The West Bengal Minister of State for Finance, Ms. Chandrima Bhattacharya, presented the Budget for the state for the financial year 2022-23 on March 11, 2022.

Budget Highlights

  • The Gross State Domestic Product (GSDP) of West Bengal for 2022-23 (at current prices) is projected to be Rs 17,13,154 crore.  This is a growth of 11.5% over the revised estimate of GSDP for 2021-22 (Rs 15,36,681 crore).   In 2021-22, GSDP is estimated to grow at 18.1% over the previous year (at current prices).
     
  • Expenditure (excluding debt repayment) in 2022-23 is estimated to be Rs 2,60,629 crore, a 13% increase over the revised estimates of 2021-22 (Rs 2,29,634 crore).   In addition, debt of Rs 60,401 crore will be repaid by the state in 2022-23.  In 2021-22, expenditure (excluding debt repayment) is estimated to be 7% lower than the budget estimate.
     
  • Receipts (excluding borrowings) for 2022-23 are estimated to be Rs 1,98,232 crore, an increase of 13% over the revised estimates of 2021-22 (Rs 1,76,202 crore).  In 2021-22, receipts (excluding borrowings) are estimated to fall short of the budget estimate by Rs 10,618 crore (decrease of 6%).
     
  • Fiscal deficit for 2022-23 is targeted at Rs 62,397 crore (3.64% of GSDP).   In 2021-22, as per the revised estimates, fiscal deficit is expected to be 3.48% of GSDP, lower than the budget estimate of 4.03% of GSDP.
     
  • Revenue deficit for 2022-23 is estimated to be Rs 28,280 crore, which is 1.65% of the GSDP.  In 2021-22, the state is estimated to observe a revenue deficit of 2.15% of GSDP, higher than the revenue deficit of 1.77% of GSDP estimated at the budget stage.

Policy Highlights

  • Tax proposals: The state government has exempted payment of the Rural Employment Cess and the Education cess for the tea industry for the next financial year (2022-23).  Further, the Agricultural Income cess has been waived off for 2022-23 to provide relief for small tea gardens.  To incentivise electric vehicles (two-wheelers and four-wheelers), the Registration Fees and Road Tax has been exempted for two years, from 2022-23.  This will also be applicable on all categories of CNG vehicles.  Further, the 2% rebate on stamp duty and 10% rebate on circle rate for property has been extended till September, 2022.
     
  • Social security: Widow pensions will be provided to new eight lakh applicants received through ‘Duare Sarkar’ from April 1, 2022.  More than 21 lakh widows will be covered under the scheme. 

West Bengal’s Economy

  • GSDP:  West Bengal’s GSDP (at constant prices) grew by 1.1% in 2020-21, which is less than the growth rate of 6.1% in 2019-20.  In 2020-21, the manufacturing sector contracted by 1.2%.  West Bengal’s growth rate in 2020-21 was higher than the growth in national GDP (which registered a negative growth of 6.6% in 2020-21).
     
  • Sectors:  In 2020-21, at current prices, agriculture, manufacturing, and services sectors contributed to 23%, 20%, and 57% of the economy.
     
  • Per capita GSDP:  The per capita GSDP of West Bengal in 2020-21 (at current prices) was Rs 1,32,932; 7% higher than the corresponding figure in 2019-20.     This is lower than the per capita GDP at the national level (Rs 1,46,087 at current prices).  

Figure  1 : Growth in GSDP and sectors in West Bengal at constant (2011-12) prices 
 
 image

Note: These numbers are as per constant prices (2011-12) which implies that the growth rate is adjusted for inflation.
Sources: MoSPI; PRS.

 

 

 

 

 

 

 

 

 

 

 

Budget Estimates for 2022-23

  • Expenditure (excluding debt repayment) in 2022-23 is targeted at Rs 2,60,629 crore.  This is an increase of 14% over the revised estimate of 2021-22 (Rs 2,29,454 crore).   This expenditure is proposed to be met through receipts (excluding borrowings) of Rs 1,98,232 crore and net borrowings of Rs 54,558 crore.  Receipts (excluding borrowings) for 2022-23 are expected to register an increase of 13% over the revised estimate of 2021-22.  In 2021-22, receipts are estimated to be 6% lower than the budget estimates.
     
