Political Favouritism in Budget Allocations is Harmful

India Needs Equitable Development Across All States

Newsreel Asia Insight #291
July 24, 2024

The 2024 budget, presented by Finance Minister Nirmala Sitharaman on July 23, allocated significant funds specifically to Andhra Pradesh and Bihar. These financial commitments to the two states appear to be part of the Bharatiya Janata Party (BJP)’s strategy to support the ruling parties of these states, which are crucial in maintaining the central government's majority in Parliament. This apparent quid pro quo arrangement undermines the principle of equitable development across all states, regardless of their political affiliations. 

For Andhra Pradesh, the central government has earmarked 150 billion rupees to aid the development of its capital city, Amaravati. While Andhra Pradesh requires support to address the challenges following its bifurcation in 2014 and to facilitate its development independently from Hyderabad—which it formerly shared with Telangana—it is debatable whether the development of Amaravati as the state capital is a top priority compared to other pressing needs in different states.

The budget allocated 260 billion rupees for various road projects in Bihar. The government also plans to accelerate loans from multilateral agencies for Bihar and support the construction of new airports, medical colleges and sports infrastructure. These initiatives are components of the Purvodaya plan, which aims to promote development in India’s eastern states, including Bihar. However, this raises the question of whether other states might also be in need of similar developmental packages.

For example, no state has suffered economically and otherwise but Manipur in the northeast, as both the state and central governments have failed to protect the lives of hundreds of people and thousands of homes and other buildings in the ongoing ethnic violence that began in May 2023, which has also displaced tens of thousands.

Further, the northern states of Himachal Pradesh and Uttarakhand were particularly impacted by floods and landslides during the monsoon season, causing extensive destruction to homes and infrastructure, as well as significant damage to agriculture.​

The allocation of larger budgets to Bihar and Andhra Pradesh, seemingly in exchange for political support from their respective ruling parties gives rise to several concerns, both ethical and practical, affecting the overall functionality of a federal system. A little over a month ago, the results of the 2024 general election revealed that the BJP did not secure enough seats to form the government on its own, necessitating support from Nitish Kumar of Janata Dal (United) and Chandrababu Naidu of the Telugu Desam Party. Given the recent national election results where the BJP fell short of a majority, requiring support from Nitish Kumar of Janata Dal (United) and Chandrababu Naidu of the Telugu Desam Party, there is room to speculate that the substantial budget allocations to Bihar and Andhra Pradesh are a form of political payback. 

This transactional approach, where budget allocations are possibly influenced by political considerations rather than based on impartial assessments of need or merit, can lead to a form of political patronage where financial resources are used as a lever to secure and maintain political alliances rather than to address genuine developmental needs.

In democracies, the distribution of state resources should be aimed at ensuring that all regions of the country can develop uniformly and that no state is disproportionately favoured or neglected.

A transactional practice can distort the incentives for regional leaders, encouraging them to prioritise political alignments over effective governance. If state leaders believe that aligning with the central government’s political coalition will result in increased funding or developmental projects, they may be less inclined to criticise or oppose central policies that could be detrimental to their constituents but beneficial for maintaining political favour.

Further, the perception of biased financial distribution can erode public trust in the government. Citizens may view the budget allocations not as a reflection of their needs but as a result of political bargaining. This scepticism can diminish the legitimacy of both the central and state governments, leading to increased cynicism and decreased political engagement among the populace.

Moreover, such practices can aggravate regional inequalities, as states not politically aligned with the central government might be overlooked or receive less funding, regardless of their developmental needs. This can hinder national cohesion, as disparities in development can fuel regional resentments and conflicts.

Furthermore, the focus on political expediency over transparent and accountable governance can undermine the overall quality of democracy. It is crucial for the stability and integrity of democratic institutions that government actions, especially those concerning budget allocations and developmental policies, are conducted transparently and are free from undue political influence.