जनभावना टाइम्स ਇੰਡੀਆ ਡੇਲੀ ਪੰਜਾਬੀ इंडिया डेली लाइव

Rs 30,000 crore for Bihar, $12 billion for Andhra: Demands of Nitish, Naidu from Modi's budget

The Ministry of Finance has yet to respond to these requests. The budget for the fiscal year through March 2025, to be released on July 23, aims to narrow the federal deficit to 5.1 per cent of GDP.

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Narendra Modi, Chandrababu Naidu, Nitish Kumar

ANI

New Delih: Prime Minister Narendra Modi's coalition government is facing a critical test. Nitish Kumar, leading the Janata Dal (United) in Bihar, has demanded Rs 30,000 crore ($3.6 billion) for state projects. Concurrently, Chandrababu Naidu of the Telugu Desam Party (TDP) in Andhra Pradesh is seeking over $12 billion in aid. These demands come at a time when fiscal pressures are mounting, requiring Modi to balance these requests while managing government debt ahead of the Union Budget 2024.

Nitish Kumar submitted demand during pre-budget meeting

According to reports, Bihar's government, led by Nitish Kumar, submitted a significant budget request during a pre-budget meeting with Finance Minister Nirmala Sitharaman last month. The specifics of the allocation remain undecided. However, the demand underscores the fiscal pressure on Modi's administration to satisfy coalition partners while maintaining financial prudence.

Chandrababu Naidu requests aid for next few years

Bloomberg News recently reported that N Chandrababu Naidu's Telugu Desam Party has requested more than $12 billion in aid for Andhra Pradesh over the next few years. The combined fiscal demands from Bihar and Andhra Pradesh are more than half of the government’s annual food subsidy budget of 2.2 trillion rupees, highlighting the intense fiscal pressure Modi faces.

What will be the economic implications?

The BJP, which did not secure an outright majority in recent elections, now relies heavily on coalition allies including JDU and TDP to govern. The two coalition partners hold 9.5% of the parliamentary seats in PM Modi's National Democratic Alliance (NDA). Both allies seek increased borrowing limits for their states. Bihar has requested an additional 1 per cent borrowing headroom without any conditions, while Andhra Pradesh seeks a 0.5 per cent increase.

Specific requests from raised by Nitish Kumar

The JDU has detailed several specific demands for Bihar:

  • Provision for nine new airports, four metro lines, and seven medical colleges.
  • Funding for a 200 billion-rupee thermal power plant.
  • Repair work for over 20,000 kilometers of roads.
  • Special category status for preferential fund access and tax breaks.

Ministry of Finance yet to give an official nod

The Ministry of Finance has yet to respond to these requests. The budget for the fiscal year through March 2025, to be released on July 23, aims to narrow the federal deficit to 5.1 per cent of GDP. The combined central and provincial budgets' deficit was estimated at 8.8 per cent in the past fiscal year. S&P Global Ratings indicated that reducing the combined deficit below 7 per cent of GDP could prompt a rating upgrade.

Bihar got Rs 1.25 trillion during PM Modi's first term

India’s states derive most of their income from tax revenue shares collected by the central government and face borrowing restrictions. During PM Modi’s first term, Bihar received a financial package of 1.25 trillion rupees for infrastructure and farmer welfare. Both Bihar and Andhra Pradesh are experiencing financial strain, limiting their development spending. Bihar's spending on salaries, pensions, and interest payments constitutes over 40 per cent  of its revenue income, with per capita income significantly below the national average.

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