The Bengal government projected a fiscal deficit of 2.91 per cent of gross state domestic product (GSDP) for FY27, dipping below the 3 per cent threshold for the first time since 2017-18. The estimate comes days after the Sixteenth Finance Commission recommended that states cap their fiscal deficits at 3 per cent of GSDP.
In absolute terms, the fiscal deficit for FY27 is estimated at ₹62,423.36 crore, lower than ₹67,773.98 crore in FY26 revised estimate (RE), according to the vote on account presented by state finance minister Chandrima Bhattacharya.
The state’s GSDP is projected to expand by 8 per cent to ₹21,48,244 crore in FY27BE from ₹19,90,896 crore in FY26RE, the medium-term fiscal policy statement released alongside the vote-on-account budget disclosed.
Amit Mitra, principal chief adviser to chief minister Mamata Banerjee, said the government is committed to fiscal prudence. “That’s why we have been able to lower both of these,” Mitra said in response to a question to The Telegraph.
“Revenue deficit is down from 3.75 per cent to our target 1.01 per cent (projected for FY27). Our destination is zero. Art of the possible. Step by step,” Mitra added.
Restrained expenditure
While these deficit numbers lead to stability in market borrowings and a moderation in the debt-to-GDP ratio, the budget fine print indicates that a combination of factors is driving the improved headline number, including a slowdown in the growth of revenue expenditure and a sharp rise in the state’s estimate of its share of Union taxes and grants-in-aid from the Centre.
The fiscal policy statement further noted that the Sixteenth Finance Commission has suggested that FRBM Acts should mandate governments to report to the legislature if deficit or debt limits prescribed under the framework are breached. The commission has also recommended expanding the definition of fiscal deficit and debt to uniformly include off-budget borrowings, a point also underscored in the Economic Survey 2025-26.
On the revenue side, the government has budgeted a 17.5 per cent increase in revenue receipts to ₹2,87,791.73 crore in FY27BE from ₹2,44,866.90 crore in FY26RE. The state’s own tax revenue is projected to rise by a modest 6.2 per cent to ₹1,18,668.78 crore.
Revenue expenditure is budgeted to grow by 8.22 per cent to ₹3,09,551.07 crore in FY27BE, markedly slower than the 12.8 per cent growth recorded in FY26. A closer look shows a slowdown in spending under general services, driven largely by a sharp reduction in pension outgo, budgeted to decline by 27.77 per cent to ₹18,765.25 crore over FY26RE. Expenditure under social services, however, is projected to rise by 10.18 per cent, led by higher allocations to social schemes with an eye on electoral considerations.
In contrast, the state’s share of Union taxes and duties is expected to increase by 9.69 per cent to ₹1,17,668.57 crore, while grants-in-aid from the Centre are budgeted to surge by 115.75 per cent to ₹47,615.46 crore over FY26RE, providing an elusive boost to the revenue profile.
As a result of the revenue and expenditure mix, the revenue deficit as a proportion of GSDP is budgeted to decline to 1.01 per cent in FY27BE from 2.07 per cent in FY26RE, signalling some improvement in the state’s operating balance.
On the borrowing front, the government has signalled stability, with market loans budgeted at ₹80,444.55 crore in FY27BE, broadly in line with ₹80,000 crore in FY26BE. The debt-to-GDP ratio is projected to ease to 37.98 per cent in FY27BE from 38.29 per cent in FY26RE, indicating a marginal improvement in the debt metrics.
“Quality of debt is important. Over 45 per cent is going to asset creation. We are taking loans but it is being used to create infrastructure, to serve people,” Mitra said.
Capital expenditure, however, is projected to rise sharply by 42.64 per cent to ₹86,533.10 crore in FY27BE, underscoring the state’s stated emphasis on infrastructure creation even as it seeks to adhere to fiscal discipline.
Industry bodies have welcomed the fiscal stance. Priti A Sureka, president of the Merchants’ Chamber of Commerce & Industry, said the budget was confidence-building, supporting infrastructure while maintaining fiscal discipline, with the lower fiscal deficit indicating stability.
Naresh Pachisia, president of the Bharat Chamber of Commerce, said improving own tax revenue and moderation in key fiscal indicators, reflected a calibrated and responsible approach to public finance management.