West Bengal Budget Analysis 2023-2024 | WBCS Preparation: All Subjects - WBCS (West Bengal) PDF Download

Ms. Chandrima Bhattacharya, the Finance Minister of West Bengal, unveiled the state's budget for the fiscal year 2023-24 on February 15, 2023.

Budget Highlights

• The Gross State Domestic Product (GSDP) of West Bengal for 2023-24 is anticipated to reach Rs 17.19 lakh crore, reflecting a growth of 10.6% compared to 2022-23.
• Expenditure (excluding debt repayment) in 2023-24 is projected to be Rs 2,78,622 crore, indicating an 8.6% increase over the revised estimates of 2022-23. Additionally, the state plans to repay Rs 60,541 crore in debt.
• Receipts (excluding borrowings) for 2023-24 are estimated at Rs 2,12,783 crore, reflecting a 9.3% increase compared to the revised estimates of 2022-23. The previous fiscal year witnessed a 1.8% decrease in receipts (excluding borrowings) from the budget estimates.
• The revenue deficit for 2023-24 is expected to be 1.8% of GSDP (Rs 30,924 crore), while in 2022-23, it is projected to be 2.6%, surpassing the budget estimate of 1.7%.
• The fiscal deficit target for 2023-24 is set at 3.8% of GSDP (Rs 65,839 crore). In 2022-23, the fiscal deficit increased as a percentage of GSDP from 3.6% to 4.0%, attributed to lower-than-estimated GSDP growth.

Policy Highlights

• Tax proposals: Homebuyers will enjoy a 2% stamp duty rebate and a 10% discount on the circle rate of land/property until September 30, 2023.
• Settlement of tax disputes: Agricultural income tax on tea gardens will be waived for 2023-24 and 2024-25.
• Funds for local area development: The Bidhayak Elaka Unnayan Prakalp will raise the annual allocation for each MLA from Rs 60 lakh to Rs 70 lakh for local area development.
• Lakshmir Bhandar: Lakshmir Bhandar beneficiaries aged 60 and above will receive a monthly old-age pension of Rs 1,000.
• Matsyajeebi Bandhu Scheme: The Matsyajeebi Bandhu Scheme grants a one-time payment of two lakh rupees to the family members of registered fishermen aged 18-60 upon their demise.
• Credit to youth: The Bhavishyat Credit Card scheme, with an allocation of Rs 350 crore, will provide loans up to five lakh rupees to individuals aged 18-45 for micro-enterprises.

West Bengal’s Economy

• GSDP: GSDP growth at constant prices is estimated at 8.4%, surpassing the national GDP growth of 7%.
• Sectors: Contributions to the economy at current prices: agriculture (19.4%), manufacturing (24%), and services (56.5%).
• Unemployment: Unemployment rate in 2020-21 was 6.8%, lower than the national rate of 7.5% (as per the Periodic Labour Force Survey).

Table  1 : West Bengal's GSDP Growth

Sources: Medium Term Fiscal Policy Statement and Fiscal Policy Strategy Statement (various years), West Bengal Budget Documents; PRS.

Budget Estimates for 2023-24

• Total expenditure (excluding debt repayment) in 2023-24 is targeted at Rs 2,78,622 crore.  This is an increase of 8.6% over the revised estimate of 2022-23.  This expenditure is proposed to be met through receipts (excluding borrowings) of Rs 2,12,783 crore and net borrowings of Rs 59,499 crore.  The remaining amount will be funded through the public account and contingency fund.  Total receipts for 2023-24 (other than borrowings) are expected to register an increase of 9.3% over the revised estimate of 2022-23.
• Revenue deficit in 2023-24 is estimated to be 1.8% of GSDP (Rs 30,924 crore), lower than the revised estimates for 2022-23 (2.6% of GSDP).  Fiscal deficit for 2023-24 is targeted at 3.8% of GSDP (Rs 65,839 crore), as compared to the revised estimates for 2022-23 (4.0% of GSDP).  For 2023-24, the central government has allowed states a fiscal deficit of 3.5% of GSDP (including 0.5% for undertaking power sectors reforms).
• In 2022-23, the fiscal deficit exceeded the budget estimates by 0.4 percentage points of GSDP, primarily due to lower-than-expected GSDP growth. In absolute terms, the fiscal deficit was lower than the budget estimate by Rs 676 crore. Both expenditure (excluding debt repayment) and receipts (excluding borrowing) in 2022-23 were 1.6% and 1.8% lower than the budget estimates, respectively. 

Table  2 : Budget 2023-24 - Key figures (in Rs crore)



Note: BE is Budget Estimates; RE is Revised Estimates.  Expenditure for 2022-23 RE does not include transfer of Rs 180 crore to contingency fund.

