Focus on revenue outlay over capex in Bengal budget indicates populism tilt in election year: Experts

The budget, tabled before the Bengal assembly on Wednesday, proposed significant cash dole-outs under the revenue expenditure head, pegged at over Rs 30,000 crore higher in 2025-26 than the revised estimates of the current fiscal of 2024-25, but tendered an increase of less than Rs 12,000 crore under capital outlay for the same period.

Kolkata: The West Bengal government’s budgetary proposals for a sharp increment in revenue expenditure coupled with a marginal rise in capital outlay for the 2025-26 fiscal look like one that has its eyes clearly set on the state elections due next year, experts said.

The budget, tabled before the West Bengal assembly on Wednesday, proposed significant cash dole-outs under the revenue expenditure head, pegged at over Rs 30,000 crore higher in 2025-26 than the revised estimates of the current fiscal of 2024-25, but tendered an increase of less than Rs 12,000 crore under capital outlay for the same period.

Revenue expenditures of an organisation are short-term expenses used to service its ongoing operational costs, including salaries of employees, overhead costs and financing welfare schemes, while capital expenditures (capex) are funds used for one-time creation of fixed assets that are expected to generate revenue over a longer period.

Figures from the state budget revealed that the Bengal government ended up upwardly revising its revenue expenditure by over Rs 2,600 crore on what it had originally budgeted for the current fiscal while, simultaneously, downsizing capital expenditure in its revised estimates by nearly Rs 7,000 crore during the same period.

The budgetary estimates for revenue expenditure for the state for the upcoming year stood at a whopping Rs 3.01 lakh crore, a jump of about 11.27 per cent over its current estimates, the money for over half of which (nearly Rs 1.6 lakh crore) is allocated under the Social Services head.

In the last full-fledged budget of the Mamata Banerjee government before the 2026 Assembly elections, state finance minister Chandrima Bhattacharya tabled the Rs 3.89 lakh crore budget with a significant focus on social welfare, and announced a four per cent hike in dearness allowance (DA) for state government employees.

Of the Rs 1.6 lakh crore allocated under the Social Services head, the highest amounts were reserved for the Welfare of SC, ST, OBC and Social Welfare & Nutrition head followed closely by Education, Sports, Art and Culture, according to budget figures.

The corresponding outlay for the budget’s capital expenditures, responsible for creating or servicing assets, is estimated for the upcoming year at Rs 72.818.72 crore, marking an upward revision of Rs 11,826.62 crore over the current fiscal.

Of that amount, Rs 19,724.72 remains allocated under the Social Services head.

Among the highest outlays under capital expenditure for Social Services are reserved for the state’s rural housing scheme, 'Banglar Bari', for which, Bhattacharya announced that the government has already earmarked Rs 14,000 crore for 12 lakh beneficiaries.

“I am happy to announce that in the second phase, we are going to cover 16 lakh eligible families,” the FM declared in her budget speech. “They will be provided with the first installment (@ Rs 60,000 per family) by December this year. I have accordingly allocated Rs 9,600 crore for this.” One of the indicators of the fiscal health of a state is the percentage of its capital outlay over its Gross State Domestic Product (GSDP).

As per Reserve Bank of India data on state-wise capital expenditure based on their respective budgetary estimates for 2023-24, West Bengal was ranked at number 11 among the 15 bigger states in India, with its total outlay of Rs 65,601 crore.

The first three rank holders for that period were Uttar Pradesh, Maharashtra and Tamil Nadu with their capex pegged at Rs 1,77,888 crore, Rs 1,36,333 crore and Rs 1,01,091 crore respectively.

Economist Prasenjit Bose referred to “major revisions” posted by the state government in terms of highlighting its growth rate.

“In the last budget, the government claimed that the state GSDP in 2024-25 would be growing at a rate of 7.65 per cent in constant prices. Now its revised estimates show that GSDP growth this year has been 6.09 per cent. That has serious implications on the state’s fiscal indicators.

"The following year, the government has posted a growth estimate of 6.8 per cent and is likely to again revise it downwards,” he claimed.

According to the state government’s mid-term fiscal policy statement, Bengal posted a figure of 36.88 for debts as a percentage of GSDP based on budgetary estimates for 2024-25 which has now shot up to 38.93 after revising its GSDP figure for the same year.

“That’s a significant jump of two percentage points, which means that the government is misleading its people on the state’s actual fiscal health,” Bose argued, adding, “Fiscal transparency is being sacrificed for electoral motivations.”

On Wednesday, Amit Mitra, principal chief advisor to chief minister Mamata Banerjee said the state's nominal GDP is projected to grow by 11.94 per cent in 2025-26, and development expenditure will increase by 16.17 per cent, while capital expenditure is set to rise by 10.7 per cent.

Key indicators of the state budget revealed that the government’s outstanding debt projection for 2025-26 stood at a staggering Rs 7,71,670.41 crore, an increase of over Rs 65,000 crore compared to the revised estimates of the current year. The state is estimated to spend over Rs 81,000 crore during that time to service loan repayment.