Two Engines, One Tank: How West Bengal’s First BJP Budget Bets on Delhi

By P. SESH KUMAR

West Bengal’s 2026-27 budget expands welfare, jobs and capital spending, but its fiscal arithmetic depends heavily on a sharp rise in Central grants, even as salaries, pensions and debt costs remain under pressure.

New Delhi, September 2026 — On 22 June 2026, Finance Minister Swapan Dasgupta tabled West Bengal’s first budget under a new government, a document of Rs 4,38,775.29 crore that

(i)        raises the women’s cash transfer to Rs 3,000 a month,

(ii)       lifts dearness allowance by twenty percentage points,

(iii)      promises a lakh of government jobs,

(iv)      raises half a dozen categories of honoraria, and

(v)       still contrives to show a fiscal deficit of 2.91 per cent of GSDP and a revenue deficit halved.

The State’s own Budget at a Glance supplies the answer to the paisa: grants-in-aid from the Central Government rise from Rs 22,068.85 crore to Rs 71,393.19 crore, an increase of Rs 49,324.34 crore that by itself accounts for 65 per cent of the entire growth in revenue receipts.

Every headline improvement–committed expenditure falling from 65 to 51 per cent of revenue receipts, compliance with the Sixteenth Finance Commission’s three per cent ceiling–is a function of that single assumption and of a growing GSDP denominator, not of anything done to the State’s own revenue base or its own spending.

Four specific gaps emerge from the budget’s own figures:

(i)        the flagship Annapurna Yojana appears provided at roughly half its declared coverage;

(ii)       the salaries and pensions heads cannot accommodate both the prospective DA hike and the Supreme Court’s February 2026 arrears judgment, of which no provision is visible;

(iii)      the Social Welfare and Nutrition head has perhaps Rs 900 crore of headroom for everything announced other than Annapurna; and

(iv)      capital outlay is promised at Rs 40,930 crore for the third consecutive year against deliveries of Rs 21,621 crore and Rs 26,439 crore.

On the question of a central bonanza, the honest answer is that there is none. There is unblocking, which is not the same thing.

Money reaches a State from Delhi through three separate channels, and in 2026-27 they moved in opposite directions: the Sixteenth Finance Commission cut Bengal’s formula share of Union taxes and abolished the revenue deficit grant it used to draw, while discretionary scheme assistance quadrupled. Bengal has swapped a smaller guaranteed stream for a larger revocable one, and the swap is the real fiscal event of the year.

Now that the accounts for the first four months have been published, and they settle the question: grants received between April and July 2026 total Rs 1,315.48 crore against Rs 2,205.85 crore in the same months of the last year of the feud–40 per cent lower, with nothing at all received in April–while salaries and pensions run 40 and 32 per cent above last year before the October dearness allowance has cost a paisa, and capital expenditure is down 53 per cent.

Not merely a statement of accounts

There is a particular kind of theatre that attends a first budget after a long dispensation ends, and Bengal got the full production. Suvendu Adhikari and Swapan Dasgupta held the printed volumes aloft for the photographers; the Chief Minister told the press afterwards that the exercise was an attempt to restore the State’s lost dignity.

The Finance Minister, seven weeks into elected life after a career spent writing about other people’s budgets, announced a monthly pension of Rs 5,000 for retired journalists. One is entitled to a small smile.

He also told the House, in a formulation the speech returns to, that the budget for 2026-27 was “not merely a statement of accounts” but a reflection of transformation, industrial resurgence and cultural pride. It is a fine sentence, and it contains the whole difficulty. A budget is in fact a statement of accounts, and the accounts are where the promises are kept or broken.

Having spent a working life reading these documents rather than applauding them, I have turned past the speech to Budget Publication No. 9–the State’s own Budget at a Glance — where the arithmetic sits without adjectives.

What is there is a budget of Rs 4,38,775.29 crore, of which Rs 54,607 crore is repayment of debt, leaving net expenditure of Rs 3,84,169 crore, 23 per cent above the revised estimate for 2025-26. Against it stand receipts other than borrowings of Rs 3,21,747 crore, up 31 per cent, and net borrowing of Rs 50,781 crore.

