SFAR West Bengal 2024-25
State Finances Audit Report
Government of West Bengal
This chapter provides a snapshot of West Bengal’s finances for the FY 2024-25, covering demographics, economic indicators, and the State’s fiscal status. It analyses revenue and expenditure trends in the State, debt levels, and fiscal deficits, and highlights persistent imbalances and reliance on borrowings.
West Bengal, located in eastern India, spans 88,752 sq. km with 23 districts and about 40,203 villages, and has a predominantly service-oriented economy along with agriculture and industry. The State's population is estimated at 10.02 crore 1 (7.07 per cent of India's total population), with a population density of 1,127 persons per sq. km.
This section provides an overview of the State's demography, Gross State Domestic Product (GSDP) and per capita income of the State.
The State's demographic details vis-à-vis national average are presented in the Table 1.1 below.
GSDP and per capita income are important indicators of the State's economy as discussed in succeeding paragraphs.
Gross Domestic Product (GDP) refers to the total value of goods and services produced within a country, while GSDP measures the same at the State level. Both these indicators reflect the economic development and overall progress in the State. The trends of GSDP and GDP over the last five years are given in Table 1.2 below.
The Year on year (Y-o-Y) growth of GSDP and GDP and the contribution of GSDP to the GDP of the country, is given in Chart 1.1.
Besides the above, Per Capita Income 2 (PCI) of the country and PCI of the State are also depicted in Table 1.2 and Chart 1.2.
As seen from the Chart 1.1, post the economic contraction experienced by the State in 2020-21 due to the adverse impacts of the COVID-19 pandemic, there was a robust rebound in 2021-22 in the GSDP figures. However, after this sharp recovery, the State's growth rate declined between 2022-24, followed by a marginal improvement to 9.91 per cent in FY 2024-25.
Chart 1.2 shows that West Bengal's Per Capita Income (PCI) has consistently remained below the national average, despite steady year-on-year growth. While both India and the State recorded rising PCI levels, the gap between them persisted and widened gradually during 2020-21 to 2024-25. This indicates that West Bengal's income growth, though positive, has not kept pace with the national trajectory.
The sectoral contribution by various sectors to GSDP during 2024-25 and sectoral growth in GSDP during the last five years are depicted in Chart 1.3 and Chart 1.4 respectively.
Chart 1.5 shows the composition of each sector during FY 2024-25, in terms of its major contributing segments.
The analysis of sectoral trends from Chart 1.3 indicates that the tertiary sector continues to dominate West Bengal's economy, contributing nearly 55 per cent of GSDP in 2024-25, while the primary and secondary sectors account for 20 per cent each.
Chart 1.4 shows that both the secondary and tertiary sectors witnessed sharp post-pandemic recovery in 2021-22 but continued to fall during 2022-24 before stabilising in 2024-25, with the tertiary sector emerging as the principal driver of GSDP. The primary sector remained volatile, recording only modest growth in recent years.
Acloser look at sectoral composition, presented in Chart 1.5, shows that the primary sector is dominated by agriculture, forestry and fishing (96 per cent), while the secondary sector is led by manufacturing (61 per cent) and construction (31 per cent). The tertiary sector is more diversified, with major contributions from (i) trade & repair services, (ii) public administration, (iii) real estate and (iv) transport, storage, communication & services related to broadcasting.
Overall, West Bengal's economy remains service-driven, with manufacturing regaining strength and agriculture providing stability but limited growth potential.
Table 1.3 shows the details of actual financial results of State Government of West Bengal for the years 2023-24 and 2024-25 vis-à-vis Budget Estimates (BE), Revised Estimates (RE) and GSDP for the year 2024-25.
From Table 1.3, it is evident that in FY 2024-25, West Bengal's dependence on borrowings remains significant. The State's resource mobilisation weakened, driven by almost 42 per cent shortfall in Non-Tax Revenue compared to the BE. Grants-in-aid and Contributions were also significantly lower, at 56 per cent below the BE. Capital Expenditure was compressed to 60 per cent of the budget estimates, indicating that borrowings were utilised largely to meet revenue expenditure rather than asset creation.
The growing revenue deficit and rising fixed liabilities create risks for the State's financial health, even though the fiscal deficit is still within the limit prescribed in WBFRBM (Amendment) Act 2025. Besides, Capital Expenditure of the State also remained 40 per cent below the BE. The details of State Government Finances for FY 2020-21 to 2024-25 is given in Appendix 1.1.
Comparison of components of the sources and application of funds of the State during the current year is given in Chart 1.6.
Chart 1.6 shows that-
Appendix 1.2 provides details of receipts and disbursements and the overall fiscal position of the State during current year as well as previous year.
Government accounts capture the financial liabilities of the Government and the assets created out of the expenditure incurred. Appendix 1.3 gives an abstract of the balances of such liabilities and assets, as on 31 March 2025, compared with the corresponding position of the previous year. The liabilities consist mainly of internal borrowings, loans and advances from GoI, receipts from the Public Account and Reserve Funds. Assets comprise mainly of progressive Capital Expenditure, loans and advances given by the State Government and cash balances. A summarised position of the cumulative balances of assets and liabilities as on 31 March 2024 and 2025, for the financial years 2023-24 and 2024-25, is presented in Table 1.4.
As of 31 March 2025, the State's liabilities grew moderately, mainly due to higher balances of internal debt and loans & advances from GoI, along with a rise in Public Account obligations. On the assets side, growth was supported by increases in the cumulative balances of capital expenditure and cash balances. In contrast, the cumulative balances of Loans and Advances extended by the State registered only a marginal growth.
A comprehensive ten-year trend analysis covering the period from 2015-16 to 2024-25 of the major fiscal and economic parameters of the State (presented in Appendix 1.4), has been carried out to provide a long-term perspective on the State's fiscal sustainability. The analysis includes the calculation of the Compound Annual Growth Rate (CAGR) for each component over the ten-year period. It enables an assessment of the structural strengths and weaknesses of the State's finances, identifies emerging risks and highlights systemic trends that have influenced the fiscal position over the decade.
