The 15th Finance Commission on Tuesday assured West Bengal that it would "explore all possible ways" to meet the state's demand for restructuring the debt.
"I think the state brought out very forcefully the need for the Finance Commission to look at the legacy issue of the debt.
The commission has taken note of the state government's demand and will explore all possible ways within our mandate, " panel Chairman N. K. Singh said.
During its three - day visit, the commission met representatives of political parties, urban local bodies, panchayats and state officials apart from Chief Minister Mamata Banerjee and Finance Minister Amit Mitra.
"The Chief Minister made detailed observations, which were followed by presentations on the state finances, " Singh said.
Referring to the state's representation, the commission Chair said that Bengal had urged for a look at the innovative ways through which this large debt overhang could be redressed in a manner that it "does not become a permanent drag on the state economy".
He also said that Bengal's economy in the last few years had made "enormous progress" in terms of key macroeconomic parameters such as SGDP growth, debt management, increase in own tax revenue and innovative ways of financing.
He said that the state had made significant strides in many human developmental indices, including education and health.
Speaking on the state's opposition to the commission's terms of reference in regards to the use of 2011 census for determing the share of states, Singh said that the panel had nothing to do with the issue since the terms were stipulated by the President of India.
The Chief Minister said that the meeting between the Finance Commission and state officials was "good".
"We had a detailed discussion with the commission.
Our expectations are high.
We expect the commission to consider our debt restructure (proposal) or debt waiver, " Banerjee said.
The state requested the panel that the share of the states in the divisible pool be increased from 42 to 50 per cent and that the size of the divisible pool be augmented by including cesses and surcharges.
Speaking on debt her government inherited from the earlier Left Front government, Banerjee said the state had repaid Rs 2. 25 lakh crore in interest and principal in seven years, of which Rs 46, 000 crore was this financial year.
"My government has sought central support to provide relief by way of debt waiver or restructuring of debt so that the scarce resources of the state are channelled for developmental works.
Unfortunately, no help has come forth, " she said in her presentation.
Banerjee said: "I urge the commission to consider a debt waiver or restructuring or any other mechanism for debt - stressed state like West Bengal. "
In her presentation, the Chief Minister also accused the Centre of depriving the states of their rightful share in the central taxes by way of cesses and surchanges which do not form part the divisible pool.