The revenue deficit falls to 1.02 per cent of a projected GSDP of Rs 21,48,244 crore; the fiscal deficit lands at 2.91 per cent, inside the three per cent the Sixteenth Finance Commission has set for 2026-31.

Read quickly, that is a competent consolidation achieved while expanding welfare. Read slowly, it is one of the most heavily leveraged single assumptions in recent state budgeting in India.

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The inheritance, honestly stated

Any assessment that begins by treating the Trinamool Congress’s (TMC) fifteen years as an unrelieved fiscal crime is not analysis but stenography, so let us be fair about what was inherited on both sides of the ledger.

On the credit side, the outgoing government built and ran a cash-transfer machine of genuine administrative competence. Lakshmir Bhandar reached roughly 2.21 crore women through direct benefit transfer.

Swasthya Sathi covered every family in the State–more than 2.45 crore of them–from the State’s own budget, without waiting for a cost-sharing formula from Delhi, and it worked at the counter.

The State’s nominal GSDP kept growing at a respectable clip, and its fiscal deficit, whatever else may be said, was generally kept in the neighbourhood of the borrowing ceiling rather than blown through it.

Ninety-three lakh micro, small and medium enterprises are not nothing; nor are IT exports that the budget documents themselves put at Rs 35,000 crore in 2025-26 against Rs 8,335 crore in 2010-11.

A new government that pretends it inherited a desert will find itself explaining, two years on, why the desert is still there.

On the debit side, the record is bleak and the numbers are not seriously disputed. Public debt has climbed from about 22 per cent of state domestic product in 1990 to roughly 38 per cent now; the Finance Minister told the House the new government had inherited Rs 8.15 lakh crore of it, and the budget documents put the outstanding stock at Rs 8,15,891 crore, or 37.98 per cent of GSDP, among the highest for any large State.

It is worth noticing how the State’s own Budget at a Glance defines that line–outstanding debt “including PF, Reserve Fund and Deposits”–so the figure embraces public-account liabilities but still excludes guarantees of Rs 16,202 crore and whatever off-budget borrowing the Sixteenth Finance Commission now wants brought onto the books.

Bengal’s share of national output has fallen from 10.5 per cent in 1960 to 5.6 per cent in 2024-25, and per capita income from 127.5 per cent of the national average to 79.5 per cent.

Own tax revenue ran at 5.4 per cent of GSDP in 2024-25 against a states’ average of 6.3 per cent, and own non-tax revenue at 0.20 per cent against an average of one per cent–a gap the Sixteenth Finance Commission’s own evaluation of Bengal’s finances attributed to weak organised-sector growth and inefficiency in collection.

Capital outlay was budgeted at Rs 35,866 crore in 2024-25 and delivered at Rs 21,621 crore.

And the suppression of dearness allowance, sustained for over a decade as a cash-management device, ended where such devices usually end: in the Supreme Court, which on 5 February 2026 held that DA is a legally enforceable right, that financial capacity is no defence, and that arrears for 2008 to 2019 must be released to some twenty lakh serving and retired employees, with a committee under Justice Indu Malhotra–including the Comptroller and Auditor General or his nominee–to determine the quantum and schedule, the first instalment falling due on 31 March 2026.

That judgment is the true bequest. Not the debt stock, which is re-financeable, but a judicially quantified liability of unknown size that the new government cannot litigate away and cannot plead poverty against.

Where the 31 per cent came from

Now the conjuring, and here the official document is more eloquent than any commentary. Budget Publication No. 9 sets out revenue receipts as follows:

(i)        State tax revenue Rs 1,30,669.68 crore against Rs 1,11,737.13 crore revised;

(ii)       non-tax revenue Rs 8,302.71 crore against Rs 3,795.10 crore;

(iii)      the State’s share of Union taxes Rs 1,10,119.27 crore against Rs 1,07,265.82 crore; and

(iv)      grants-in-aid from the Central Government Rs 71,393.19 crore against Rs 22,068.85 crore.

(v)       Total revenue receipts rise from Rs 2,44,866.90 crore to Rs 3,20,484.85 crore.

