Reluctant to pay the Dearness Allowance (DA) arrears to the state government employees, the Mamata Banerjee government moved the Supreme Court seeking an extension of the deadline for paying Dearness Allowance (DA) arrears to December 31, 2026, while citing recent government expenditures, upcoming state Assembly elections, and the impact of GST rationalisation. According to Finance Department sources, complying with the Supreme Court’s order by the current deadline would require the government to arrange over Rs 25,000 crore by March 31 this financial year. The state government moved the SC on March 6.
In a ruling on February 5, the Supreme Court had directed the West Bengal government to immediately release 25 per cent of the outstanding DA arrears to its employees. Emphasising that the “state must act as a Model Employer”, a bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra underscored the necessity of ensuring justice for the workforce.
To oversee the process, the top court also constituted a committee headed by former Supreme Court Justice Indu Malhotra, Justice Tilak Singh Chauhan, and Justice Gautam Maghuria. The committee is tasked with determining the total arrear amount and a definitive payment schedule by March 6 and monitoring the disbursement. According to the court’s timeline, the first installment of the remaining 75 per cent must be cleared by March 31, with a comprehensive compliance report due by April 15, the date of the next hearing.
The Supreme Court verdict covers DA arrears from 2008 to 2019 and is expected to benefit around 12 lakh current and retired state employees, including those who retired during the litigation. However, despite the ruling, a 40% DA gap persists between state and central government employees.
In their prayer to the apex court, the West Bengal government stated, “In terms of Para 59.7(b) of the Judgement, the schedule of payment is required to be determined having due regard to the fiscal stability of the State. Fiscal space is contingent upon both revenue inflows and committed expenditure, both of which presently involve material uncertainty.”
“It is anticipated that the impending West Bengal Legislative Assembly Elections, 2026 will entail substantial and unavoidable expenditure. However, as the dates and number of phases of the election are yet to be notified, the magnitude of such expenditure remains indeterminate at this stage,” it added.
“Recent GST rate rationalisation is likely to adversely impact State GST collections and consequential devolution from the Union Government. Further, from FY 2026–27 onwards, fiscal space is expected to contract on account of the recommendations of the 16th Central Finance Commission, including reduction in the divisible pool, reduction in local body grants and discontinuation of revenue deficit grants,” it mentioned.
“SoWest Bengal has already approached the Department of Expenditure, Ministry of Finance, Government of India, on 16.01.2026 seeking approval for market borrowing of Rs 23,247 crore during FY 2025–26 under Article 293(3) of the Constitution, within the State’s eligibility under the FRBM framework. Approval from the Union Government is presently awaited,” the prayer stated.
A senior official of the Finance Department said, “The state government has a cap of market borrowing which is around Rs 1 lakh crore per year. In the 2024-25 financial year, we borrowed around Rs 23,000 crore less. So, this financial year, 2025-26, we appealed to the Central government to borrow that amount this financial year apart from our cap of Rs 1 lakh crore. One can imagine the financial crunch of the state just before the announcement of the Assembly election.”
The state government prayed to apex court, “In these circumstances, it is most humbly prayed that this Hon’ble Court may be pleased to grant West Bengal government reasonable time to undertake the detailed exercises as set out hereinabove and permit the disbursement of the upfront payment of 25% DA arrears and first instalment of DA arrears on or before 31.12.2026. So, West Bengal government respectfully submits that it shall make every earnest effort to complete the said exercise and effect disbursement as expeditiously as possible and, if feasible, even prior to the aforesaid date, and seeks the said timeline only to ensure proper and sustainable compliance with the directions of this Hon’ble Court.”
According to the data shared by the Mamata Banerjee government in their budgetary documents, the state government increased funding to the direct cash benefit programmes such as Lakshmir Bhander, Kanyashree, Rupashree. On the other hand, the budgetary allocation for schemes such as Mid-day Meal, Minority Affairs and Madrasah Education, Pre-matric and Post-matric scholarship, Samagra Shiksha Abhiyan have been curtailed. The allocation also decreased in the Public Health Department, Mass Education Extension and Library Services, School Education, Self-Help group.
According to state government data, the proposed budgetary allocation for women specific schemes like Housing for Destitute Minority Women under Destitute Minority Women Rehabilitation Programme has been significantly reduced from Rs 272 crore to Rs 19 crore in the 2025-26 financial year.
The finance minister had proposed Rs 819.83 crore for the Mid-day meal in the 2025-26 financial year budget but it was later revised to Rs 156.22 crore. That means only 19 per cent of the proposed allocation remained in Mid-day Meal allocation. In Samagra Shiksha Mission also, Rs 1788.30 crore allocated during the budget proposal was later decreased to Rs 760.40 crore in the revised allocation.
Meanwhile, revised budgetary allocation showed a significant increase for several schemes such as Kanyashree, Lakshmir Bhander, Rupashree and Widow Pension Scheme under Jai Bangla. In Kanyashree, it increased to Rs 1058.08 from Rs 816.31 crore. In Lakshmir Bhander, it increased to Rs 28,615.11 from Rs 26,700.00 crore. In Rupashree, it increased to Rs 693.76 crore from 689.90 crore. In the Widow Pension Scheme under Jai Bangla it increased to Rs 2,661.12 crore from Rs 2,101.45 crore.
Last year, the West Bengal government revoked all industrial incentives, laying the Bill, “The Revocation of West Bengal Incentive Schemes and Obligations in the Nature of Grants And Incentives Bill, 2025” in the Legislative Assembly which was notified by the state government on April 2, 2025. The Bill, passed in the Assembly in March, received the Governor’s assent thereafter. The Act revokes all the incentives granted to the industries since 1993 and takes effect retrospectively from the date of implementation of each scheme.
The Bill also mentioned the priority of the state government is to meet the fund of social welfare schemes. “Object of this Act is to make state finances available for various social welfare schemes formulated and under operation in the State of West Bengal which are intended for utilisation by the socio-economically disadvantaged and marginalised section of the State and not to expend such finances to provide special assistance, financial incentives, state support, benefits, concessions or special privileges at the cost of the marginalised… and whereas the State government is satisfied that the above change of policy is required in larger public interest,” read the Bill.
A senior official of the state government said, “The state government announced the new scheme “Yuba Sathi”, a direct cash benefit of Rs 1500 for the unemployed youth. During the vote of accounts, it was announced that the scheme will start from April 1 but later the Chief Minister announced it will start from March. Already 84 lakh youth have applied for this scheme which has increased the financial burden of the state government by over Rs 1250 crore in the last month of this financial year apart from Lakshmir Bhandar, Kanyashree and other direct cash benefit programmes.”