Revenue Receipts mostly registered a steady upward movement over the last ten years, recording a CAGR of about 7.69 per cent. This growth was primarily driven by higher own tax revenue and an increase in the State's share of Union taxes and duties (except decline in 2019-20 and 2020-21). However, the pace of revenue growth was insufficient to keep up with the faster rise in revenue expenditure, resulting in the State remaining in a continuous revenue deficit.
Own Tax Revenue grew at a CAGR of 9.73 per cent, reinforcing its position as the State’s primary revenue source. This growth was supported by improvement in GST collection and higher collections from State Excise, taxes and duties on electricity, taxes on vehicles, etc.
Non-Tax Revenue showed an inconsistent growth, increasing by only about at 7.89 per cent CAGR. The year-to-year fluctuations were mainly due to variable receipts from royalties, fees, user charges and returns from State PSUs.
The State’s share in Union Taxes and Duties grew at a moderate CAGR of around 11.22 per cent. The trend was uneven between 2015-16 and 2020-21, with a noticeable decline during the pandemic years. However, it increased steadily from 2020-21 onwards. Thus, this component continues to play a significant role in the State’s fiscal stability.
Grants-in-Aid from GoI declined sharply in the latter part of the ten-year period, particularly in 2023-24 and 2024-25 due to reductions in grants for Centrally Sponsored Schemes and Finance Commission transfers.
Revenue Expenditure increased at a faster pace than Revenue Receipts, growing at about 8.78 per cent CAGR. The continued dominance of revenue expenditure over revenue receipts kept the State in a revenue deficit throughout the decade. Rising committed expenditure further reduced financial flexibility.
Interest Payments increased due to the rise in public debt and it increased at a CAGR of about 7.79 per cent. This rising interest burden consumed a large share of revenue expenditure, while reducing funds available for developmental expenditure. It highlights the need for better debt management and stronger revenue growth.
Subsidies rose at a CAGR of about 16.04 per cent, with sharp increases during and after the pandemic (from 2020-21 onwards), reflecting expanded welfare spending. The growing subsidy burden requires periodic review to ensure that such expenditure does not strain the State’s finances.
Capital Receipts grew at a CAGR of about 7.53 per cent, mainly because of increased borrowings, mostly in the last two FYs (2023-24 and 2024-25). Non-debt capital receipts, such as recoveries of loans and advances, remained minimal. This reflects a structural dependence on borrowings to finance capital expenditure and bridge fiscal gaps.
Capital Expenditure grew at a CAGR of around 6.35 per cent but showed significant fluctuations. Although Capital Expenditure was relatively higher in FYs 2017-18, 2018-19 and 2023-24 with respect to the total expenditure of those years, it remained low in the remaining FYs of the decade. This limited level of capital expenditure may hinder long-term asset creation and economic growth.
The State incurred a Revenue Deficit (RD) throughout the period from 2015-16 to 2024-25. The Revenue Deficit increased at a CAGR of about 17.80 per cent over the period. Despite an improvement in revenue receipts over the decade, revenue expenditure continued to exceed revenue receipts, mainly due to elevated committed expenditure, particularly on interest payments. Consequently, a part of borrowings was used to finance revenue expenditure, thereby reducing fiscal space.
Fiscal Deficit (FD) expanded sharply at a CAGR of about 12.83 per cent. From 2015-16 to 2018-19, the fiscal deficit exceeded the targets prescribed in MTFPSs7of the respective years, though it remained within the limits8prescribed under the WBFRBM (Amendment) Acts9for the years 2019-20 to 2024-25. The increase in FD was driven primarily by higher subsidies and persistent revenue shortfalls, leading to greater dependence on borrowings.
The State shifted from a small primary surplus (during 2015-16 and 2016-17) to a rising primary deficit. From 2017-18 to 2024-25, the primary deficit grew at a CAGR of 52.63 per cent, reflecting weak fiscal space and increasing expenditure rigidity.
Outstanding liabilities more than doubled over the decade, growing at a CAGR of 9.66 per cent. The Debt-GSDP ratio remained persistently above the prescribed limit in MTFPSs10 of the respective years for 2015-16 to 2018-19 and above the targets11 prescribed in the WBFRBM (Amendment) Acts 2020 and 2025 for the years 2019-20 to 2024-25, signifying continued dependence on borrowings for financing fiscal gaps.
The gains with respect to good performance in own tax mobilisation and steady GSDP growth, were overshadowed by high expenditure, rising debt and persistent revenue deficits. To strengthen fiscal sustainability, the State needs to improve revenue mobilisation (especially non-tax revenue), rationalise subsidies, improve the efficiency of capital expenditure and manage debt more prudently.
All revenues received by the State Government, all loans raised by the State Government, ways and means advances extended by the Reserve Bank of India and all money received by the State Government in repayment of loans forms part of the Consolidated fund of the State.
Trends and growth of revenue receipts with respect to Gross State Domestic Product (GSDP) over the five-year period (2020-25) are shown in Table 1.5.
Revenue Receipts as percentage of GSDP and contribution from various sources in revenue receipts are given in Chart 1.7 and Chart 1.8.
From the table and charts, it is evident that
Overall, good tax growth and economic performance were achieved, but fiscal stability is constrained by limited revenue sources and rising expenditure.
Own Tax Revenue is the revenue collected by the State Government through taxes it is empowered to levy under the Constitution. Actuals for FY 2023-24, Budget Estimate (BE), Revised Estimate (RE) and Actuals of Own Tax Revenue for FY 2024-25 are given in Table 1.6.
Table 1.6 shows that during FY 2024-25, Own Tax Revenue (₹ 97,994 crore) increased by 8.90 per cent compared to FY 2023-24 (₹ 89,986 crore). However, it fell short of both BE (₹ 1,02,349 crore) and RE (₹ 99,863 crore) by ₹ 4,355 crore (4.25 per cent) and ₹ 1,869 crore (1.87 per cent) respectively, which indicates growth over previous year, but below Government's projection.
