Bengal Budget banks on central funds, offers no roadmap for fiscal constraints: Economist

West Bengal's first Budget under the BJP government may not yet reveal the party's long-term economic trajectory, but it does indicate a greater dependence on central assistance and a continuation of fiscal constraints, economist and Congress leader Prasenjit Bose said.

The Budget has generated debate over whether it represents a genuine economic roadmap or a political balancing act between welfare commitments, fiscal prudence and growth ambitions. The Federal spoke to Bose to understand what the BJP government's first Budget says about the state's economic future.

What does the BJP government's first Budget reveal about its economic vision?

I do not think it would be fair to judge the BJP's desired economic trajectory solely from this Budget because it comes in the context of an interim Budget that was presented before the elections.

I do not see any major departure in revenue mobilisation strategy or expenditure priorities. For a fuller assessment, we will have to wait for the next full Budget.

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That said, two things stand out. The first is the sharp increase in grants expected from the Centre. This is where the double-engine government logic comes into play. The previous government had budgeted around Rs 37,000 crore in grants from the Centre, but ultimately received only around Rs 22,000 crore. This year's Budget estimates central grants at about Rs 71,000 crore, implying an increase of nearly Rs 50,000 crore compared to the revised estimates.

Given that the state and Centre are now governed by the same party, I do not expect the kind of friction that existed earlier. That political alignment is likely to result in greater resource flows to the state.

How much can the double-engine advantage help West Bengal, and does the Budget offer a credible investment roadmap?

The short answer is no.

The government has not been transparent about how it intends to manage some of its welfare commitments. Take the Lakshmir Bhandar scheme, for example. The BJP promised to double the benefit from Rs 1,500 to Rs 3,000. While the per-beneficiary transfer has doubled, the overall allocation has increased only from Rs 32,000 crore to Rs 36,000 crore.

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The state finance minister has not disclosed the total number of beneficiaries. Based on the numbers available, it appears that a substantial number of beneficiaries may be excluded. The government needs to clearly explain who will remain eligible and who will not. At the moment, that process remains unclear.

The second concern is the state's debt burden. West Bengal's economy has grown more slowly than the national average over a longer period, while debt has risen sharply. Debt is now above Rs 8 lakh crore and is estimated at nearly 40 per cent of state GDP. That significantly limits the government's fiscal room for manoeuvre.

How do you assess the government's fiscal strategy?

The government is clearly concerned about debt and is trying to reduce the fiscal deficit. However, it has also committed to continuing welfare schemes and addressing Dearness Allowance arrears for government employees.

The DA commitment alone could involve very large expenditures. Yet the Budget documents do not clearly show how these commitments will be financed. There is a gap between what is being promised and what the financial allocations appear to support.

Capital expenditure remains broadly at the level budgeted by the previous government. This means there is no significant additional public investment push. In many ways, this Budget represents continuity rather than transformation.

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Even out of the additional Rs 50,000 crore expected from the Centre, only around Rs 20,000 crore appears to translate into higher capital expenditure. Much of the rest is likely to go towards revenue expenditure, welfare commitments and DA-related spending.

Can the Budget generate sustainable jobs, particularly for young people?

Jobs and growth ultimately depend on investment. The increase in capital expenditure is minimal and insufficient when compared to the scale of unemployment and infrastructure deficits in the state.

The government's fiscal position is constraining its ability to spend more aggressively. At the same time, it is trying to maintain welfare commitments while reducing debt and the fiscal deficit. If this trajectory continues, I do not think it will adequately address the economic challenges confronting West Bengal.

Are the Budget's fiscal assumptions and spending plans realistic and sustainable?

We will need a few more Budgets before making a definitive judgment. But what this Budget suggests is more of the same — somewhat less welfare, greater fiscal conservatism, and no major public investment push.

A larger concern is that West Bengal's own tax revenue growth has lagged behind most Indian states. Without stronger economic activity, it becomes difficult to generate the revenues needed for sustained development.

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What this Budget indicates is that the government will rely heavily on support from the Centre. Some benefits from the double-engine arrangement will certainly materialise. However, I am not convinced that this alone will produce the structural breakthrough required to put West Bengal on a significantly higher growth and employment trajectory.

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