When we set those four lines side by side, the budget explains itself.

Revenue receipts grow by Rs 5,617.95 crore. Grants alone supply Rs 49,324.34 crore of it –sixty-five per cent. State tax revenue contributes Rs18,932.55 crore, non-tax Rs 4,507.61 crore, and devolution a bare Rs 2,853.45 crore.

If we widen the frame to all non-borrowing receipts and grants still account for 64 per cent of the Rs 76,624 crore increase. Everything else in this budget–the Rs 36,000 crore for women, the twenty points of DA, the lakh of jobs, the fifty-five per cent rise in capital outlay, the deficit compression–is financed out of a bet that Delhi will now send more than three times what it sent last year.

Within the grants figure, assistance for centrally sponsored schemes is budgeted at Rs 62,793 crore against Rs 13,821 crore, an increase of 354 per cent.

The bet is not absurd. It is the arithmetic expression of a real political change, and the Finance Minister has been candid about it, speaking of a double-engine sarkar and of some Rs 40,000 crore of development funds unlocked by adopting central schemes the previous government had declined or fought over.

Let us now set the assumption against the recent record of the same head in the same State’s own budgets.

In 2024-25, grants were budgeted at Rs 34,684 crore and realised at Rs 15,205 crore, 56 per cent short. In 2025-26 they were budgeted at Rs 37,158 crore and revised to Rs 22,069 crore, 41 per cent short, because money for the Jal Jeevan Mission (81 per cent lower), Samagra Shiksha (78 per cent lower) and MGNREGA (72 per cent lower) did not come.

Against that series, Rs 71,393.19 crore is more than three times the highest figure the State has actually received in recent years.

Suppose the taps open generously but not miraculously and grants come in at Rs 45,000 crore–double the best recent realisation. On my computation the shortfall of roughly Rs 26,000 crore would push the revenue deficit from Rs 21,984 crore to about Rs 48,000 crore, or 2.2 per cent of GSDP, and the fiscal deficit from 2.91 to about 4.1 per cent, well outside the ceiling.

The elegance of the headline numbers is entirely borrowed from Delhi’s intentions–and Section VIII of this note, written after the first four months of accounts appeared, records what those intentions have so far produced. And as Section IX sets out, not every pipe from Delhi is flowing the same way: the surge in this line sits alongside a reduction in the transfers Bengal receives as of right.

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Three ratios that improve for the wrong reason

The most quoted evidence of consolidation is that committed expenditure–salaries, pensions, interest-51 per cent of revenue receipts from sixty-five per cent in the 2024-25 actuals.

But committed expenditure rises only 9 per cent in absolute terms, to Rs 1,62,190 crore, while the denominator is assumed to rise 31 per cent.

If we set the same Rs 1,62,190 crore against the revenue receipts the State actually expects to have realised in 2025-26—Rs 2,44,866.90 crore- the ratio is 66.2 per cent, not fifty-one. Nothing has been reformed. A denominator has been forecast.

The same is true of compliance with the fiscal deficit ceiling. The GSDP projection of Rs 21,48,244 crore is eight per cent above the 2025-26 revised figure, which was itself two per cent below what had been budgeted a year earlier. Divide the Rs 62,421 crore deficit by last year’s revised GSDP instead and it is 3.14 per cent, above the Finance Commission line. The State does not need to spend less to comply; it needs its own growth forecast to be right.

And then the arresting sum, which belongs to nobody but the budget’s own tables. Gross borrowing in 2026-27 is  Rs 1,05,388 crore. Repayment of debt is Rs 54,607 crore and interest is Rs 53,034 crore–Rs 1,07,641 crore between them.

West Bengal will borrow rather more than a lakh of crores this year and hand back Rs 2,253 crore more than it borrows.

Every rupee of new capital formation, every rupee of Annapurna, is financed from taxes and transfers, because the debt account is now cash-negative. Interest alone, at Rs 53,034 crore, exceeds the combined allocations for Health and Family Welfare (Rs 25,530 crore) and Rural Development (Rs 24,555 crore).

(This is first of the three-part series. This is an opinion piece. Views are the author’s own.)

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