West Bengal Budget 2025-26 Focuses on Growth and Welfare

West Bengal‘s Minister of State for Finance, Chandrima Bhattacharya, presented the state budget for the financial year 2025-26. The budget outlines a total expenditure of Rs 3.89 trillion. It aims to stimulate economic growth while implementing extensive welfare measures. This budget comes in anticipation of the state elections scheduled for 2026.

Economic Growth Overview

West Bengal’s Gross State Domestic Product (GSDP) grew by 6.8 per cent in 2024-25. This growth rate surpasses the national average of 6.37 per cent. The industrial sector showed remarkable performance with a growth of 7.3 per cent, exceeding the national figure of 6.2 per cent. The agricultural sector also performed well, recording a 4.2 per cent increase, while the services sector led the growth with a notable 7.8 per cent.

Unemployment Rate

The unemployment rate in West Bengal is reported at 4.14 per cent as of January 2025. This figure is lower than the national unemployment rate of 7.93 per cent. The government attributes this positive outcome to a focus on job-centric growth strategies initiated by Chief Minister Mamata Banerjee.

Fiscal Performance

The fiscal performance of West Bengal has shown steady improvement. The state’s own revenues increased by 10 per cent compared to the previous financial year. The successful implementation of the Settlement of Disputes (SoD) Scheme in Commercial Taxes has led to the resolution of over 20,000 cases, generating additional revenue exceeding Rs 900 crore. The debt-to-GSDP ratio has decreased from 40.65 per cent in 2010-11 to 37.49 per cent in 2022-23, indicating improved fiscal discipline.

Welfare Measures

The budget places a strong emphasis on social welfare. An allocation of Rs 38,762.03 crore has been made for the Women and Child Development and Social Welfare Department. Several flagship schemes have been brought into light, including the Sabuj Saathi Project, which has assisted 12.6 million students by providing bicycles. The Lakshmi Bhandar Scheme offers monthly financial support to women, with higher amounts for those from Scheduled Castes, Scheduled Tribes, and Other Backward Classes.

Future Political Context

As this budget marks the last full budget of Mamata Banerjee’s third term, it is strategically positioned ahead of the upcoming assembly elections. The government plans to present a ‘Vote on Account’ next year to maintain continuity in spending until a new government is established.

Questions for UPSC:

1. Discuss the impact of economic growth on employment rates in West Bengal’s recent fiscal policies.
2. Critically examine the role of social welfare schemes in the economic development of West Bengal.
3. Explain the significance of the Debt to GSDP ratio in assessing a state’s fiscal health.
4. What are the implications of the upcoming West Bengal assembly elections on the state’s financial planning? Discuss with suitable examples.

Answer Hints:

1. Discuss the impact of economic growth on employment rates in West Bengal’s recent fiscal policies.

1. West Bengal’s GSDP growth of 6.8% indicates a robust economy, which can create more job opportunities.
2. The industrial sector’s growth of 7.3% contributes to job creation, particularly in manufacturing and services.
3. Lower unemployment rate of 4.14% compared to the national average of 7.93% suggests effective job-centric policies.
4. Chief Minister Mamata Banerjee’s focus on job-centric growth strategies has positively influenced employment rates.
5. Overall economic resilience across agriculture, industry, and services supports sustainable employment opportunities.

2. Critically examine the role of social welfare schemes in the economic development of West Bengal.

1. Social welfare schemes like Lakshmi Bhandar provide financial support, enhancing purchasing power among women.
2. Programs such as Sabuj Saathi promote education by providing bicycles, thus encouraging school attendance.
3. Welfare measures contribute to poverty alleviation, improving overall socio-economic conditions in the state.
4. Investment in women and child development encourages a healthier, more educated workforce for future economic growth.
5. Flagship schemes demonstrate the government’s commitment to inclusive growth, which can lead to long-term economic stability.

3. Explain the significance of the Debt to GSDP ratio in assessing a state’s fiscal health.

1. The Debt to GSDP ratio indicates the level of debt relative to the state’s economic output, reflecting fiscal sustainability.
2. A decreasing ratio (from 40.65% in 2010-11 to 37.49% in 2022-23) suggests improved fiscal discipline and management.
3. Lower ratios can enhance investor confidence, making it easier for the state to borrow at favorable rates.
4. It is a critical measure for assessing the ability of a state to meet its debt obligations without compromising growth.
5. A balanced ratio supports long-term economic planning and funding for development projects.

4. What are the implications of the upcoming West Bengal assembly elections on the state’s financial planning? Discuss with suitable examples.

1. The budget presented is the last full budget before elections, indicating a focus on populist measures to attract voters.
2. Allocation for welfare schemes may increase to demonstrate government commitment to social issues ahead of polls.
3. Anticipation of a ‘Vote on Account’ next year reflects a strategic approach to maintain fiscal continuity post-elections.
4. Political considerations may influence spending priorities, potentially leading to short-term fiscal imbalances.
5. Examples include increased funding for flagship welfare programs like Lakshmi Bhandar to secure votes from key demographics.