Kolkata (PTI): West Bengal is heading for an unsustainable debt situation in the medium to long run unless suitable measures are taken, the Comptroller and Auditor General has said.

"Increasing fiscal liabilities accompanied with negligible rate of return on government investments and inadequate cost recovery on loans and advances might lead to unsustainable debt situation in medium to long run," the CAG said in its audit report.

To prevent such a situation, the state should take suitable measures to compress non-plan revenue expenditure and to mobilise additional resources both through tax and non-tax sources in the ensuing years, the CAG said.

It noted that the expenditure pattern of the state reveals that the revenue expenditure as a percentage to total expenditure hovered around 90 per cent during the period 2002-07 leaving inadequate resources for expansion of services and creation of assets.

As a result of such expenditure pattern over these years, only 32 per cent of fiscal liabilities of the state has asset backup during 2006-07.

Moreover, within the revenue expenditure, four components -- salary expenditure, pension liabilities, interest payments and subsidies -- constitute about 76 per cent of the revenue expenditure during 2006-07.

These trends in expenditure indicate the need for changing allocative priorities, the CAG observed.