  • In 2022-23, the state is estimated to observe a revenue deficit of Rs 28,280 crore, which is 1.65% of its GSDP.  In comparison, in 2020-21 and 2021-22, the state is to observe a revenue deficit of 2.27% of GSDP (Rs 29,527 crore) and 2.15% of GSDP (Rs 32,964 crore), respectively.
     
  • Fiscal deficit in 2022-23 is estimated to be 3.64% of GSDP which is within the limit of 4% of GSDP permitted by the central government in Union Budget 2022-23 (of which, 0.5% of GSDP will be made available upon undertaking power sector reforms).  In 2021-22, the state has estimated a fiscal deficit of 3.48% of GSDP, lower than the limit of 4.5% of GSDP permitted by the central government (of which, 0.5% of GSDP becomes available upon undertaking power sector reforms).  

Table  1 : Budget 2022-23 - Key figures (in Rs crore)

Items

2020-21

Actuals

2021-22

BE

2021-22

RE

% change from BE 21-22 to RE 21-22

2022-23

BE

% change from RE 21-22 to BE 22-23

Total Expenditure

2,20,121

3,08,727

2,91,147

-6%

3,21,030

10%

(-) Repayment of debt

26,889

61,043

61,513

1%

60,401

-2%

Net Expenditure (E)

1,93,232

2,47,685

2,29,634

-7%

2,60,629

13%

Total Receipts

2,23,973

3,02,493

2,84,241

-6%

3,13,191

10%

(-) Borrowings

75,429

1,15,673

1,08,039

-7%

1,14,959

6%

Net Receipts (R)

1,48,544

1,86,821

1,76,202

-6%

1,98,232

13%

Fiscal Deficit (E-R)

44,688

60,864

53,432

-12%

62,397

17%

as % of GSDP

3.43%

4.03%

3.48%

3.64%

Revenue Deficit

29,527

26,755

32,964

23%

28,280

-14%

as % of GSDP

2.27%

1.77%

2.15%

1.65%

Primary Balance

10,906

28,206

16,870

-40%

23,286

38%

as % of GSDP

0.84%

1.87%

1.10%

1.36%

Note: BE is Budget Estimates; RE is Revised Estimates; Net expenditure in 2021-22 RE includes appropriation to contingency fund. 
Sources: West Bengal Budget Documents 2022-23; PRS.

Expenditure in 2022-23

  • Revenue expenditure in 2022-23 is estimated to be Rs 2,26,327 crore, which is an increase of 8% over the revised estimate of 2021-22 (Rs 2,08,995 crore).  This expenditure includes the payment of salaries, pensions, interest, and subsidies.     In 2021-22, as per the revised estimates, revenue expenditure is estimated to be 2% lower than the budget estimate.
     
  • Capital outlay in 2022-23 is estimated to be Rs 33,144 crore, which is an increase of 73% over the revised estimate of 2021-22.  Capital outlay comprises expenditure towards creation of assets.     This includes expenditure on building schools, hospitals, and roads and bridges.  In 2021-22, capital outlay is estimated to be 41% lower than the budget estimate.

Capital outlay in 2021-22

In 2021-22, capital outlay by West Bengal is expected to be 41% lower than the budget estimates.  As per revised estimates, capital outlay on rural development, welfare of SC, ST, OBC and minorities, and education, sports, arts and culture is estimated to be lower than budget estimates by 84%, 79%, and 66% respectively.  Other sectors which have seen significant reduction in capital outlay are social welfare and nutrition (64%) and police (60%).  Further, with the state being in revenue deficit, it may reduce the fiscal space for capital outlay.  

Table  2 :   Expenditure budget 2022-23 (in Rs crore)

Items

2020-21

Actuals

2021-22

BE

2021-22

RE

% change from BE 21-22 to RE 21-22

2022-23

BE

% change from RE 21-22 to BE 22-23

Revenue Expenditure

1,77,921

2,13,437

2,08,995

-2%

2,26,327

8%

Capital Outlay

13,034

32,774

19,175

-41%

33,144

73%

Loans given by the state

2,277

1,474

1,284

-13%

1,158

-10%

Net Expenditure

1,93,232

2,47,685

2,29,454

-7%

2,60,629

14%

Sources: West Bengal Budget Documents 2022-23; PRS.

