Editorial: Exercise in political wooing

The Centre has opened its purse strings for Bihar and AP while ignoring the genuine needs of other States

Political consolidation, rather than fiscal consolidation, appears to be the objective of the union Budget for 2024-25, the first of the NDA 3.0. Bihar and Andhra Pradesh, ruled by the key allies whose support is crucial for the stability of the central government, got special treatment in terms of funds allocation. Nitish Kumar and Chandrababu Naidu must be mighty pleased with the liberal assistance announced by union Finance Minister Nirmala Sitharaman who presented her seventh consecutive Budget. Unlike in the past two terms, the NDA government is now dependent on both the Janata Dal (United) and the Telugu Desam Party for survival. In a clear move to please them, it has opened its purse strings for Bihar and AP, while ignoring the genuine needs of other States. This has exposed the Centre to the charge of political favouritism. Effectively, Bihar will be getting Rs 37,500 crore in special funds allocated for multiple infrastructure projects across districts and flood mitigation plan, while there will be additional funds for the development of tourism and cultural circuits around Rajgir and Nalanda in the State. The Centre will release Rs 15,000 crore in the current financial year as special assistance for the industrial and infrastructural development of Amaravati, the new capital of AP. Apart from this specific fund, the Central government will also release additional financial assistance through multilateral development agencies. Grants for backward regions of Rayalaseema and north coastal Andhra were also part of the package.

It is ironic that while the Finance Ministry has worked around the Andhra Pradesh Reorganisation Act to allocate special funds to AP, it has ignored the unfulfilled promises for Telangana under the same legislation. The needs of Telangana, the country’s youngest State, were not even mentioned in the Budget. Though numerous requests were made to the Central government in the past to support Telangana and fulfil over 35 promises made to the State under the Reorganisation Act, there has been no response in the last ten years. None of the promises — steel plant at Bayyaram, railway coach factory at Kazipet, national status for Palamuru-Rangareddy Lift Irrigation Scheme, Tribal University at Mulugu — was fulfilled. Despite recommendations by the NITI Aayog, the Centre has been deliberately ignoring the need for extending financial support for schemes in Telangana. Minor changes in the income tax structure and increasing the Standard Deduction limit may help in pleasing the middle classes but the NDA government has lost yet another opportunity to resolve the genuine issues of the States. If one was expecting the Budget to set the tone for upholding the federal spirit in the coming years, the Finance Minister’s presentation has come as a disappointment. The stock market gave a thumbs down to the Budget due to tax hike on both long-term and short-term capital gains on equities and tax on share buyback.

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