On July 25, 2026, the Comptroller and Auditor General (CAG) of India released its State Finances Audit Report on West Bengal for the financial years 2020–21 to 2024–25, following its tabling in the West Bengal Legislative Assembly. The audit provides a comprehensive 360-degree review of the state's financial position, expenditure management, and compliance. Key observations highlight that while West Bengal maintained its Fiscal Deficit (3.41% of GSDP) within the FRBM target of 3.50%, the Debt-to-GSDP ratio reached 38.66%, marginally exceeding the 38% FRBM benchmark. Capital expenditure dropped by 25%, and substantial funds remained unspent in Single Nodal Agency accounts.
The Comptroller and Auditor General (CAG) of India conducted a press conference in Kolkata on July 25, 2026, following the tabling of the State Finances Audit Report of West Bengal for FY 2020–21 to 2024–25 in the Legislative Assembly. The conference was addressed by Principal Accountants General Shri Bibhu Dutta Basantia, Shri Manish Kumar, and Shri Anindya Das Gupta. The audit revealed a fiscal deficit within FRBM limits, but flagged significant structural challenges including falling capital expenditure, high debt liabilities, and delayed scheme implementation.
The press conference took place on July 25, 2026, in Kolkata, West Bengal. The audit evaluates state financial data spanning five financial years from 2020–21 to 2024–25.
The audit report is structured into three distinct chapters covering Overview of State Finances, Budgetary Management, and Financial Reporting Practices. CAG scrutinizes state treasury figures, revenue receipts, expenditure trends, and off-budget liabilities. It compares state performance against statutory targets set by the State Fiscal Responsibility and Budget Management (FRBM) Act and parliamentary accounting principles.
This audit is crucial for evaluating state fiscal autonomy, budget discipline, and public accountability. It links directly to UPSC GS Paper 2 (Governance & Constitutional Bodies - CAG) and GS Paper 3 (Indian Economy, Budgeting, and Fiscal Policy). Understanding state debt sustainability and revenue buoyancy is a recurring theme in competitive examinations.
📌 [BACKGROUND — verify independently] The Constitutional mandate of the CAG stems from Articles 148 to 151. State FRBM Acts were enacted following the 12th Finance Commission recommendations (2005–2010) to mandate fiscal discipline across Indian states. Over the decade from 2015–16 to 2024–25, West Bengal's GSDP expanded from ₹7.97 lakh crore to ₹18.15 lakh crore, marking a Compound Annual Growth Rate (CAGR) of 9.57%.
📌 [BACKGROUND — verify independently]
While the FRBM target caps state debt at 20% of GSDP (as per NK Singh Committee recommendations), West Bengal's debt stands at 38.66%. On average, Indian states maintain a debt-to-GSDP ratio of ~28–30%, placing West Bengal among the higher debt-stressed states in the country alongside Punjab and Kerala.
The state government will need to submit excess expenditure of ₹13,486.92 crore for formal regularisation by the Public Accounts Committee (PAC) and Assembly. State authorities are expected to expedite onboarding the remaining 53 Centrally Sponsored Schemes onto the SNA-SPARSH portal to prevent central fund delays.
Core Concept: Comptroller and Auditor General of India (CAG)
Q1. Under which Article of the Constitution of India are the audit reports of the CAG relating to the accounts of a State submitted to the Governor? [Easy]
A) Article 148
B) Article 149
C) Article 150
D) Article 151
Answer: D
Explanation: Article 151(2) specifies that the reports of the CAG relating to the accounts of a State shall be submitted to the Governor, who causes them to be laid before the State Legislature.
Q2. What was the Fiscal Deficit as a percentage of GSDP for West Bengal in FY 2024–25 according to the latest CAG audit report? [Easy]
A) 2.19%
B) 3.41%
C) 3.86%
D) 4.25%
Answer: B
Explanation: West Bengal's Fiscal Deficit stood at ₹61,924 crore, which was 3.41% of GSDP, staying within the FRBM target limit of 3.50%.
Q3. What does "Revenue Buoyancy below one" signify in public finance analysis? [Moderate]
A) Revenue growth is faster than GSDP growth
B) Revenue growth is lagging behind economic/GSDP growth
C) Capital expenditure exceeds revenue receipts
D) Non-tax revenue exceeds tax revenue
Answer: B
Explanation: Revenue buoyancy below 1 indicates that tax revenue growth is not keeping pace with overall Gross Domestic Product growth.
Q4. According to the CAG audit report, what percentage of West Bengal's total Revenue Receipts in 2024–25 was derived from Central transfers? [Moderate]
A) 38%
B) 41%
C) 52%
D) 67%
Answer: C
Explanation: The CAG report highlighted that 52% of the State's total revenue receipts in 2024–25 came via transfers from the Government of India.
Q5. Which platform was established by the Union Government for real-time tracking and onboarding of Centrally Sponsored Schemes (CSS)? [Moderate]
A) PFMS-PRAGATI
B) SNA-SPARSH
C) TREDS-FIN
D) E-KUBER
Answer: B
Explanation: SNA-SPARSH is the digital platform implemented for monitoring funds under Single Nodal Agencies for Centrally Sponsored Schemes.
Q6. Consider the following statements regarding the CAG's audit findings for West Bengal (2024–25): [Tricky]
Statement I: The debt-to-GSDP ratio of West Bengal declined compared to 2020–21 levels.
Statement II: Outstanding liabilities fully met the statutory FRBM benchmark limit of 38% of GSDP.
Which of the above statements is/are correct?
A) Statement I only
B) Statement II only
C) Both Statement I and Statement II
D) Neither Statement I nor Statement II
Answer: A
Explanation: Statement I is correct because Debt-to-GSDP declined from 42.60% (2020-21) to 38.66% (2024-25); Statement II is incorrect because 38.66% marginally exceeded the FRBM benchmark of 38%.