Committed expenditure: Committed expenditure of a state typically includes expenditure on payment of salaries, pensions, and interest.  A larger proportion of budget allocated for committed expenditure items limits the state’s flexibility to decide on other expenditure priorities such as developmental schemes and capital outlay.  In 2022-23, West Bengal is estimated to spend Rs 1,22,632 crore on committed expenditure items, which is 62% of its revenue receipts.   This comprises spending on salaries (31% of revenue receipts), interest payments (20%), and pensions (12%).  Committed expenditure in 2022-23 is estimated to increase by 3% over the revised estimate of 2021-22.  Interest payments are estimated to increase by 7% whereas salaries and pension are estimated to increase by 2% each.

Table  3 : Committed Expenditure in 2022-23 (in Rs crore)

Items

2020-21

Actuals

2021-22

BE

2021-22

RE

% change from BE 21-22 to RE 21-22

2022-23

BE

% change from RE 21-22 to BE 22-23

Salaries

56,660

59,169

59,568

1%

60,524

2%

Pensions

21,394

21,263

22,538

6%

22,998

2%

Interest Payment

33,782

32,658

36,562

12%

39,111

7%

Total Committed Expenditure

1,11,835

1,13,090

1,18,669

5%

1,22,632

3%

Sources: West Bengal Budget Documents 2022-23; PRS.

Sector-wise expenditure: The sectors listed below account for 67% of the total expenditure on sectors by the state in 2022-23.  A comparison of West Bengal’s expenditure on the key sectors with that by other states is shown in Annexure 1.

Table  4 : Sector-wise expenditure under West Bengal Budget 2022-23 (in Rs crore)

 

Sectors

2020-21 Actuals

2021-22 BE

2021-22 RE

2022-23 BE

% change from RE 21-22 to
BE 22-23

Budget Provisions (2022-23)

Education, Sports, Arts, and Culture

35,873

43,195

38,440

43,466

13%

  • Rs 1,930 crore has been allocated towards mid-day meal scheme.
  • Rs 2,117 crore has been allocated towards Samagra Shiksha Abhiyan.

Social Welfare and Nutrition

15,822

37,868

36,770

36,448

-1%

  • Rs 1,048 crore and Rs 331 crore has been allocated towards old age pension scheme for SCs and STs.

Rural Development

19,080

20,053

14,083

22,236

58%

  • Rs 1,560 crore has been allocated towards MGNREGS.
  • Rs 5,832 crore has been allocated towards Pradhan Mantri Awas Yojana – Gramin.

Health and Family Welfare

12,831

16,576

16,229

17,786

10%

  • Rs 2,263 crore has been allocated towards capital outlay on medical and public health.

Agriculture and allied activities

5,011

12,936

8,944

12,709

42%

  • Rs 4,994 crore has been allocated towards Krishak Bandhu scheme.

Urban Development

7,469

11,320

9,725

11,606

19%

  • Rs 825 crore has been allocated towards Housing for All scheme.

Police

8,923

9,503

10,068

10,410

3%

  • Rs 6,302 crore has been allocated towards district police.  Rs 232 crore has been allocated towards special police.

Transport

4,859

6,878

6,165

6,843

11%

  • Rs 4,165 crore has been allocated towards capital outlay on roads and bridges.

Welfare of SC, ST, OBC, and Minorities

3,599

5,966

4,657

6,581

41%

  • Rs 143 crore has been allocated towards the Board of Wakfs, West Bengal.

Irrigation and Flood Control

2,725

5,075

3,548

5,321

50%

  • Rs 3,857 crore has been allocated towards capital outlay on Irrigation and flood control.

% of total expenditure on all sectors

61%

69%

65%

67%

 

 

Sources: West Bengal Budget Documents 2022-23; PRS.