During FY 2024-25-
It was also noted that during 2024-25, Land revenue was overstated by ₹ 452.20 crore as royalty receipts from minerals were misclassified as Land revenue. This should have been actually classified under 0853-Non-ferrous Mining and Metallurgical Industries or 0803-Coal and Lignite as per LMMH 13. This resulted in overstatement of tax revenue by ₹ 452.20 crore and simultaneous understatement of non-tax revenue.
Trends of own tax revenue and its components during the period 2020-21 to 2024-25 are shown in Chart 1.10 and Chart 1.11 respectively.
Chart 1.10 shows that, although there was an increase in the Own Tax Revenue of the State, post-COVID, its growth slowed during 2023-24 and 2024-25.
However, West Bengal's Own Tax Revenue (OTR) as percentage of GSDP has remained consistently lower in comparison to other States like Karnataka and Tamil Nadu. This reflects a comparatively narrower tax base and limited own-tax collections. Although the OTR-to-GSDP percentages of West Bengal and Gujarat are broadly comparable, Gujarat's absolute own tax revenue is significantly higher 14.
The OTR-to-GSDP percentages of the above-mentioned States are presented in Table 1.7 for FYs 2020-21 to 2024-25.
Chart 1.11 shows SGST as the largest contributor (46.15 per cent), followed by State Excise and Taxes on Sales, Trade. During 2020-25, an upward trend is seen in case of SGST, State Excise, Taxes and duties on electricity and Taxes on vehicles while it was erratic in case of Stamps and Registration, Land Revenue and others. Since 2020-21, State Excise has shown the highest CAGR at 16.31 per cent, followed by SGST at 14.83 per cent and Taxes on Vehicles at 14.63 per cent, reflecting growth across these own tax revenue sources.
Non-Tax Revenue (NTR) of a State refers to the rent, fees, royalties and other receipts of the State Government from sources other than taxes. It comprised 1.72 per cent of the total Revenue Receipts of the State in 2024-25, up from 1.62 per cent in 2023-24.
Actuals for FY 2023-24, Budget Estimate (BE), Revised Estimate (RE) and Actuals of Non-Tax Revenue for FY 2024-25 are given in Table 1.8.
The actual Non-Tax Revenue in 2024-25 reflected a growth of 13.90 per cent over the previous year. However, the receipts were substantially lower than the BE (₹ 6,317 crore) and marginally higher than the RE (₹ 3,286 crore). This indicates overestimation in the original budget.
Trends of Non-Tax Revenue and its components during the period 2020-21 to 2024-25 are shown in Chart 1.12 and Chart 1.13 respectively.
Non-Tax Revenue in 2020-21 reached a peak owing to crediting of ₹ 2,498 crore withdrawn from the Consolidated Sinking Fund 16 (for meeting borrowing commitments in the COVID-19 pandemic situation) into the head 0049-Interest Receipts. Thereafter it plummeted in 2021-22 and started showing an increasing trend from FY 2022-23 to FY 2024-25.
Chart 1.13 highlights that the State's NTR is mostly dependent on mining revenues, while mobilisation of revenue from sources such as receipts from dividends and interest needs greater rigor. During FY 2024-25-
Grants-in-aid (GIA) from the Government of India declined sharply from ₹ 38,172 crore in 2020-21 to ₹ 15,205 crore in 2024-25. The largest reduction was in Finance Commission Transfers, which dropped by 40.90 per cent from ₹ 12,351 crore in 2020-21 to ₹ 7,299 crore in 2024-25. Grants for Centrally Sponsored Schemes (CSSs) also fell significantly, from ₹ 17,604 crore in 2020-21 to ₹ 6,564 crore in 2024-25, while other transfers fell significantly from ₹ 8,217 crore in 2020-21 to ₹ 1,342 crore in 2024-25.
Percentage of Grants-in-aid from Government of India to GSDP is given inChart 1.15.
Chart 1.15 shows a consistent downward trend of the percentage of GIA to GSDP from 2020-21 and 2024-25. The decline was significant after 2021-22, coinciding with the decline in Finance Commission transfers and less Central allocations for CSSs as discussed in the following paragraphs.
Out of the Grants of ₹ 6,564 crore released to the State for Centrally Sponsored Schemes during 2024-25, major allocations were made to the schemes shown in Table 1.11.
Significant increases over the previous year were observed inter alia under PMGSY (126.63 per cent), DAY-NRLM (36.88 per cent), Anganwadi Services (POSHAN 2.0) (22.32 per cent) and NFSA-Assistance to FPS Dealers (208.27 per cent) highlighting enhanced support for these interventions.
Significant decreases over the previous year were noticed in grants related to PMAY-Urban (decline of 45.96 per cent) and IGNOAPS & IGNWPS (social pensions), where grants decreased by 18.78 per cent and 20.45 per cent respectively, reducing support to vulnerable sections.
Audit further observed that the funds were not released by GoI to the State Government under two major rural development schemes. GoI attributed this primarily to non-compliance with Central directives and unsatisfactory follow-up action by the State Government, as detailed below:
During FY 2024-25, GoI released Fifteenth Finance Commission (15th FC) grants of ₹ 5,238.51 crore 20, against the allocation of ₹ 8,132.02 crore for FY 2024-25. The released grants included (i) Post Devolution Revenue Deficit (PDRD) grants of ₹ 568.00 crore, (ii) Rural Local Bodies (RLBs) grants of ₹ 3,500.51 crore and (iii) Grants for State disaster response and mitigation of ₹ 1,170.00 crore.
Release of grants by the Government of India vis-à-vis the allocations recommended by 15th FC, during the year 2024-25, are detailed in the following Table 1.12.
Table 1.12 shows that out of the three types of grants allocated, Post Devolution Revenue Deficit Grants and Grants for Disaster were received in full while there was noticeable shortfall (45 per cent) in Grants for Local Bodies. In case of these grants, funds were received only in respect of one component viz. Rural Local Bodies (with a marginal shortfall of 3 per cent) while funds were not received in respect of the remaining components viz. Grants for Urban Local Bodies and Health Grant for Local Bodies.
