West Bengal is facing dire fiscal and financial stringency. Bengal is compared to Andhra Pradesh in order to understand its revenue-generating capacity. A new approach that uses National Sample Survey Office data on consumption expenditure is used to decompose the aggregate consumption data of each state to estimate tax collection for each commodity group. It is found that some part of West Bengal's poor tax realisation may be due to unusually low per capita consumption of some commodities that are important for taxation. The discrepancy might be related to a larger informal sector, and thereby, under-reporting of actual consumption, or genuine consumption behaviour reflecting a different intra- and inter-temporal preference structure. This opens up new avenues for future research.