Receipts in 2022-23

  • Total revenue receipts for 2022-23 are estimated to be Rs 1,98,047 crore, an increase of 13% over the revised estimate of 2021-22.  Of this, Rs 86,019 crore (43%) will be raised by the state through its own resources, and Rs 1,12,028 crore (57%) will come from the centre.  Resources from the centre will be in the form of state’s share in central taxes (31% of revenue receipts) and grants (26% of revenue receipts).
     
  • Devolution: In 2022-23, the state estimates to receive Rs 61,437 crore in the form of share in central taxes, an increase of 10% over the revised estimates of 2021-22.  Devolution from the centre in 2021-22 is expected to be 12% higher than the budget estimates.
     
  • State’s own tax revenue: Total own tax revenue of West Bengal is estimated to be Rs 79,347 crore in 2022-23, an increase of 7% over the revised estimate of 2021-22.  The state’s own tax revenue as a percentage of GSDP is estimated to stay unchanged at 4.9% of GSDP from 2020-21 (as per actuals) to 2022-23 (as per budget estimate).   Note that own tax to GSDP ratio was 4.8% in 2021-22 (as per revised estimates).
     
  • State’s non-tax revenue: In 2022-23, West Bengal is estimated to earn Rs 6,672 crore in the form of state’s own non-tax revenue, a 131% increase over the revised estimates of 2021-22.  In 2021-22, state’s own non-tax revenue is estimated to register a decrease of 37% over the previous year.  In non-tax revenue, the state has estimated interest receipts at Rs 5,369 crore, an increase of 206% over the revised estimates of 2021-22.  In 2021-22, interest receipts are expected to be 363% higher as per the revised estimates over the budget estimates.

Table  5 : Break-up of the state government’s receipts (in Rs crore)

Sources

2020-21

Actuals

2021-22

BE

2021-22

RE

% change from BE 21-22 to RE 21-22

2022-23

BE

% change from RE 21-22 to BE 22-23

State's Own Tax

60,287

75,416

73,905

-2%

79,347

7%

State's Own Non-Tax

5,198

4,612

2,885

-37%

6,672

131%

Share in Central Taxes

44,737

50,070

55,940

12%

61,437

10%

Grants-in-aid from Centre

38,171

56,583

43,301

-23%

50,592

17%

Revenue Receipts

1,48,394

1,86,681

1,76,031

-6%

1,98,047

13%

Non-debt Capital Receipts

150

139

171

23%

185

8%

Net Receipts

1,48,544

1,86,821

1,76,202

-6%

1,98,232

13%

Note: BE is Budget Estimates; RE is Revised Estimates; totals for 2022-23 may not match due to rounding off. 
Sources: West Bengal Budget Documents 2022-23; PRS.

  • In 2022-23, SGST is estimated to be the largest source of own tax revenue (46%).  SGST revenue in 2022-23 is estimated at Rs 36,114 crore, which is a 10% increase over the revised estimates of 2021-22.  While there is a marginal decrease in the estimates of SGST revenue from the budget to the revised stage, GST compensation is estimated to increase from Rs 11,133 crore at the budget stage to Rs 11,525 crore at the revised stage (including back-to-back loan in lieu of compensation of Rs 6,425 crore).
     
  • In 2022-23, revenue from State Excise and Sales Tax/VAT is estimated to increase 6% and 4% respectively (Table 6).

GST Compensation ends in June 2022

When the GST was introduced, the central government guaranteed states a 14% compounded annual growth in their GST revenue for a period of five years.  Any shortfall in a state’s GST revenue from this level is covered by the Centre by providing compensation grants to the state.  This guarantee ends in June 2022.  During 2018-22, West Bengal has relied on GST compensation grants to achieve the guaranteed SGST revenue level.  In 2021-22, the state is estimated to receive Rs 11,525 crore in the form of GST compensation grants, which is about 7% of its own tax revenue.     Hence, beyond June 2022, West Bengal might see a decline in the level of revenue receipts.