The Finance Department did not furnish reasons behind short/ non-receipt of the untied & tied grants for Local Bodies during FY 2024-25, though called for (May 2025).
(A) Post-Devolution Revenue Deficit Grants
Being a Revenue Deficit State, the 15th FC recommended post-devolution revenue deficit (PDRD 21) grants of ₹ 45,128 crore to West Bengal from FYs 2020-21 to 2024-25 (Table 1.13). These grants were provided in a manner so that the Revenue Deficit of the State could taper off in successive years.
Table 1.13 shows that West Bengal received the total PDRD grants recommended by the 15th FC for 2020-21 to 2024-25. However, the receipt of PDRD grants did not mitigate the deficit, highlighting the need for the State to increase its own revenue or rationalise its spending to maintain revenue balance.
(B) Grants received during 2024-25 though allocated for the preceding years
The following grants of ₹ 1,532.01 crore were received during the year 2024-25, with delays as these had been allocated by the 15th FC for the preceding financial year (2023-24) (Table 1.14).
The Finance Department did not furnish reasons behind delayed receipt of grants from the GoI, though called for (May 2025).
(C) Pending Interest Payment
The 15th FC provided that the States should release grants to local bodies within 10 working days of them being credited to the State Government's account by the GoI. Any delay in the release of the above grants would attract penal interest, as per the effective rate of interest on market borrowings/ State Development Loans for the previous year.
In this context, the followings were observed from the records available with the Finance Department, GoWB:
The Finance Department did not provide reasons behind non-payment of penal interest 22, despite being asked for.
Capital Receipts comprise miscellaneous capital receipts such as proceeds from disinvestments, recoveries of loans and advances, debt receipts from internal sources (market loans, borrowings from financial institutions/commercial banks) and loans and advances from GoI.
Trends of capital receipts and its components during 2020-21 to 2024-25 are shown in Table 1.15.
Table 1.15 shows that a significant portion of the Capital receipts comes from borrowed money, while repayments and other sources contribute very little. The State is relying more and more on loans to meet its financial needs. During 2023-25, loans from GoI have also increased. The fact that debt is growing faster than the State's economy during 2023-25 indicates that the State is under risk of increasing financial stress.
Capital Receipts as percentage of GSDP is depicted in Chart 1.16.
As seen from the Chart 1.16, the ratio of capital receipts to GSDP shows an increasing trend in recent years. Such a trend reflects that the State would have increased future interest and repayment liabilities.
This paragraph analyses the deviations between the projections of the 15th FC and the State's actual fiscal and economic performance during the period 2020-21 to 2024-25.
The projected revenue and GSDP by the 15th FC and actuals for FY 2020-21 to FY 2024-25 are given in the Table 1.16.
Table 1.16 shows that the 15th FC had projected moderate growth in GSDP and revenue parameters during 2020-21 to 2024-25. However, actual outcomes indicate significant deviations from these projections. While the State's actual GSDP consistently exceeded the projections from 2021-22 onwards, Revenue Deficits were incurred in all years against the FC projections of Revenue Surplus, reflecting fiscal stress at the revenue account level. Although Fiscal Deficit remained within the recommended ceilings, it exceeded the projected levels during 2023-24 and 2024-25. These divergences show that revenue mobilisation and expenditure management did not keep pace with economic growth.
Government expenditure is classified into revenue expenditure, capital expenditure, and loans and advances. Revenue expenditure includes costs of maintenance, repairs, and day-to-day functioning of departments, including administrative and establishment expenses. Capital expenditure relates to the initial construction of projects and sanctioned improvements or additions to assets. Loans and advances comprise funds provided by the Government to Public Sector Undertakings and other entities, which are recoverable over time. Details of expenditure, total expenditure as percentage of GSDP and share of its components is given in Table 1.17, Chart 1.17 and Chart 1.18 respectively.
Table 1.17 and Chart 1.18 indicate that the expenditure profile of the State was skewed towards revenue expenditure, with capital expenditure fluctuating and remaining only between 6.74 per cent and 11.33 per cent of the total expenditure during the last five years. Such instability in asset-building reflects weak fiscal planning and adversely affects infrastructure development. Moreover, Audit noted that the Capital Expenditure of ₹ 21,622 crore for the year 2024-25, as reported in Finance Accounts of the GoWB for FY 2024-25, is overstated by ₹ 1,031.84 crore as revenue expenditure was incorrectly classified as Capital expenditure (Paragraph 2.5.6 of Chapter II). Further, Capital expenditure was also understated by ₹ 4.40 crore due to non-recoupment of the Contingency Fund. Thus, the actual Capital expenditure for 2024-25 would be ₹ 20,594.56 crore instead of ₹ 21,622 crore, as reported in Financial Accounts of the GoWB for FY 2024-25.
Sector-wise composition of expenditure is given in Table 1.18 and relative share of various sectors in the total expenditure of the State is depicted in Chart 1.19.
Table 1.18 and Chart 1.19 show that social services dominated the overall expenditure in the State, indicating West Bengal’s commitment towards social development. Further, expenditure on General services also remained significant, driven by interest payments and servicing of debt along with administrative costs.
Revenue expenditure is incurred to maintain the current level of services and payment for the past obligation. As such, it does not result in any addition to the State's infrastructure and service network. Growth of revenue expenditure, its ratio to total expenditure, GSDP and revenue receipts are shown in Table 1.19.
Table 1.19 reflects that Revenue Expenditure continues to exceed Revenue Receipts, reflecting fiscal stress. Its significant share in total expenditure indicates structural rigidity and leaves little fiscal space for capital investment.
Sector-wise composition of Revenue expenditure is given in Table 1.20 and relative share of various sectors in Revenue expenditure is depicted in Chart 1.20. Detailed Sector-wise expenditure is given in Appendix 1.2.