Expenditure in 2023-24

Capital outlay by West Bengal
West Bengal's anticipated capital outlay for the fiscal year 2023-24 is projected to surge by 58% when compared to the revised estimates of 2022-23. However, in the preceding fiscal year (2022-23), the capital outlay observed a 35% reduction compared to the initial budget estimates. Notably, there was an 82% underspending on capital outlay in 2022-23 specifically in the welfare of SC, ST, OBC, and minorities. Other sectors experiencing significant underspending include education, arts, sports, and culture (71%), rural development (56%), and agriculture and allied activities (54%). Over the period from 2015-16 to 2019-20, West Bengal underspent its capital outlay budget by 22%, surpassing the average underspending of 17% by all states.

• Revenue expenditure for 2023-24 is proposed to be Rs 2,43,561 crore, an increase of 4% over the revised estimate of 2022-23.  This includes expenditure on salaries, pensions, interest, grants, and subsidies.
• Capital outlay for 2023-24 is proposed to be Rs 34,026 crore, an increase of 58% over the revised estimate of 2022-23.  Capital outlay is the expenditure towards creation of assets.  
• In 2023-24, loans and advances given by the state are expected to be Rs 1,043 crore, an increase of Rs 315 crore (44% increase) over 2022-23 revised estimates.

Table  3 :  Expenditure budget 2023-24 (in Rs crore)

Sources: Annual Financial Statement, West Bengal Budget 2023-24; PRS.
Committed expenditure: In the upcoming fiscal year, West Bengal is expected to allocate Rs 1,31,192 crore, constituting 61.7% of its estimated revenue receipts, towards committed expenditure. This primarily encompasses salaries (30% of revenue receipts), interest payments (20%), and pensions (11%). The estimated committed expenditure for 2023-24 reflects a 3% increase over the revised estimate of 2022-23. Notably, in the preceding fiscal year, pension expenditure surpassed the budget estimate by 11%.

Table  4 : Committed Expenditure in 2023-24 (in Rs crore)

Sources: Budget in Brief and Annual Financial Statement, West Bengal Budget 2023-24; PRS.
Sector-wise expenditure: The sectors outlined below account for 64% of the total expenditure on sectors by the state in 2023-24. Annexure 1 provides a comparative analysis of West Bengal's sectoral expenditure with that of other states.

Table  5 : Sector-wise expenditure under West Bengal Budget 2023-24 (in Rs crore)






Sources: Annual Financial Statement, West Bengal Budget 2023-24; PRS.

Receipts in 2023-24

• The anticipated total revenue receipts for the fiscal year 2023-24 are projected to reach Rs 2,12,637 crore, marking a 9% increase compared to the revised estimate of 2022-23. Within this, the state aims to generate Rs 94,972 crore (45%) from its own resources, while Rs 1,17,665 crore (55%) is expected to be sourced from the central government. Central contributions will be derived from the state's share in central taxes (36% of revenue receipts) and grants (19% of revenue receipts).
• Devolution:  The state's share in central taxes for 2023-24 is estimated at Rs 76,844 crore, reflecting an 8% increase over the revised estimate of 2022-23. Meanwhile, grants from the central government are expected to amount to Rs 40,821 crore, representing a 2% decrease compared to the revised estimates for 2022-23.
• State’s own revenue:  West Bengal's total own tax revenue is anticipated to reach Rs 88,596 crore in 2023-24, reflecting an 11% increase over the revised estimate of 2022-23. The estimated own tax revenue as a percentage of GSDP is 5.2% in 2023-24, compared to the initially estimated 4.6% for 2022-23, which was later revised to 5.1%. Additionally, the state's own non-tax revenue is expected to surge by 239% in 2023-24 over the revised estimate of 2022-23, with interest receipts projected to increase by Rs 4,402 crore.

Table  6 : Break-up of the state government’s receipts (in Rs crore)


Note: BE is Budget Estimates; RE is Revised Estimates.
Sources: Annual Financial Statement, West Bengal Budget 2023-24; PRS.

• In 2023-24, State GST is projected to be the predominant source of own tax revenue, constituting a 43% share. State GST revenue is expected to increase by 9% over the revised estimates of 2022-23, although it is anticipated to be 4% lower than budgeted for the current fiscal year. Moreover, revenue from state excise is estimated to increase by 19% in 2023-24 over the revised estimates of 2022-23, whereas revenue from state excise is expected to be 9% lower than the budget estimates in the current fiscal year.
• In 2023-24, sales tax/VAT, stamp duty, and taxes on vehicles are all projected to witness an increase of 15%, 5%, and 10%, respectively, over the revised estimates of 2022-23.