Q7. What was the observed trend in Capital Expenditure for West Bengal in FY 2024–25 compared to the previous year? [Tricky]
A) Increased by 25% due to asset creation
B) Remained constant at 3.5% of GSDP
C) Declined by 25% to ₹21,622 crore
D) Exceeded the budgetary allocation by 18.09%
Answer: C
Explanation: Capital Expenditure recorded a sharp 25% drop from ₹28,963 crore in 2023–24 to ₹21,622 crore in 2024–25, constituting just 1.19% of GSDP.
Q8. Which mechanism is legally required when a State government incurs expenditure in excess of the sanctioned parliamentary/legislative grant? [Tricky]
A) Executive Order by Governor under Article 213
B) Regularisation by State Legislature under Article 205
C) Re-appropriation approval from RBI under E-Kuber
D) Direct approval by Finance Commission under Article 280
Answer: B
Explanation: Under Article 205 of the Constitution, excess expenditure incurred over voted grants requires formal regularisation by the State Legislature after PAC scrutiny.
PYQ 1:
With reference to the Comptroller and Auditor General (CAG) of India, consider the following statements:
A) The CAG can be removed from office on the same grounds and in the same manner as a Judge of the Supreme Court.
B) The salary and service conditions of the CAG are determined by the Union Finance Ministry.
C) The CAG holds office during the pleasure of the President of India.
D) The CAG is eligible for further office under the Government of India after demitting office.
Answer: A
Explanation: Under Article 148(1), CAG can only be removed in like manner and on like grounds as a Supreme Court Judge. Salary is determined by Parliament, and CAG is ineligible for further government post.
PYQ 2:
Consider the following statements regarding State finances and audit mechanisms in India:
1. CAG reports on State finances are submitted directly to the Speaker of the Legislative Assembly.
2. Revenue Deficit indicates the shortfall where state's current revenue receipts are insufficient to meet current revenue expenditure.
3. The Fiscal Responsibility and Budget Management (FRBM) guidelines set limits on state debt-to-GSDP ratios.
Which of the above statements are correct?
A) 1 and 2 only
B) 2 and 3 only
C) 1 and 3 only
D) 1, 2 and 3
Answer: B
Explanation: Statement 1 is incorrect because reports are submitted to the Governor (Article 151(2)), who then causes them to be laid before the Legislative Assembly. Statements 2 and 3 are correct.
PYQ 3:
Assertion (A): High commitment on revenue expenditure and subsidies reduces a State's capacity for capital creation.
Reason (R): Capital expenditure creates long-term physical assets that boost future economic growth, whereas committed expenditure is non-developmental in nature.
A) Both A and R are true and R is the correct explanation of A.
B) Both A and R are true but R is NOT the correct explanation of A.
C) A is true but R is false.
D) A is false but R is true.
Answer: A
Explanation: High committed costs (salaries, pensions, interest) reduce room for capital assets, making fiscal spending tilted towards current consumption.
Translate to Target Language: Output maintained in requested language (English).
Question 1 (150 words): Discuss the key structural weaknesses in state public finances highlighted by recent CAG audit reports, with reference to capital creation and committed liabilities.
Recent CAG state audit reports reveal significant structural vulnerabilities in state financial management across India. The foremost concern is the continuous compression of Capital Expenditure, which fell by 25% in West Bengal to ₹21,622 crore (just 1.19% of GSDP) in 2024–25. Asset creation is severely crowded out because non-developmental committed spending—comprising interest payments, pensions, and administrative salaries—absorbs over half of state revenue receipts.
Furthermore, ballooning subsidy bills, which spiked by 85.61% to ₹19,444 crore, combined with committed liabilities absorbed nearly 74% of revenue receipts. When 41% of revenue expenditure is funded via net borrowings, state fiscal health faces dynamic debt-sustainability risks. Additionally, delayed fund utilization under Single Nodal Agency accounts for Centrally Sponsored Schemes hampers infrastructure development.
To ensure sustainable growth, states must improve tax revenue buoyancy, rationalize un-targeted subsidies, and strictly adhere to FRBM capital expenditure benchmarks.
Question 2 (250 words): Evaluate the constitutional role of the Comptroller and Auditor General (CAG) in enforcing fiscal accountability in State financial management. How do findings such as unregularised excess expenditure affect legislative oversight?
The Comptroller and Auditor General (CAG) serves as the constitutional bulwark of fiscal accountability under Articles 148–151 of the Indian Constitution. By auditing the Consolidated Funds, Contingency Funds, and Public Accounts of states, the CAG acts as an independent watchdog ensuring that public money is spent strictly in accordance with legislative authorization and financial prudence.
CAG audit findings perform two vital functions: evaluating financial compliance and assessing performance efficiency. In the state financial audit of West Bengal (2020–21 to 2024–25), the CAG exposed structural issues such as ₹57,263.62 crore of unregularised excess expenditure accumulating between 2009 and 2024, as well as ₹13,486.92 crore in 2024–25 alone across seven grants.
Unregularised excess expenditure directly undermines parliamentary and legislative sovereignty. Under Article 205, executive spending beyond voted grants without prior legislative sanction violates democratic financial control. When states delay submitting excess expenditure to the Public Accounts Committee (PAC) for regularisation, legislative oversight becomes post-facto and purely administrative.
Furthermore, accounting irregularities—such as transferring ₹535.59 crore to Personal Deposit Accounts or parking ₹8,296.51 crore of scheme funds in Single Nodal Agency bank accounts—obscure real-time treasury balances.
To restore executive accountability, state legislatures must mandate strict time-bound PAC reviews of CAG audit observations, penalize off-budget parking, and ensure mandatory legislative regularisation before presenting subsequent annual budgets.