Table 1.20 and Chart 1.20 reflect that Revenue Expenditure (RE) on Social Services remained at the top, indicating priority towards welfare commitments. RE on General Services also remained high, reflecting a heavy administrative burden. However, RE on Economic Services lagged.
The committed expenditure of the State Government on revenue account consists of interest payments, expenditure on salaries and wages, and pension payments. It has first charge on Government resources. The components of committed expenditure are given in Table 1.21 and committed expenditure as a percentage of revenue receipts and remaining fiscal space for other expenditure is given in Chart 1.21.
Table 1.21 indicates that Committed Expenditure comprising (i) salaries & wages, (ii) pensions and (iii) interest payments, consumed a large portion of the revenue expenditure of the State, limiting flexibility. Rising interest payments indicate a growing debt burden for the State. With Committed Expenditure comprising more than half of Revenue Expenditure, fiscal space for developmental or discretionary priorities remained severely constrained.
Chart 1.21 shows that committed expenditure on salaries & wages, pensions, and interest payments has been taking up a larger share of total revenue receipts over the last five years. This highlights that a large portion of the State's receipts are being used just to meet fixed obligations. As a result, there is less room left for the government, shown as 'remaining fiscal space' to spend on new schemes, development projects or social sector investments.
Agrowing committed expenditure restricts the government's flexibility in using funds for development. It also means that the State may have to borrow even for normal expenses, which adds to future liabilities.
Subsidies during the current year increased by ₹ 8,968 crore (85.61 per cent) from the previous year. The increase was mainly due to increase of ₹ 5,858 crore on account of State Subsidy for purchase of paddy for distribution of Rice in PDS and ₹ 282 crore on account of Subsidy to West Bengal State Electricity Distribution Company Limited (WBSEDCL) for subsidisation in power tariff to its Consumers.
Department-wise major subsidies for FYs 2020-21 to 2024-25, are shown in Table 1.22.
Table 1.22 and Chart 1.22 show that the total subsidy increased sharply to ₹19,443.85 crore in 2024-25 after a decline in 2023-24. Major subsidies were for Food & Supplies, Power and Agriculture Departments. This shows that subsidies continued to form a large part of the revenue expenditure of the State.
While subsidies help specific groups of people, abrupt increase in subsidies can reduce the funds available for development expenditure and asset creation. The Government needs to review major subsidy schemes regularly to assess their impact.
Chart 1.23 and Chart 1.24 depict Committed expenditure and subsidies together as a percentage of Revenue Receipts and Revenue Expenditure during FYs 2020-25 respectively.
In 2024-25, the State's committed expenditure of ₹ 1,39,202 crore comprising salaries (₹ 67,937 crore), pensions (₹ 25,859 crore), and interest payments (₹ 45,406 crore), accounted for approximately 65 per cent of the Revenue Receipts. In addition, subsidies amounted to ₹ 19,444 crore, bringing the total rigid (committed expenditure + subsidies) expenditure to ₹ 1,58,646 crore, which was nearly 74 per cent of the State's revenue receipts. The high and inflexible nature of such expenditure significantly compresses fiscal space, limiting the State's ability to allocate resources towards capital investment and developmental priorities.
There is an urgent need for expenditure reform through rationalisation of subsidies, improved targeting, and prudent management of salary and pension commitments, to enhance fiscal flexibility and ensure a sustainable fiscal path.
Audit analysed the Food subsidy component, which forms a major part of the subsidy bill of the Government and noted that as of March 2025, three schemes viz. Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), Rajya Khadya Suraksha Yojana (RKSY) and Maa Scheme, were implemented by the Food & Supplies Department, Government of West Bengal, all of which had subsidy components. Of these, PMGKAY has one component 25 with 100 per cent subsidy from Government of India (GoI).
It was seen that the GoI's share of subsidy is received directly into the bank account of the Food & Supplies Department and the State share also is transferred to a bank account. GoI's share is also initially borne by the State and is subsequently reimbursed by GoI. Accordingly, the overall Food subsidy expenditure for 2020-25 is indicated below in Table 1.23.
The expenditure of GoWB on subsidy (as per Table 1.23 above) showed minor variations (except in 2024-25) that were attributed to variations in paddy procurement.
Assistance provided by way of grants by the State Government to the local bodies and other institutions during the period 2020-21 to 2024-25 is presented in Table 1.24.
During the current year, financial assistance to the local bodies and other institutions increased by ₹ 24,773 crore (24.75 per cent) over the previous year. The increase was mainly due to increase in assistance to Panchayati Raj Institutions (₹ 4,353 crore: 25.71 per cent), Educational Institutions (Universities) (₹ 2,584 crore: 44.63 per cent), Public Sector Undertakings (PSUs) (₹ 1,551 crore: 580.90 per cent) and grants released for 'National Old Age Pension Scheme (State Share), 'Anganwadi Services (including erstwhile SNP) under Saksham Anganwadi and POSHAN 2.0 (State Share)' and 'Scheme for financial assistance to the workers in locked-out industrial units', etc. (₹ 14,946 crore: 37.44 per cent). The overall quantum of financial assistance to local bodies and other institutions as percentage to revenue expenditure increased to 49.27 per cent during the current year from 44.29 per cent of the previous year. Only 8.13 per cent of such assistance contributed to creation of capital assets.
Grants to Panchayati Raj Institutions (PRIs), Municipal Corporations and Municipalities, and other bodies have increased over the years, both in absolute terms and as a share of total revenue expenditure.
Capital expenditure is primarily expenditure on creation of fixed infrastructure assets, such as roads, buildings, etc. Capital expenditure, in both the Centre and the State, is being met from budgetary support and extra budgetary resources. It also includes investments made by the State Government in Companies/Corporations. Trend of capital expenditure in the State over the last five years i.e., 2020-25 is given in Chart 1.25.
Capital expenditure (₹ 21,622 crore) in the year 2024-25 fell by 25 per cent (₹ 7,341 crore) vis-à-vis the previous financial year wherein it stood at ₹ 28,963 crore. Major variations in Capital Expenditure (CE), during 2024-25, vis-à-vis 2023-24, are shown in Table 1.25.