Table  7 :  Major sources of state’s own-tax revenue (in Rs crore)



Sources: Annual Financial Statement, Revenue Budget, and Budget in Brief statements, West Bengal Budget 2023-24; PRS.

Deficits, Debt, and FRBM Targets for 2023-24

The West Bengal Fiscal Responsibility and Budget Management Act, 2010, outlines annual targets to progressively reduce the outstanding liabilities, revenue deficit, and fiscal deficit of the state government. However, the Comptroller and Auditor General (CAG) noted an understatement of revenue and fiscal deficits by West Bengal in 2020-21, amounting to Rs 3,440 crore and Rs 2,249 crore, respectively. The state exhibited a persistent pattern of understating deficits during 2017-21, with the CAG highlighting the risks associated with an excessive focus on short-term deficit reduction measures.
Understatement of Revenue and Fiscal Deficits 

• Revenue deficit:  Defined as the difference between revenue expenditure and revenue receipts, the budget estimates a revenue deficit of Rs 30,924 crore (1.8% of GSDP) for 2023-24. In 2022-23, the revenue deficit is estimated at Rs 39,663 crore (2.6% of GSDP), surpassing the budget estimate of 1.7% of GSDP.
• Fiscal deficit:  Representing the excess of total expenditure over total receipts, West Bengal's fiscal deficit is estimated to be 3.8% of GSDP in 2023-24. In 2022-23, the fiscal deficit is expected to be higher than the budget estimate by 0.4 percentage points of GSDP, attributed to the state's GSDP being 9.2% lower at the revised estimate stage. In absolute terms, the fiscal deficit is lower than the budget estimates by Rs 676 crore in 2022-23.
• Outstanding liabilities:  At the end of 2023-24, outstanding liabilities are projected to be 37.7% of GSDP, representing an increase from the 2019-20 level of 36.8% of GSDP.

Outstanding Government Guarantees:  The outstanding obligations of state governments exclude certain contingent liabilities, which may require states to fulfill under specific circumstances. State governments provide guarantees for the borrowings of State Public Sector Enterprises (SPSEs) from financial institutions. As per the West Bengal Ceiling on Government Guarantees Act, 2001, the total outstanding government guarantees at the beginning of a financial year should not exceed 90% per month of the state revenue receipts of the second preceding years. As of March 31, 2022, the outstanding government guarantees amounted to Rs 13,156 crore (0.8% of GSDP).

Annexure 1:  Comparison of states’ expenditure on key sectors
The charts below illustrate the comparison of West Bengal's expenditure in 2023-24 on six key sectors as a percentage of its total expenditure across all sectors. Sector averages represent the expenditure average in each sector by 31 states (including West Bengal) based on their budget estimates for 2022-23.

• Health:  West Bengal has allocated 6.7% of its expenditure to health in 2023-24, surpassing the average allocation for education by states in 2022-23 (6.3%).
• Education:  West Bengal has allocated 16.5% of its total expenditure to education, exceeding the average allocation for education by states (14.8%).
• Urban Development:  West Bengal has allocated 4.2% of its expenditure to urban development, surpassing the average allocation to urban development by states (3.5%).
• Roads and bridges:  West Bengal has allocated 2.0% of its total expenditure to roads and bridges, which is below the average allocation by states (4.5%).
• Police:  West Bengal has allocated 3.8% of its expenditure to police, falling below the average allocation to police by states (4.3%).
• Agriculture:  West Bengal has allocated 6.4% of its expenditure to agriculture, exceeding the average allocation to agriculture by states (5.8%).

Note: 2021-22, 2022-23 (BE), 2022-23 (RE), and 2023-24 (BE) figures are for West Bengal
Sources: Annual Financial Statement, West Bengal Budget 2023-24; various state budgets; PRS.
The 31 states include the Union Territories of Delhi, Jammu and Kashmir, and Puducherry.

Annexure 2:  Comparison of 2021-22 Budget Estimates and Actuals
The tables below compare the actual figures for 2021-22 with the budget estimates for that year.
Table  8 : Overview of Receipts and Expenditure (in Rs crore)



Note: BE: Budget Estimates.  For calculating deficits, GST compensation loan not treated as grants.
Sources: West Bengal Budget Documents of various years; PRS.

Table  9 : Key Components of State's Own Tax Revenue (in Rs crore)

Sources: West Bengal Budget Documents of various years; PRS.

Table  10 : Allocation towards Key Sectors (in Rs crore)


Sources: West Bengal Budget Documents of various years; PRS.