West Bengal's state coffers are under significant and growing pressure, largely due to the escalating costs of popular welfare programs. While schemes like the Trinamool Congress's Lakshmir Bhandar have provided crucial benefits to women, their financial footprint on the state budget is substantial and projected to increase further.
Lakshmir Bhandar and Future Financial Commitments
Launched in 2021-22, the Lakshmir Bhandar scheme offers direct cash transfers to women aged 25 to 60. Ahead of recent state elections, the Mamata Banerjee government enhanced the benefits to a uniform Rs 1,500 per household, subject to certain conditions. For the fiscal year 2026 (FY26), this scheme alone had an allocation of Rs 26,700 crore in the state budget.
Adding to this, the Bharatiya Janata Party (BJP) has proposed its own direct cash transfer program, the Matrishakti Bharosa Card, promising Rs 3,000 to women and youth. If implemented, this could effectively double the cash benefits, placing even greater strain on West Bengal's already stretched financial resources.
Escalating Revenue Deficit and Expenditure
Analysts have consistently highlighted the significant impact of such cash transfer schemes on West Bengal's financial health. A report by PRS Legislative Research noted that expenditure under Lakshmir Bhandar was estimated to increase at an annual rate of 47% between 2021-22 and 2025-26.
“In 2021-22, the state had spent 3% of its revenue receipts on cash transfers under Lakshmir Bhandar which is estimated to increase to 10% as per the Budget Estimates of 2025-26,” the PRS Legislative Research report on the West Bengal Budget 2025-26 stated.
The state's finances have shown consistent strain, with both revenue expenditure and revenue deficit increasing year-on-year. The revenue deficit climbed to 2.4% of the Gross State Domestic Product (GSDP) in FY25 from 1.6% in FY24, although it was projected to decrease slightly to 1.7% in FY26. Total revenue expenditure for FY26 was proposed to rise by 11% to Rs 3,01,375 crore, an increase from Rs 2,70,852 crore in FY25.
Broader Trends in Social Sector Spending
This financial pressure in West Bengal mirrors a broader trend across India. A recent study by CareEdge Ratings, analyzing the finances of the top 15 states, found that revenue expenditure is estimated to increase by 8% in FY26 and 11% in FY27. A substantial portion of this growth is attributed to social sector expenditure, projected to grow at around 11% annually.
Over the past three years, many states have expanded social protection programs, including cash transfers, subsidies, and other welfare initiatives. This has led to a near doubling of social security and welfare expenditure from FY22 to FY25, placing considerable demands on state budgets nationwide.