Significant declines in CE compared to 2023-24 were noticed under some key infrastructure-oriented sectors, as described below:
These decreases were offset to some extent by increase in expenditure in a few social and economic sector sectors as discussed below:
The pattern of capital expenditure in 2024-25 reflects a significant contraction across major infrastructure-oriented sectors, coupled with continued volatility over the five-year period. Reductions in expenditure on rural development, roads & bridges, water supply & sanitation, irrigation, power and education highlights structural weaknesses in planning, prioritisation and execution of capital projects, which may constrain the State's long-term growth potential.
Sector-wise composition of Capital expenditure is given in Table 1.26, whereas details of relative share of various sectors in Capital expenditure are presented in Chart 1.26. Detailed Sector-wise expenditure is given in Appendix 1.2.
As seen from above, Capital expenditure has fluctuated during the five-year period 2020-25. Major spending was noted on economic services followed by social services.
As of 31 March 2025, the State Government's investment in 2,204 28 companies, corporations and other bodies stood at ₹ 22,792.64 crore, comprising State PSUs (₹ 19,829.23 crore), Statutory Corporations (₹ 902.00 crore), Co-operative Banks and Societies (₹ 802.57 crore), Central Government PSUs (₹ 477.59 crore), Banks (₹ 384.31 crore), other Joint Stock Companies (₹ 199.54 crore) and others (₹ 197.40 crore).
The position of return on investments 29 during the period 2020-25 is presented in Table 1.27. The trends in year-end investments in companies, corporations, co-operative banks and societies, along with the corresponding returns, are depicted in Chart 1.27, whereas Chart 1.28 presents the rate of return on these investments vis-à-vis the average rate of interest on Government borrowings.
During 2024-25, the return on investment from PSUs was ₹ 240 crore (1.09 per cent of the average investment of ₹ 22,086 crore), which was very low. Over the period 2020-25, returns ranged between only 0.01 and 1.40 per cent, while the State Government's average cost of overall interest-bearing liabilities stood significantly higher at 7.22 to 7.70 per cent.
The continued negative differential indicates erosion of public capital and underscores the need for a comprehensive review of PSU investments, including restructuring or rationalisation of chronically underperforming entities.
Awell-defined dividend policy mandating a minimum return from profitmaking enterprises, enables the State Government to optimise its returns from investments in SPSEs and enhance monitoring of SPSEs' financial performance. It was observed that the state had not formulated or enforced a dividend policy for its PSUs till 2024-25, resulting in persistently low return on the government's equity investments. It was only in August 2025 that the State Government, vide a memorandum has mandated that all profit-making State PSUs should pay a minimum annual dividend of 30 per cent 30 of Profit After Tax.
In addition to the investments in co-operative societies, corporations and companies, the State Government has also been providing loans and advances to many institutions/organisations. Detailed Sector-wise disbursement of loans and advances by the State Government is given in Appendix 1.5. Further, Table 1.28 presents the position of outstanding loans and advances as on 31 March 2025 and interest receipts vis-à-vis interest payments by the State Government on its borrowings during the last five years.
The Contingency Fund of the Government of West Bengal is intended to provide advances for meeting unforeseen expenditure, pending its authorisation by the State Legislature. The fund is recouped once the Legislature approves the additional expenditure. The corpus of the Fund is ₹ 200 crore.
At the end of FY 2024-25, ₹ 5.57 crore remained un-recouped under various heads. As on 31 March 2025, Contingency Fund had a balance of ₹ 194.43 crore only.
Details of expenditure made out of the Contingency Fund are discussed in Paragraph 2.7.1 of Chapter II.
Receipts and Disbursements in respect of certain transactions such as Small Savings, Provident Funds, Reserve Funds, Deposits, Suspense, Remittances, etc., which do not form part of the Consolidated Fund, are kept in the Public Account set up under Article 266(2) of the Constitution and are not subject to vote by the State Legislature. The balance after disbursements during the year is the fund available with the Government for use for various purposes.
The component-wise net balances in Public Account of the State are given in Table 1.29.
Net balances in the Public Account rose by 40.93 per cent in 2024-25 compared to 2020-21.
During 2020-21 to 2024-25, Audit observed the following:
Balances under Suspense and Miscellaneous heads decreased over the years. Details of Suspense Accounts are shown in Paragraph 3.9 of Chapter III.
Reserve Funds are created for specific and defined purposes under the Public Account of the State Government. These funds are met from contributions or grants from the Consolidated Fund or from outside agencies. They comprise interest bearing reserve funds and reserve funds not bearing interest.
Against the gross accumulated balance of ₹ 24,710 crore lying in Reserve Funds, an amount of ₹ 17,113 crore was under 21 33 non-interest-bearing Reserve Funds and ₹ 7,597 crore was under three interest-bearing Reserve Funds. The fund balances lying in the major Reserve Funds as on 31 March 2025 are given in Table 1.30.
Out of the total accumulated balance of ₹ 24,710.44 crore in these funds, ₹ 16,238 crore (65.71 per cent) was invested in Government Securities as of 31 March 2025.
As per the agreement with the Reserve Bank of India (RBI), State Government must maintain a minimum daily cash balance with the RBI, which in case of West Bengal was₹ 2.48 crore. If the balance falls below this minimum, the shortfall is to be met through instruments like Ways and Means Advances (WMA)/Special Ways and Means Advances (SWMA)/Special Drawing Facility (SDF)/Overdrafts (OD), with the WMA limit revised periodically by RBI. During the year, the State did not resort to any WMA.
The State Government invests surplus cash balances, including those from earmarked reserve funds in GoI securities and Treasury Bills. Earnings from these investments are credited under '0049-Interest Receipts'.
It is not advisable for the State to raise market loans while holding large unutilised cash balances, as it leads to idling of funds, while increasing the State's liabilities. Cash balance and investment details for 2023-24 and 2024-25 are provided in Table 1.31.
Details of Cash Balance Investment Account during the last five years is given in Table 1.32.
