With the West Bengal budget for 2026-27 projecting a higher tax buoyancy of 2.1, the practical fiscal challenge for the State government will be to raise the buoyancy without broad-based tax increases under the GST, according to a report by SBI Research.

The report showed that the State’s tax buoyancy stood between 1.0-1.4 in the last five financial years. It had recorded the highest buoyancy of 2.3 in 2012-13 and 2017-18 in the last 15 years.

The SBI Research report, released on Thursday, highlighted that West Bengal’s own tax revenue share remains stagnant at around 40-45 per cent of total revenue receipts. The State is also unable to garner non-tax revenues, which remains at around 3 per cent of total revenue receipts. In the budget for FY27, grants from the Centre are estimated to be around 22 per cent of total revenue receipts. Grants in Aid increased significantly to ₹71,393 crore from ₹22,069 crore in FY26, primarily due to Centrally-sponsored schemes.

Presenting the first state budget of the new BJP government in West Bengal, Finance Minister Swapan Dasgupta on Monday tabled the budget of over ₹4.38 lakh crore for the financial year 2026-27 in the Assembly. The budget emphasised on the State’s industrial revival, employment, and youth and women welfare.

“Thematic analysis points to a decisive shift in the FY27 Budget towards investment-led growth and economic transformation. Themes relating to investment, governance, fiscal management, technology, entrepreneurship, tourism and climate resilience (that were hitherto absent in earlier budgets in terms of focus) assume greater prominence, suggesting a strategic reorientation of the budget discourse towards industrialization, productive capacity creation, and long-term growth acceleration,” the SBI Research report said.

It, however, highlighted that Bengal’s fiscal position has not been healthy with higher debt accumulation, despite a higher share of Central Government grants. In a persistent trend, grants from the Centre and tax devolution to Bengal over the years have always been more than 50 percent of overall tax revenue of the State. “This has happened owing to rising unconditional cash transfers, higher off-balance sheet borrowings and higher committed expenditure and higher leakages in terms “middleman intermediation” siphoning of monetary resources,” the report pointed out.

The impact of GST implementation on the State Finances has been positive despite claims to the contrary. Average growth in the State’s own tax revenue has not declined but has increased modestly post GST implementation.

State’s non-tax revenues are linked to coal mining, a mineral that will be slowly phased out. This exposes the state finances to risk of green transition.

The SBI Research report said West Bengal has significant potential of higher non tax revenue that has been languishing over the years. Enhancing general administrative efficiency remains key to increasing non-tax revenues.

The State is seventh largest in terms of coalbed methane. It can become the hub of methanol production given the locational advantage in CBM and coal gasification.

Published on June 25, 2026