Budget 2024: The uneven pathway of Centre-state relations

livemint.com:

economic growth and development. Multiple measures in the budget have states as their touchpoints. The ambition on agriculture reforms, the ₹1.1-trillion infrastructure push, development of industrial parks with states to spur manufacturing, urban development plans and ramp-up of skilling, among others, are all projects that envisage intense cooperation between the Centre and states.

But the pathway seems somewhat uneven, skewed by realpolitik and rutted by the presence of incentives which could squeeze resource transfers to states. The shadow of electoral politics over budget-making has ensured that Andhra Pradesh and Bihar find special favours for supporting the ruling coalition. As a return gift to Chandrababu Naidu, the government is facilitating special financial support of ₹15,000 crore for Andhra from multilateral development agencies during FY25, with promises of more to come in future years.

This is in addition to grants for Andhra’s backward areas and capital commitments for stuck projects and future infrastructure outlays. Oddly, Andhra—a southern state—has been lumped with eastern states like West Bengal and Odisha for accessing benefits from the new Purvodaya scheme. Likewise, Bihar finds itself the recipient of fresh capital flows for investment in road connectivity projects, power plants ( ₹21,400-crore project cost), tourism centres, industrial parks, new airports, medical colleges and sports infrastructure.

These allocations, at one level, make sense from a development perspective. But the politically motivated largesse starts to look decidedly curious in the face of a funds squeeze for other states. Tax devolution to the states is up by only 13%, compared with over 16% growth in FY24.