Nitish Kumar’s JD(U), a key ally of Prime Minister Narendra Modi, is reportedly pressing for a Rs 30,000 crore infusion into Bihar’s projects. During a pre-budget meeting with Finance Minister Nirmala Sitharaman last month, Bihar Chief Minister Nitish Kumar’s government is said to have put forward this demand, Bloomberg reported. However, the allocation remains undecided for this fiscal year.
Meanwhile, Chandrababu Naidu’s TDP, the biggest NDA ally, has already sought over Rs 80,000 crore in aid for Andhra Pradesh over the next few years, according to the report. These requests collectively surpass half of the central government’s annual food subsidy budget of Rs 2.2 lakh crore.
The BJP, which failed to secure a majority on its own in the Lok Sabha elections, is reliant on coalition support to stay in power.
Both JD(U) and TDP are also advocating for increased borrowing flexibility under fiscal rules that currently restrict states to borrowing up to 3 per cent of their GDP. Bihar is pushing for an additional 1 per cent borrowing capacity with no strings attached, while Andhra Pradesh seeks an additional 0.5 per cent.
In the budget slated for July 23, Finance Minister Sitharaman aims to reduce the federal deficit to 5.1 per cent of GDP, down from the previous fiscal year’s 8.8 per cent combined deficit. International bodies like the IMF and S&P Global Ratings are closely watching these fiscal developments, with potential rating upgrades hinging on deficit reduction below 7 per cent of GDP.
In Modi’s first term, Bihar secured a financial package of Rs 1.25 lakh crore aimed at farmer welfare and infrastructure enhancement, covering roads, railways, and airports. However, ongoing financial strains in both Bihar and Andhra Pradesh are limiting their ability to allocate funds towards crucial development projects.
Bihar, for instance, spends more than 40 per cent of its revenue income on salaries, pensions, and interest payments. The state, with a per-capita income of about Rs 59,000, less than half the national average, remains one of India’s poorest.
JD(U) is demanding funds to support ambitious infrastructure projects in Bihar, including the construction of nine airports, four new metro lines, and seven medical colleges. There’s a push for funding to establish a Rs 20,000 crore thermal power plant and undertake repair work across more than 20,000 kilometre of roads.
Bihar wants special category status, which would provide preferential access to central government funds and tax exemptions.
Meanwhile, the Centre has approved the establishment of an oil refinery and petrochemical hub in Andhra Pradesh with an investment of Rs 60,000 crore, according to reports. An official announcement regarding the refinery is expected during the upcoming budget presentation.
