As the West Bengal Minister of State for Finance (Independent charge), Chandrima Bhattacharya, is all set to present the state budget for the financial year 2024-25 this week, economists and the people of the state are caught between expectations of a welfare budget and apprehensions over revenue generation.

The Assembly’s Budget Session is scheduled to start from February 5 and the state Budget will be presented on February 8. There will be discussions on the state budget on February 9 and 10.

At a recent public meeting Chief Minister Mamata Banerjee had hinted at additional doles and welfare schemes for the people in the state budget.

She said while the Interim Budget of the Union Government has limited scope for announcing welfare schemes because of the forthcoming Lok Sabha polls, there are no such bindings in the state budget.

So, going by those indications, there are expectations of higher subsidies and grants under the existing welfare schemes and hopes for new ones, especially for the underprivileged in the state.

Economists wonder whether the Government will be able to strike a balance between welfarism and revenue generation.

They are also deliberating whether the state budget will make provisions to ease West Bengal’s huge debt burden.

West Bengal’s accumulated debt, as per the state government’s budget papers for 2024-25, is slated to rise to Rs 6,47,825.52 crore by March 31, 2024, a ten per cent rise over the figure of Rs 5,86,124.63 crore as on March 31, 2023.

What is equally alarming is that the state’s per capita debt for the same period is slated to rise to Rs 59,000.

Both, the projected accumulated debt and per capita debt figures are extremely high compared to the corresponding figures as on March 31, 2011, which was the last year of the 34-year Left Front rule in West Bengal. As on March 31, 2011, the accumulated debt figure was Rs 1,97,000 crore and the per capita debt figure was just Rs 20,300.

Economists project a higher accumulated debt figure in the budget estimates for 2024-25. They also fear that unless urgent fiscal measures are adopted to arrest this upward trend, the state will slowly inch towards a debt trap situation, which is a point where the state has to go for fresh borrowings just to service older debts. That situation comes when the debt to Gross State Domestic Product (GSDP) ratio reaches 50 per cent.

A scrutiny of the budget documents of the last 10 fiscals reveals that the two factors that fuelled this accumulated debt were rising non-Plan expenditure and the lack of adequate avenues for improving the generation of the state’s tax revenue which is purely excise dominated.

During the financial year 2023-24, while the projected growth in the state’s revenue generation was just 12.69 per cent, the same for state excise collection was 19.41 per cent.

Another worrisome trend is the state government’s increasing focus on recurring expenditure rather than on capital expenditure.

Industry observer and Professor of Economics, Santanu Basu, says that the only way to arrest the looming financial disaster is to attract big ticket investment by revising the land and special economic zone policies.

“In a state like West Bengal with extremely fragmented land holdings, the state government has to have some role in land procurement for the industry. Industrialists will not be willing to invest in the state if they have to approach all the land owners to get the land for setting up industry here,” Basu added.