SBI Research flags Bengal’s fiscal stress, calls for revenue reforms and industrial push
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West Bengal’s fiscal health remains under pressure despite receiving a relatively higher share of central grants and tax devolution, according to a report by SBI Research, which argued that the state needs stronger revenue mobilisation, industrial value addition, and administrative reforms to support long-term growth.
In its analysis, the research arm of State Bank of India said broader budget trends for FY27 indicate a decisive shift towards investment-led growth and economic transformation, with greater policy emphasis on investment, governance, fiscal management, technology, entrepreneurship, tourism, and climate resilience. These themes, which had received relatively less attention in earlier budgets, suggest a strategic move towards industrialisation, productive capacity creation, and accelerating long-term growth.
West Bengal Finance Minister Swapan Dasgupta on Monday presented the first budget of the BJP government, unveiling a mix of employment generation, welfare expansion, and infrastructure initiatives while pledging to restore fiscal discipline.
Against this backdrop, SBI Research highlighted concerns around West Bengal’s fiscal position, pointing to sustained debt accumulation despite sizeable transfers from the Centre. According to the note, central grants and tax devolution have consistently accounted for more than 50% of the state’s overall tax revenue over the years.
The report attributed fiscal pressures to rising unconditional cash transfers, increased off-balance-sheet borrowings, higher committed expenditure and leakages arising from what it termed “middleman intermediation” in public spending.
SBI Research noted that West Bengal has considerable untapped potential in non-tax revenues, but administrative inefficiencies have constrained collections. It said improving governance and efficiency in public administration would be critical for unlocking additional revenues.
The report identified property tax reforms, monetisation of idle public assets, and better utilisation of land owned by government departments and public sector undertakings through commercial leasing, public-private partnerships, and long-term concessions as possible revenue avenues.
The note also called for greater value addition to existing mineral resources rather than continued reliance on royalty income. It pointed out that West Bengal possesses the country’s seventh-largest reserves of coalbed methane (CBM) and argued that the state could position itself as a methanol production hub by leveraging its coal and CBM resources along with coal gasification capabilities.
At the same time, SBI Research cautioned that dependence on coal-linked revenues creates long-term risks as the economy gradually transitions toward greener energy sources.
The report also flagged concerns over fiscal discipline. It noted that West Bengal discontinued revenue deficit targets under amendments to the Fiscal Responsibility and Budget Management (FRBM) framework in 2020, following which revenue deficits widened further. It added that the state has not met its debt-to-GDP targets under the FRBM framework and continues to face unrealised revenues tied up in legal disputes and administrative bottlenecks.
The report observed that while Bengal’s per capita income exceeded the national average in FY78, by FY25 it had fallen to around 23% below the all-India level.
As part of its long-term development recommendations, SBI Research proposed operationalising an Eastern Multimodal Growth Corridor connecting Bihar, Odisha, West Bengal and Assam through integrated rail, road, port and inland waterway infrastructure.
The report also highlighted several announcements in West Bengal’s FY27 policy roadmap, including plans to fill 1 lakh government vacancies with 33% reservation for women, a 20% increase in dearness allowance for state employees and pensioners, and expanded welfare spending.
Among social measures, the state allocated ₹36,000 crore to the Annapurna Yojana to provide ₹3,000 per month to eligible women and earmarked ₹550 crore for free bus services for women.
On infrastructure and industrial development, the state proposed a greenfield airport in Kalyani, a deep-sea port in Purba Medinipur, a semiconductor unit in Durgapur, and renewed industrial incentives worth ₹5,000 crore alongside a review of the Urban Land Ceiling Act to attract large private investments.
The report also noted that major welfare and development schemes account for 17.8% of revenue receipts in FY27 while allocations under some existing programmes have been reduced, potentially reflecting overlap with newer welfare initiatives.