Table  6 :  Major sources of state’s own-tax revenue (in Rs crore)

Taxes

2020-21

Actuals

2021-22

BE

2021-22

RE

% change from BE 21-22 to RE 21-22

2022-23

BE

% change from RE 21-22 to BE 22-23

State GST

26,013

32,982

32,920

0%

36,114

10%

State Excise

10,666

16,100

15,586

-3%

16,500

6%

Sales Tax/ VAT

9,394

8,600

9,700

13%

10,100

4%

Stamps Duty and Registration Fees

5,528

7,246

6,990

-4%

6,550

-6%

Taxes on Vehicles

2,336

2,900

2,640

-9%

2,772

5%

Land Revenue

2,756

3,200

2,627

-18%

3,259

24%

GST Compensation Grants

5,776

4,708

5,100

8%

5,500

8%

GST Compensation Loans

4,431

6,425

6,425

0%

-

-

Sources: West Bengal Budget Documents 2022-23; PRS.

Deficits and Debt Targets for 2022-23

The West Bengal Fiscal Responsibility and Budget Management (FRBM) Act, 2010 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit, and fiscal deficit of the state government.

Revenue Balance:   It is the difference of revenue expenditure and revenue receipts.  A revenue deficit implies that the government needs to borrow to finance its expenses which do not increase its assets or reduces its liabilities.  In 2022-23, West Bengal is estimated to observe a revenue deficit of Rs 28,280 crore, which is 1.54% of the GSDP.  In 2020-21 and 2021-22, the state is to observe a revenue deficit of 2.27% of GSDP (Rs 29,527 crore) and 2.15% of GSDP (Rs 32,964 crore), respectively.  

The 15th Finance Commission has recommended grants for eliminating revenue deficit to 17 states during the 2021-26 period.  West Bengal will receive grants till 2024-25 during this period.  In 2022-23, the state has estimated to receive Rs 13,587 crore as post devolution revenue deficit grants.  In 2021-22, the state has estimated to receive Rs 17,607 crore, while in 2020-21, West Bengal received Rs 5,013 crore as revenue deficit grants. 

Fiscal deficit:  It is the excess of total expenditure over total receipts.  This gap is filled by borrowings by the government and leads to an increase in total liabilities of the state government.  In 2022-23, the fiscal deficit is estimated to be Rs 62,397 crore (3.64% of GSDP).  It is within the limit of 4% of GSDP permitted by the central government in 2022-23 as per the Union Budget (of which, 0.5% of GSDP will be made available upon undertaking power sector reforms).

Outstanding liabilities:  Outstanding liabilities is the accumulation of total borrowings at the end of a financial year, it also includes any liabilities on public account.   At the end of March 2023, the outstanding liabilities of the state is estimated to be 34.23% of the GSDP.  The outstanding liabilities are estimated to decrease from 35.89% in 2019-20.

Figure  2 : Revenue and Fiscal Balance (% of GSDP) 

image

Note: RE is Revised Estimates; BE is budget estimates. A positive figure means a surplus, a negative figure means a deficit.  *Figures for 2023-24 and 2024-25 are projections.
Sources: West Bengal Budget Documents 2022-23; PRS.

Figure  3 : Outstanding Liabilities (% of GSDP)

image

Note: RE is Revised Estimates; BE is budget estimates.
Sources: West Bengal Budget Documents 2022-23; PRS.  

 

Outstanding Government Guarantees: Outstanding liabilities of states do not include a few other liabilities that are contingent in nature, which states may have to honour in certain cases.  State governments guarantee the borrowings of State Public Sector Enterprises (SPSEs) from financial institutions.  According to the West Bengal Ceiling on Government Guarantees Act, 2001, outstanding government guarantees, as on April 1 of any year, should not exceed 90% per month of revenue receipts of the second preceding year.  As on March 31, 2022, the state is estimated to have outstanding guarantees worth Rs 16,885 crore out of which power department accounts for guarantees worth Rs 8,681 crore.

