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regular-article-logo Wednesday, 17 April 2024

Bengal’s fiscal deficit set to surge with increase in spending on social welfare ahead of general elections

Bengal government has budgeted fiscal deficit of 3.63 per cent of its gross state domestic product for 2024-25, up from 3.49 per cent in revised estimate of 2023-24 and 3.26 per cent in 2022-23

Pinak Ghosh Calcutta Published 09.02.24, 11:02 AM
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Representational image File picture

A surge in spending on social welfare schemes ahead of the general elections threatens to crank up Bengal’s fiscal deficit for the third consecutive year.

The Bengal government has budgeted a fiscal deficit of 3.63 per cent of its gross state domestic product for 2024-25, up from 3.49 per cent in the revised estimate of 2023-24 and 3.26 per cent in 2022-23.

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The increase in deficit comes amid higher revenue expenditure on social services and higher capital expenditure with the state announcing a slew of schemes and infrastructure projects as a
populist move ahead of the general elections.

In absolute numbers, the fiscal deficit for 2024-25 is estimated at Rs 68,250.16 crore, up from Rs 59,305.99 crore, the revised estimate for 2023-24.

The state has estimated its GSDP at Rs 18,79,453 crore in 2024-25, up from Rs 17,00,939 crore, the revised estimate for 2023-24, a rise of 10.5 per cent.

“It needs to be stressed that in this case, despite an excessive financial burden on the state, the fiscal indicators have consistently moved towards the targets prescribed in the FRBM Act,” the fiscal policy strategy statement from the state government said.

The state’s total debt is projected to rise to Rs 6,93,231.66 crore in 2024-25, from 2023-24 revised estimate of Rs 6,30,783.50 crore, which translates to a debt to GDP ratio of 36.88 per cent in 2024-25. Interest payment burden for 2024-25 is estimated at Rs 45,268.83 crore, up from Rs 42,275.27 crore, the revised estimate for 2023-24.

A breakup of revenue expenditure shows that the state intends to spend Rs 1,32,784.54 crore as expenditure on social services in 2024-25, up 21.18 per cent from Rs 1,09,571.89 crore, the revised estimate of 2023-24. Social services expenditure includes spending on education, health and family welfare, housing and urban development, welfare of SC, ST, OBC.

Total capital expenditure is estimated at Rs 67,913.26 crore, up 9.23 per cent from Rs 62,170.89 crore, the revised estimate for 2023-24.

The state’s revenue receipts, comprising tax revenue, non-tax revenue, share of Union taxes and grants in aid from the Centre is projected to grow 13.22 per cent to Rs 2,36,251.09 crore from Rs 2,08,659.09 crore. Total capital receipts is estimated at Rs 99,862.93 crore in 2024-25, comprising largely of market loans at Rs 79,727 crore. According to the revised estimate of 2023-24, the capital expenditure was Rs 90,432.48 crore.

The decision of higher spends on social welfare schemes and capital expenditure, however, has been welcomed by industry.

“The host of social welfare schemes would go a long way in raising demand in the state as the MPC (Marginal Propensity to Consume) of the beneficiaries would be nearly 1. Subsidised loans for MSMEs along with employment generation schemes would promote self employment along with state employment,” said Rajeev Singh, director-general, Indian Chamber of Commerce.

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