West Bengal finance minister Asim Dasgupta will present 2010-11 budget on Monday with a debt burden of Rs 1.62 lakh crore on the state. As the country is struggling to come out of the clutches of recession, Dasgupta will also find it difficult to contain fiscal deficit for the financial year ahead.

According to the 13th Finance Commission report, West Bengal?s fiscal deficit till 2007-08 exceeded 3% of gross state domestic product (GSDP). In fact, while the state has been able to increase its revenue receipt through an increase in collection under a few heads like sales tax, it continued to pay almost 30% of its earnings towards the interest payment.

The report mentioned that West Bengal along with Sikkim failed to enact Fiscal Responsibility Legislation (FRL) which came in the way of its availing the benefits of the Debt Consolidation and Relief Facility (DCRF). The DCRF resulted in considerable relief to the states in terms of debt write-off and savings in interest payments on outstanding central loans.

?By 2007-08, revenue accounts of all states, with the exception of Kerala, Punjab and West Bengal, turned surplus. Thus, in all but three general category states, elimination of the revenue deficit was achieved one year ahead of the target year of 2008-09,? the report said.

The report has also suggested a roadmap to bring down its fiscal deficit gradually to zero in 2013-14. Accordingly, Dasgupta faces an immediate target of bringing down fiscal deficit to 1.6% of GSDP by 2011-12.

Although the state?s own projection of tax to GSDP ratio is 5.44%, Dasgupta is confronting a declining trend in own tax revenue (OTR) as the OTR has come down to 4.24% in 2007-08 from 4.76% in 2004-05. In his 2009-10 budget speech, Dasgupta had admitted that the state has been facing a shortfall in the collection of the state?s own tax revenue since 1999-2000. Assesment of the 13th Finance panel shows that the state will have an own tax revenue of Rs 26,581 crore and a non tax revenue of Rs 3,097 crore in 2010-11. It also expects the state?s GSDP to be around Rs 4.3 lakh crore. But with an annual salary burden of Rs 7,901 crore it will be difficult for Dasgupta to do the balancing act.