While Bihar and Andhra Pradesh do not have special status, the Finance Minister announced that both states will receive special assistance
The "bahi-khata” held by Finanace Minister Nirmala Sitharaman. Pic/PTI
Now presented digitally, the red-coloured “bahi-khata” held by Nirmala Sitharaman marks the 13th Budget of the Modi Government and the seventh in a row presented by her. The focus, as always, is on the poor, women, youth, and farmers. While this budget maintains the capital expenditure (capex) at Rs 11.11 lakh crore, it introduces tax relief in the new regime, with zero tax up to Rs 3 lakh. The fiscal deficit is kept at 4.9%, with a target of 4.5% for the next year. Innovative policies, such as the space economy fund, are highly commendable.
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The interim budget presented before the polls did not include any vote-pulling schemes, as the Government focused on clean politics and sound economics. However, the results of the polls may have shifted the party’s perspective. After a poor performance in the Lok Sabha polls and by-elections, the BJP cannot afford to lose in the upcoming four state elections: Maharashtra, Haryana, J&K, and Jharkhand. The budget presented today reflects the Government’s effort to balance politics and economics. It focuses significantly on the states of Bihar and Andhra Pradesh, the home states of key alliance partners JDU and TDP, respectively, in Modi's third term.
While Bihar and Andhra Pradesh do not have special status, the Finance Minister announced that both states will receive special assistance from multilateral development banks. Power projects, including the establishment of a new 2400 MW power plant at Pirpainti, will be undertaken at a cost of Rs 21,400 crores. Additionally, new airports, medical colleges, and sports infrastructure will be constructed in Bihar. The government reaffirmed its commitment to the development of Andhra Pradesh, including the commitments made in the Andhra Pradesh Reorganization Act, addressing the state’s need for capital, and the completion and financing of the Polavaram irrigation project.
Regarding spiritual tourism, the government did not acknowledge other states but again focused on Bihar’s Mahabodhi Temple, Nalanda as a tourist centre, and Vishnupad Temple. Of the religions that originated in India and spread to other countries, Buddhism holds the greatest potential to attract international tourists. Government efforts to emphasize Gaya and Bodhgaya could enhance the transnational Buddhist circuit spanning the Indo-Nepal plains. However, the absence of essential amenities such as washrooms, petrol stations, eateries, inns, signages, and milestones along several stretches of the circuit causes significant inconvenience to tourists.
A major national issue that was thankfully acknowledged in the budget is the flood-affected states. The focus was on Bihar, Assam, Himachal Pradesh, Uttarakhand, and Sikkim. The government announced financial support of Rs 11,500 crore for Bihar. Additionally, it announced assistance for Assam’s flood management system, as the state grapples with floods every year. Himachal Pradesh will receive support through multilateral development banks, and Uttarakhand will also receive assistance.
Those who predicted the budget proposals must be pleased with the provisions for MSMEs, infrastructure, and agriculture. Not surprisingly, but prudently, the budget also focused on mines and minerals, natural resources, renewable energy, and skilling. The priority areas were set to be productivity and resilience in agriculture, employment and skilling, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation, research and development, and next-generation reforms.
The government is committed to focusing on agricultural R&D, climate-resilient cropping, and encouraging the engagement of domain experts. The emphasis on natural farming and self-reliance in pulses and oilseeds like sesame, mustard, and sunflower is commendable. Achieving self-reliance in oilseeds aims to reduce dependency on edible oil imports from 60% to 30% over the next five years. Additionally, with the agricultural department’s research budget, the government will promote private partnerships with companies involved in oilseed extension programs and research activities. Finally, there is a call for developing digital public infrastructure in the agriculture sector. A national cooperation policy is set to be planned and launched for the all-inclusive development of the cooperative industry.
The mention of “internship” in the budget excited students and the young population. This inclusion is highly relevant. Three new schemes are introduced for job and employment: for first-timers, for job creation in manufacturing, and employer support. A provision for internships in top companies with a decent stipend of Rs 5000 has been announced. Increasing women’s participation in the workforce is a targeted goal. New skilling loans and relaxed education loans will benefit ambitious youngsters. An all-round, pervasive, and inclusive saturation approach to human resource development is being adopted. This aims to cover all eligible candidates through various programs, embodying a social justice perspective.
In its development agenda, the budget follows the jurisprudence of “vikas bhi, virasat bhi.” It includes the Amritsar-Kolkata Industrial Corridor with an industrial node at Gaya, the Patna-Purnea Expressway, and the Buxar-Bhagalpur Expressway. Additionally, it includes the development of Bodhgaya, Rajgir, Vaishali, and Darbhanga spurs, and an additional 2-lane bridge over the river Ganga at Buxar, all at a total cost of ₹26,000 crores. This focus appears to be predominantly on Bihar and East India.
Continuing its national narrative of inclusive development, the government announced the PM Jan Jatiya Unnat Gram Abhiyan to ensure saturation coverage for tribal families in tribal-majority villages and aspirational districts. The decision to open more bank branches in the northeastern states is a welcome step. Balancing urban and rural development is crucial. In its industry focus, special attention is given to MSMEs and the labour-intensive manufacturing sector. Technological and credit support, along with e-commerce hubs for MSMEs, will help them compete globally. The focus on renewable energy, including solar, remains strong with continued schemes and subsidies. The inclusion of nuclear energy in India’s energy mix will be a significant advantage.
In a surprising move, the defence budget has been slightly reduced from Rs 4,55,897 crore to Rs 4,54,773 crore. It is also relevant to consider the proposals for employment and skilling. Like China, which focuses on skill training for its youth and citizens, our government has hinted at addressing positive demands from the Opposition by providing employment-linked incentives. This was mentioned in the Congress manifesto. However, the undue focus on Bihar and eastern states may attract criticism from other regions. It will be important to see how these proposals are implemented over the next year. Salary earners continue to face high taxes, which remain unresolved, and the minor changes in tax slabs are unlikely to make a significant impact. The Finance Minister has addressed GST rationalization, suggesting that a three-tier structure could streamline the process. A more effective approach might be to maintain a 5% rate for essential commodities, merge the 12% and 18% rates into a 15% bracket, and introduce a third bracket for sin and luxury goods, possibly around 40% or slightly lower. This method could simplify and clarify the taxation procedure.
(Aditya Trivedi is a Delhi-based corporate lawyer and Founding Director, Arth Vidhi; Ritwik Mehta is Founder, Niti Tantra and a political strategist)
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