Bihar Elections 2025: No big bang consumption; key sectors to watch out

Bihar is all set for assembly elections in November 2025 as it faces a crucial electoral period as the arrival of Jan Suraaj, led by Prashant Kishor, threatens to split votes between the ruling NDA coalition and the opposition. Nirmal Bang Institutional Equities observes that this development heightens the risk of a fractured mandate, introducing new uncertainty to the region's political and economic outlook.

The incumbent government has announced a series of welfare measures, especially for women, youth, and pensioners, including schemes such as the Mukhyamantri Mahila Rojgar Yojana and the Social Security Pension Scheme. Despite these steps, Nirmal Bang points out that there has been no significant consumption surge linked to election-driven expenditure.

Nirmal Bang Institutional Equities notes that the state’s fiscal burden is rising, with sops and free electricity allocations likely to reach at least 2.5% of Bihar's GSDP. With about 9.6 million women benefitting from direct assistance and increased monthly pensions for vulnerable groups, the impact on public finances could be substantial over the coming quarters.

From a stock market perspective, sectors like consumer durables and autos saw limited gains following recent GST cuts. However, auto sales during the Navratri season lagged expectations due to supply chain issues, with industry trackers anticipating a recovery around Dhanteras and Diwali. This tepid response has resulted in muted returns for auto sector stocks, contrasting with the broader Sensex performance, hints the Nirmal Bang's report.

Retail sector players are facing intensified competition, especially in rural and semi-urban markets. Rural consumption is growing at a faster pace than urban, partially offsetting urban softness. Meanwhile, the microfinance segment is showing early signs of recovery, with Nirmal Bang forecasting a turnaround by the fourth quarter of FY26.

Competitors in the auto, retail, and consumer finance sectors include major listed names such as Maruti Suzuki, Tata Motors, Bajaj Auto in auto; Avenue Supermarts and Trent in retail; and Bandhan Bank and Ujjivan in microfinance. These companies are closely monitoring the evolving demand landscape in Bihar ahead of the elections.

The state’s heavy reliance on agriculture, accounting for roughly 70% of its economy, remains a concern. Recent excessive rainfall has posed challenges for the sector. Industrial and services growth continues to lag, even as infrastructure improvements such as the new Patna airport terminal, Patna metro, and a gas-based power plant by Adani progress.

Nirmal Bang Institutional Equities warns that the array of government schemes, while politically popular, raises questions about long-term fiscal sustainability and the potential for market volatility. With industry still hesitant to invest substantially, job availability remains low, perpetuating migration trends despite improvements in health and education.

Looking ahead, analysts expect heightened volatility in Bihar-linked stocks and broader market sentiment until election results clarify the balance of power. Nirmal Bang emphasises that a fractured mandate could delay both policy implementation and private sector investment, reinforcing cautiousness among market participants.