Lok Sabha polls leave their mark, Union Budget keeps key allies Bihar and Andhra close

In keeping with the coalition pressures, Bihar and Andhra Pradesh have benefitted from the Union Budget, as the Centre keeps an eye on Bengal and thanks Odisha

There is little doubt that the outcome of the Lok Sabha polls on June 4 has cast its shadow on the Union Budget, as it was bound to. In the current political climate, the budget is not merely an account of the government’s income and expenditure, but also a statement of its political intent – which came across clearly in the finance minister, Nirmala Sitharaman’s seventh straight budget speech.

Finance minister Nirmala Sitharaman with the Union Budget 2024 (Photo by Arvind Yadav/ Hindustan Times)

Sops have been freely offered to Bihar and Andhra Pradesh, the TDP and JD(U), two allies that form the principal crutches of the NDA government.

However, Bengal and Odisha too are in the good books of the central government, which is clearly focused towards increasing its footprint in eastern India – also in many ways the economic backwaters of the country.

“The election results have left their imprimatur on this Union Budget. Therefore, sops have been offered to the two NDA allies, Bihar and Andhra Pradesh, under various heads. PM Modi has read the signal on the wall. He needs political support; in addition, there is widespread anger among farmers about the agriculture policy and the youth about unemployment. The PM, who does not normally yield, has had to give ground this time, because of the poll results,” said Economist Arun Kumar.

The Budget so far has seen a big push to Andhra Pradesh and Bihar, in keeping with the coalition pressures. The Telugu Desam Party (TDP) of Chandrababu Naidu has 16 MPs while the Nitish Kumar-led Janata Dal (United) has 12 in the 293-MP-strong NDA coalition ruling at the Centre.

The government will provide special packages to three districts of Andhra Pradesh, finance minister Sitharaman said, and it will arrange financial assistance to Bihar through aid from multilateral development agencies. Additionally, ₹15,000 crore has been allotted for the development of Amaravati, the new capital of Andhra.

The announcements pertaining to Bihar about infrastructure development, funds to promote religious tourism, building of an industrial corridor, and facilitation of external loans will please the JD(U), BJP's second biggest ally in the NDA.

The Nitish Kumar-led party has been asking for special status for Bihar for the past several years, which is not possible at the moment.

Following the formation of the new Narendra Modi led government, the party’s national executive passed a resolution seeking special status or "special package" for Bihar. The announcements are significant as Bihar goes to polls in 2025 amid the dwindling fortunes of Nitish Kumar.

The BJP-JDU combine hopes the announcements will give the fillip they need before the crucial polls. Sources said the JDU settled for two minor ministerial berths because it wanted its support to the BJP to translate into a special financial package for the state.

To make it sweeter for Bihar, the government will also set up airports, medical colleges and sports infrastructure.

The Centre will also formulate plan ‘Purvodaya’ for all-round development of Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh as an engine to attain Viksit Bharat.

While a special package for Bihar and Andhra Pradesh may have been ruled out effectively, the finance minister noted that Bihar has frequently suffered from floods, many of them originating outside the country.

“Plans to solve these problems in Nepal have not progressed. We will provide support of ₹11,500 crore for flood mitigation projects. Assam grapples with floods every year from the Brahmaputra river and its tributaries that originate outside India. We will provide support to them. Uttarakhand, Sikkim and Himachal Pradesh, that suffered due to landslides and floods, will be provided assistance,” she said.

Surprisingly, no southern state came up for mention under the flood mitigation programme. In December 2023, there was unprecedented rainfall and waterlogging challenges to both northern and southern districts of Tamil Nadu, causing a series of accidents and widespread destruction.

Prime Minister Narendra Modi, on a two-day visit to Tamil Nadu, Lakshadweep and Kerala in January this year, inaugurated projects worth ₹20,000 crore at an event in Tamil Nadu’s Tiruchirappalli and said he was deeply moved by the condition of the families affected by the recent floods in the state.

Assuring support, he said, “The last few weeks of 2023 were difficult for many people in Tamil Nadu. We lost many of our fellow citizens due to heavy rains."

Odisha has come up for special benefits with the government focusing on developing tourism in the state. Known for its scenic beauty, temples, craftsmanship, and wildlife, Odisha holds great potential as a tourist hotspot. The government aims to leverage these assets to attract more visitors to the state.

In an otherwise less-than-spectacular Lok Sabha result, Odisha was the silver lining for the BJP, where it replaced the BJD, which had ruled the state for more than two decades without a break. PM Modi has often invoked Lord Jagannath in his post-election speeches to emphasise on the growing political importance of Odisha.

NR Bhanumurthy, economist and Vice Chancellor at Dr BR Ambedkar School of Economics University, Bengaluru says, “Lets also admit that East and North East India have always needed support, so any special allocation to them has been part of a budgetary exercise. On all socio-economic parameters, its indices are low. Now of course there is also the political aspect, which is important.”

He does admit though, that the finance minister referring to Andhra Pradesh being in ‘east’ India was an interesting part of her Budget speech.

Economist Arun Kumar, however, believes that the way to raise resources for all these projects is far from clear in the budget speech. “There was more need to raise direct taxes as the rich have multiplied their wealth many times over,” he pointed out.