The State's cash balance at the end of 2024-25 was ₹ 43,567 crore, which includes large investments in the Cash Balance Investment Account.
Fiscal Sustainability is the ability of a government to manage its revenue and expenditure in a manner that ensures it can meet its current and future obligations such as public services, infrastructure, and debt repayments without excessive borrowing or accumulating unsustainable debt. It implies maintaining a stable balance between revenue generation and expenditure over the long term. Chart 1.29 and Chart 1.30 show receipts and expenditure of the State as a percentage of GSDP, during FY 2020-25 respectively.
Both receipts and expenditure as a share of GSDP show that expenditure growth has outpaced revenue growth. Revenue expenditure forms the major portion of total spending, while capital expenditure remains low.
Since expenditure, especially on the revenue account, is growing faster than receipts, the fiscal deficit is widening and dependence on borrowings is increasing over the years.
The State should make efforts to increase its own tax and non-tax revenue through better collection and compliance. Expenditure priorities should be reviewed so that more funds are expended towards productive capital projects.
Outstanding public liabilities of the State along with its percentage to GSDP for the years 2015-16 to 2024-25 is depicted in Chart 1.31.
A ten-year trend analysis of Outstanding Public Liabilities and its percentage to GSDP has already been presented in Paragraph 1.1.6 of this Chapter.
High liabilities meant that a large share of future revenue would go towards debt servicing, which may reduce flexibility for future spending, potentially breaching FRBM targets.
Total liabilities of the State Government typically constitute Internal Debt of the State (market loans, ways and means advances from RBI, special securities issued to National Small Savings Fund and loans from financial institutions, etc.), loans and advances from the Central Government, and Public Account Liabilities. The component-wise liability trends of the State for the period of five years beginning from 2020-21 are presented in Table 1.33.
Table 1.33 indicates the following:
Break-up of outstanding total liabilities at the end of 2024-25 is shown in Chart 1.32.
The liability composition shown in Chart 1.32, indicates that the State's contingent and repayable obligations are concentrated in Public Debt, mostly internal debt.
Chart 1.33 depicts the quantum of internal debt taken vis-à-vis repaid during the period of five years i.e. 2020-25.
Internal debt of the State Government increased by ₹ 1,68,039 crore (41.59 per cent) from ₹ 4,04,017 crore in 2020-21 to ₹ 5,72,056 crore in 2024-25. An amount of ₹ 40,356 crore was paid towards interest on internal debt during 2024-25.
Net increases in internal debt indicate that fiscal deficits are being financed largely through market borrowings.
Borrowed funds (Public Debt) should ideally be used to fund capital creation and developmental activities. Using borrowed funds for meeting current consumption and repayment of interest on outstanding loans is not a healthy trend. Table 1.34 and Chart 1.34 depict the utilisation and trends of borrowed funds during 2020-25 respectively.
During 2024-25, a significant part (34 per cent) of borrowings was used for repayment of principal of earlier borrowings, nearly 41 per cent of borrowings financed revenue expenditure, and only about one-fourth went to capital works.
The State should therefore ensure that borrowings are used primarily to fund capital projects. Fiscal discipline should be strengthened to ensure that revenue expenditure is met from revenue receipts.
Further, it is essential that there is a policy framework in place for deployment of borrowed funds, keeping in mind the cost of borrowing and potential increases in income.
Debt maturity and repayment profile indicates commitment on the part of the Government for debt repayment or debt servicing. Debt maturity profile of the State is depicted in Chart 1.35.
As evident from the Chart above, of the total outstanding public debt (₹ 6,11,645 crore), payable debt maturity in the ensuing five and seven years, will be ₹ 1,41,157 crore 35 (23.08 per cent) and ₹ 1,87,547 crore 36 (30.66 per cent) respectively. The debt maturity may be much higher in the coming years, given the fact that the information pertaining to maturity details for debt amounting to ₹ 79,998 crore (13.08 per cent of total outstanding public debt) was not made available by the State Government.
Table 1.35 depicts financing pattern of the fiscal deficit during 2020-25.
Table 1.35 implies that the State's fiscal deficit is rising in absolute terms and the financing pattern shows heavy reliance on market borrowings. There was also a significant increase in loans from the Central Government during 2024-25.
Heavy dependence on market borrowings to finance deficits can increase interest burden and fiscal risk.
The Government needs to adopt a fiscal consolidation roadmap with explicit targets to reduce fiscal deficit as a proportion of GSDP over the medium term, prioritise revenue measures by improving own tax collections and rationalise revenue expenditure.
As per Finance Accounts of the State for FY 2024-25, the Revenue Deficit (RD) of the State was ₹ 39,727 crore (2.19 per cent of GSDP), Fiscal Deficit (FD) was ₹ 61,924 crore (3.41 per cent of GSDP) whereas Primary Deficit (PD) was ₹ 16,518 crore (0.91 per cent of GSDP).
Scrutiny of certain major transactions during FY 2024-25 revealed that RD, FD and PD were affected by certain accounting adjustments (some of which were also brought out in Notes to Finance Accounts (NTFA) of 2024-25) and through post-audit analysis, which are detailed in Table 1.36.
Table 1.36 shows that during 2024-25, the State Government had misclassified ₹ 1,031.84 crore of Revenue Expenditure as Capital Expenditure (details discussed in Paragraph 2.5.6 of Chapter II). Moreover, the non-transfer of cess understated the RD, FD and PD by ₹ 1,809.66 crore each. Also, due to non-recoupment of the Contingency Fund, the RD was understated by ₹ 1.17 crore, while both the FD and PD were understated by ₹ 5.57 crore each.
This resulted in understatement of RD by ₹ 2,842.67 crore, FD and PD by ₹ 1,815.23 crore each. The RD, FD and PD, therefore, worked out to ₹ 42,569.67 crore (2.35 per cent of the GSDP), ₹ 63,739.23 crore (3.51 per cent of the GSDP) and ₹ 18,333.23 crore (1.01 per cent of the GSDP) respectively, after Audit.
