SBI Research flags West Bengal's challenge to lift tax buoyancy to 2.1 without broad GST hikes, as non-tax revenues languish and grants from Centre surge to ₹71,393 crore.
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West Bengal's budget for 2026-27 sets a tax buoyancy target of 2.1. The real fiscal test lies in reaching that number without raising GST rates across the board, SBI Research said in a report released Thursday.
Tax buoyancy – the ratio of tax revenue growth to nominal GDP growth – for the state has ranged between 1.0 and 1.4 over the last five years. The only times it hit 2.3 were in 2012-13 and 2017-18, the report noted.
The SBI Research analysis described the budget as a "decisive shift" toward investment-led growth, with themes around industrial revival and technology taking centre stage. Finance Minister Swapan Dasgupta presented the ₹4.38 lakh crore budget on Monday, the first under the new BJP government.
West Bengal's own tax revenue has stayed at roughly 40–45% of total revenue receipts for years. Grants from the Centre and tax devolution together account for more than half of the state's total tax revenue, the report said. That share has persisted because of rising unconditional cash transfers and off-balance-sheet borrowings, with leaks from "middleman intermediation" siphoning monetary resources, according to SBI Research.
Grants-in-aid jumped to ₹71,393 crore in FY27 from ₹22,069 crore in FY26, largely due to centrally sponsored schemes. That figure now represents about 22% of total revenue receipts.
The report said GST implementation has not hurt West Bengal's own tax collection. Average own-tax revenue growth rose modestly after the rollout, despite political claims otherwise.
Non-tax revenues amount to only about 3% of total receipts and have remained flat for years. The state's main non-tax source is coal mining, a sector that will be slowly phased out during the green transition, exposing state finances to risk. SBI Research said West Bengal has "significant potential" for higher non-tax revenue but that "enhancing general administrative efficiency remains key."
The report pointed to the state's seventh-largest coalbed methane reserves as a possible anchor. West Bengal could become a hub for methanol production, using its location advantage in CBM and coal gasification.
If West Bengal can raise tax buoyancy without GST increases and unlock non-tax revenue from energy-related sources, the fiscal trajectory could improve. The report framed the challenge as a question of administrative efficiency and leakages, not revenue potential.
The budget assumes a buoyancy that the state has not sustained in recent years. Meeting that target will require the state to broaden the tax base or cut the middleman leakage the report flagged. Neither is straightforward.
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