Annexure 1:  Comparison of states’ expenditure on key sectors

The graphs below compare West Bengal’s expenditure on six key sectors as a proportion of its total expenditure on all sectors.  The average for a sector indicates the average expenditure in that sector by 30 states (including West Bengal) as per their budget estimates of 2021-22. [1]

  • Education:  West Bengal has allocated 16.8% of its total expenditure for education in 2022-23.  This is higher than the average allocation (15.2%) for education by all states (as per 2021-22 Budget Estimates).
  • Health:  West Bengal has allocated 6.9% of its total expenditure on health, which is higher than the average allocation for health by states (6%).
  • Agriculture:  The state has allocated 4.9% of its total expenditure towards agriculture and allied activities.  This is lower than the average allocation for agriculture by states (6.2%).
  • Rural development:  West Bengal has allocated 8.8% of its expenditure on rural development.  This is higher than the average allocation for rural development by states (5.7%).
  • Police:  West Bengal has allocated 4% of its total expenditure on police, which is marginally lower than the average expenditure on police by states (4.3%).
  • Roads and bridges:  West Bengal has allocated 2.1% of its total expenditure on roads and bridges, which is lower than the average allocation by states (4.7%).

image

image

image

image

image

image

Note: 2020-21, 2021-22 (BE), 2021-22 (RE), and 2022-23 (BE) figures are for West Bengal.
Sources: West Bengal Budget Documents 2022-23; various state budgets; PRS.

Annexure 2:  Comparison of 2020-21 Budget Estimates and Actuals

The following tables compare the actuals of 2020-21 with budget estimates for that year.

Table  7 : Overview of Receipts and Expenditure (in Rs crore)

Particular

2020-21 BE

2020-21 Actuals

% change from BE to Actuals

Net Receipts (1+2)

1,79,905

1,48,544

-17%

1.  Revenue Receipts (a+b+c+d)

1,79,398

1,48,394

-17%

a.  Own Tax Revenue

70,807

60,287

-15%

b.  Own Non-Tax Revenue

4,266

5,198

22%

c.  Share in central taxes

65,835

44,737

-32%

d.  Grants-in-aid from the Centre

38,490

38,171

-1%

Of which GST compensation grants

4,928

5,776

17%

2.  Non-Debt Capital Receipts

507

150

-70%

3.  Borrowings

79,465

75,429

-5%

Of which GST compensation loan

0

4,431

-

Net Expenditure (4+5+6)

2,11,388

1,93,232

-9%

4.  Revenue Expenditure

1,79,398

1,77,921

-1%

5.  Capital Outlay

31,047

13,034

-58%

6.  Loans and Advances

943

2,277

141%

7.  Debt Repayment

44,289

26,889

-39%

Revenue Balance

0

-29,527

 

Revenue Balance (as % of GSDP)

0.00%

-2.27%

 

Fiscal Deficit

31,483

44,688

42%

Fiscal Deficit (as % of GSDP)

2.18%

3.43%

 

Note: A negative revenue balance indicates a deficit.  BE: Budget Estimates.
Source: West Bengal Budget Documents of various years; PRS.

Table  8 : Key Components of State's Own Tax Revenue (in Rs crore)

Sector

2020-21 BE

2020-21 Actuals

% change from BE to Actuals

State Excise Duty

12,732

9,394

-26%

Taxes and Duties on Electricity

2,994

2,214

-26%

SGST

33,153

26,013

-22%

Stamps Duty and Registration Fees

6,872

5,528

-20%

Taxes on Vehicles

2,826

2,336

-17%

Land Revenue

3,139

2,756

-12%

Sales Tax/VAT

7,538

10,666

41%

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

Table  9 : Allocation towards Key Sectors (in Rs crore)

Sector

2020-21 BE

2020-21 Actuals

% change from BE to Actuals

Agriculture and allied activities

10,648

5,011

-53%

Water Supply and Sanitation

3,444

1,743

-49%

Housing

391

216

-45%

Irrigation and Flood Control

4,808

2,725

-43%

Urban Development

10,571

7,469

-29%

of which Roads and Bridges

4,767

3,716

-22%

Energy

2,497

1,986

-20%

Transport

6,082

4,859

-20%

Social Welfare and Nutrition

19,744

15,822

-20%

Rural Development

21,371

19,080

-11%

Welfare of SC, ST, OBC, and Minorities

3,942

3,599

-9%

Education, Sports, Arts, and Culture

37,059

35,873

-3%

Police

8,167

8,923

9%

Health and Family Welfare

11,280

12,831

14%

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

[1]  The 30 states include the Union Territory of Delhi and Union Territory of Jammu and Kashmir.

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