As per WBFRBM (Amendment) Act 2025, by the end of 2024-25 the State aimed to:
West Bengal also follows a Medium-Term Fiscal Policy (MTFP), according to which by the end of 2024-25, interest payments were to be capped at 19.17 per cent of revenue receipts.
The fiscal targets, prescribed in the State FRBM Act and MTFPSs, vis-à-vis achievements and post-audit figures for FYs 2020-21 to 2024-25, are detailed in Table 1.37.
Audit analysis of the data (shown in Table 1.37) showed the following:
Post-audit analysis indicates a gradual reduction in revenue, fiscal and primary deficits with respect to GSDP up to 2023-24, followed by reversal in 2024-25, suggesting fiscal stress arising from increased committed expenditure and subdued growth in own tax revenue (Chart 1.36).
The targets set by 15th FC and those projected in the State budget vis-à-vis achievements in respect of major fiscal aggregates with reference to GSDP during 2024-25 are given in Chart 1.37, Chart 1.38 and Chart 1.39.
Considering the post-audit figures, during the year 2024-25, the State was unable to contain the revenue deficit-GSDP and fiscal deficit-GSDP ratios within the limits prescribed by 15th FC and those projected in the budget estimates. Additionally, the total Outstanding Debt-GSDP ratio also exceeded the ceilings stipulated in both the Budget Estimates and the recommendations of the 15th FC.
Debt sustainability refers to the ability of the State to service its debt obligation now and in future. Analysis of variations in debt sustainability indicators is given in Table 1.38.
Analysis of the data shown in Table 1.38 indicates the following:
Overall, the analysis shows that the State's debt position is moderately sustainable. Although the positive GID indicates some stability, the breach of the debt ceiling prescribed under the FRBM Act is a matter of concern. During FY 2024-25, West Bengal's debt-to-GSDP ratio remains significantly higher (38.66 per cent) than that of the States other than the North-Eastern and Himalayan States (27.73 per cent), as well as the States such as Gujarat (16.99 per cent), Karnataka (24.00 per cent) and Tamil Nadu (27.49 per cent), which have GSDP levels comparable to that of West Bengal. High repayment ratios, recurring primary deficits and heavy interest burden point to underlying fiscal stress. The State needs to continue to strive to increase revenue, manage expenditure efficiently and borrow prudently to strengthen long-term debt sustainability and fiscal resilience.
Guarantees are contingent liabilities on the Consolidated Fund in case of borrower defaults. The State extends guarantees for loans raised by entities like statutory corporations, boards, local bodies, and co-operative institutions. West Bengal Ceiling on Government Guarantee Act (WBCGA) 2001 stipulates that the total outstanding Government guarantees, as on the first day of April of any year, shall not exceed 90 per cent of the State Revenue Receipts of the second preceding year. Details of the guarantees and status of outstanding guarantees to total receipts for the last five years is given in Table 1.39.
The Finance Department acts as the tracking authority in respect of guarantees. Table 1.39 depicts that the outstanding guarantees including interest (₹ 15,400 crore) at the beginning of 2024-25, stood at 7.88 per cent of the total Revenue Receipts of the second preceding year (₹ 1,95,544 crore in 2022-23) and were, thus, well within the ceiling of the WBCGA.
The outstanding guarantees including interest amounting to ₹ 17,014 crore as on 31 March 2025, included guarantees extended to 29 institutions/companies, under various sectors 40.
Further, in terms of Section 10 of the West Bengal Finance Act, 2002, the loanees for whom the State Government had provided guarantees to the financial institutions, were required to pay guarantee commission, at the rate of one per cent (minimum) on the total amounts guaranteed. In the current year, the State Government had received guarantee commission of ₹ 204 crore, against the receivable commission of ₹ 207 crore.
Deficits can be improved by enhancing revenues and rationalizing expenditures. This includes strengthening tax compliance, widening the tax base, revising user charges, and monetizing idle government assets. On the spending side, better targeting of subsidies, controlling salary and pension growth, and ensuring proper classification of expenditure are key factors. Prioritizing productive capital investment and improving debt management through transparent and efficient borrowing can further ease fiscal pressure. These measures collectively create fiscal space and help reduce revenue, fiscal, and primary deficits in a sustainable manner. These have been discussed in succeeding paragraphs.
Untapped revenue potential, if harnessed effectively, could significantly enhance fiscal space and reduce dependence on debt. Inefficiencies in assessment, undervaluation, and limited enforcement mechanisms of key tax streams such as State GST, Stamp Duty, and Excise will lead to subdued revenue growth. Under-realized non-tax revenues, with low user charges, poor cost recovery, and suboptimal returns on public assets and investments also impede the fiscal space. Timely realization of pending arrears is (tax and non-tax) another step towards enhancing the fiscal space.
As on 31 March 2025, the arrears of revenue in respect of principal heads of revenue were ₹ 7,873 crore, as depicted in Table 1.40.
The MTFPS, presented with the Budget 2025-26, revealed that, at the end of FY 2024-25, arrears in realisation of revenue were ₹ 7,873 crore. Against these arrears, there was no dispute regarding realisation of ₹ 1,285 crore, of which cases exceeding one to two years involved ₹ 37 crore, two to five years ₹ 99 crore, five to 10 years ₹ 982 crore and more than 10 years ₹ 167 crore. The circumstances under which the revenue of ₹ 1,285 crore had not been realised were not explained in the MTFPS. As mentioned above, undisputed arrears, on account of revenue lying unrealised for prolonged periods, adversely impacts both the Revenue Receipts as well as the Revenue Deficit.
The cases of evasion of tax detected, cases finalised and the demands for additional tax raised are important indicators of revenue collection efforts of the State Government.
The details of cases of evasion of tax detected by the Directorate of Commercial Taxes, Finance Department, GoWB, cases finalised and the demand for additional tax raised during the year 2024-25, as reported by the departments concerned, are depicted in Table 1.41.
Table 1.41 disclosed that 40.23 per cent of cases of tax evasion detected by the Department remained outstanding at the end of FY 2024-25.