to Rozgarh and Rozgarh’. Ajeevika Mission (Gramin) or VB-G RAM G.
Bengal is likely one of the most indebted states in India, in response to the sixteenth Finance Fee report for 2026-2031, which was tabled in Parliament together with the Union Price range. In line with 2023-2024 figures, Bengal’s debt-to-GDP ratio is 38.3%, second solely to Punjab’s 42.9%. This calls into query its capability to fund welfare applications and DA will increase and implement the Supreme Court docket’s directives.
As for the state authorities’s monetary sources, the state items and companies tax (SGST) is estimated to be 56,279 billion rupees, state gross sales tax is 24,200 billion rupees, and gross sales tax is 13,976 billion rupees. The state’s share of the taxes collected by the Heart quantities to Rs 1.09 billion. In whole, state income receipts elevated from Rs 2.45 billion in 2025-26 to Rs 2.88 billion in 2026-27.
skilled opinion
Nevertheless, CM’s chief advisor and former state finance minister Amit Mitra maintained that the federal government’s fiscal well being remained heading in the right direction. “When Chief Minister Mamata Banerjee took workplace, we lowered the income deficit from 3.75 per cent (of state GDP). From 3.75 per cent it’s now 1.01 per cent. And our vacation spot is in direction of zero. It’s an artwork of having the ability to do it step-by-step.”
Saikat Sinha Roy, an economist and former head of the economics division at Jadavpur College, was skeptical concerning the authorities’s capability to fund spending. “The proposed improve in allocations for schemes like Lakshmir Bhandar and DA hike, in addition to stress from the Supreme Court docket to pay DA arrears, will certainly improve the fiscal burden on states. States haven’t been capable of meet their income expenditure targets beneath the FRBM Act within the current previous,” Roy mentioned, referring to the Fiscal Duty and Price range Administration Act of 2003, which units deficit limits and debt targets.
“The staggeringly excessive state debt burden will additional improve. These expenditures are sure to happen sooner or later. That is alarming given the stalled central transfers to the states, lack of recent means to extend state income, and elevated state spending on the eve of parliamentary elections,” Roy mentioned.
