Budgets of the Union or the States, as much as they are revenue and expenditure statements for the upcoming fiscal year, are also an exercise in political economy, and the recently tabled Union Budget for 2024-25 is no different. Aside from the “nine priorities”, beginning with provisions for the farm sector and attempts to boost employment, Union Finance Minister Nirmala Sitharaman delved at some length on the special provisions made for the States of Andhra Pradesh and Bihar. Both are headed by parties providing crucial support to the Bharatiya Janata Party (BJP) after its underwhelming performance in the 2024 general election. The Janata Dal (United) headed by Bihar Chief Minister Nitish Kumar, and the Telugu Desam Party headed by his Andhra Pradesh counterpart N. Chandrababu Naidu are parties associated with the convenership of the National Democratic Alliance in the past. These are also parties that severed long-standing ties with the BJP over issues that ranged from Prime Minister Narendra Modi’s alleged non-secular credentials to ignoring demands for increased central aid. Bihar has now received the largest chunk with outlays worth almost ₹59,000 crore. These include road infrastructure outlays for ₹26,000 crore, ₹21,400 crore for a 2,400 MW power plant, and ₹11,500 crore to address irrigation and flood mitigation. While Mr. Naidu had been more vociferous than Mr. Kumar with his demands for assistance worth ₹1 lakh crore, the cornerstone outlay in the Budget was a facilitation of ‘special financial support’ of ₹15,000 crore for the development of the State’s new capital, Amaravati. While Ms. Sitharaman promised to hasten the completion of the Polavaram irrigation project ‘to ensure food security of the nation’, Budget documents do not mention concrete outlays.
Both States have unsustainable public debts of about one-third, that is the debt to Gross State Domestic Product ratio, and both deserve the special attention they have received. But by making piecemeal allocations for projects in the rest of the country, as for the Mumbai Metro rail, and by ignoring other similar critical infrastructure spends in Opposition-ruled States (Chennai’s Metro rail in Tamil Nadu and Kerala’s Vizhinjam port project are examples), Ms. Sitharaman has failed to provide a fair and equitable distribution of the Union’s finances. While the debt-ridden and poorer regions of the country rightly deserve greater attention, ignoring States that generate the most revenue for the Union runs the risk of slowing down development that has acquired critical mass to enable these States to become global economic powerhouses. As they have begun attracting cutting-edge technology, corporates, talent and creating the required research and development base to house next-generation industries on energy transition, automobiles, artificial intelligence, mobile and semi-conductors, the industrially and socio-economically advanced States too need a helping hand.
