Nitish Kumar hands Nirmala Sitharaman a $3.6 billon Budget wish-list for Bihar

Prime Minister Narendra Modi's coalition government faces a significant test as his second-largest ally, Janata Dal (United)'s Nitish Kumar, has reportedly sought $3.6 billion from the Budget to be presented on July 23 for Bihar state projects. 

The request was made during a pre-budget meeting with Finance Minister Nirmala Sitharaman last month, Bloomberg claimed, adding that the Centre is yet to decide on the allocation. N Chandrababu Naidu of the Telugu Desam Party has also requested over $12 billion for Andhra Pradesh over the next few years.

The combined requests from Bihar and Andhra Pradesh, the report said, exceeded half of the government's annual food subsidy budget of Rs 22 lakh crore. A record dividend from the central bank and increased tax revenues provide some fiscal leeway this year.

Both allies are pushing for more borrowing capacity in their states. Bihar seeks an additional 1% borrowing headroom without conditions, while Andhra Pradesh has reportedly requested 0.5%.

Bihar also has specific requests which include building nine airports, four new metro lines, and seven medical colleges, funding a 200 billion-rupee thermal power plant, repairing over 20,000 kilometers of roads, special category status for preferential funding and tax breaks.

Naidu's requests include funds for developing Andhra Pradesh's capital, Amaravati, and the Polavaram irrigation project. He also seeks support for metro projects in Vijayawada, Visakhapatnam, and Amaravati, a light rail project, and a Vande Bharat train from Vijayawada to Mumbai and New Delhi. Additionally, he has asked for grants for backward districts and infrastructure projects like the Ramayapatnam Port and an integrated steel plant in Kadapa. 

Both Bihar and Andhra Pradesh are struggling financially, limiting their developmental spending. In Bihar, over 40% of revenue goes to salaries, pensions, and interest payments. With a per-capita income of about 59,000 rupees in the 2023 fiscal year, Bihar remains one of India's poorest states.