Union Budget 2025: Focus on allies, Bihar, and middle-class relief

2025 will see the fewest Assembly polls in any year during the current five-year term, therefore the Budget will be presented in a more favourable political context for the government

The political context of the National Democratic Alliance (NDA) government’s second Budget of its current tenure, which Finance Minister Nirmala Sitharaman will present on Saturday (February 1), is much different from its first, tabled on July 23 last year, nearly 50 days after the June 4 Lok Sabha results. 

At that juncture, the Bharatiya Janata Party (BJP), which lost 63 seats in the Lok Sabha polls — dropping from 303 in 2019 to 240 in 2024, falling 32 short of a majority on its own—prioritised accommodating the concerns of its key allies, the Telugu Desam Party (TDP) and Janata Dal (United) [JDU]. 

The Union Budget for 2024-25 reflected the government’s compulsions, announcing a slew of projects for Andhra Pradesh and Bihar. This led the Opposition to accuse the government of neglecting other states. The Budget also considered the forthcoming crucial Assembly polls, especially in Haryana, Maharashtra, and Jharkhand, and maintained a focus on the “four pillars” or “castes” – farmers, the youth, the poor, and women. The announcement of the Prime Minister’s Internship Scheme in the Budget was seen as a response to joblessness, which had become a key Opposition poll plank during the 2024 Lok Sabha campaign. 

The 2025-26 Budget, which the Finance Minister will present later this week, is set in a different context. The BJP secured a majority in Haryana for a historic third successive term, and the BJP-led NDA returned to power in Maharashtra, bolstering the ruling party’s confidence despite the losses suffered in the Lok Sabha polls. 

Moreover, 2025 will see the fewest Assembly polls in any year during the current five-year term. Elections are slated only in Delhi, scheduled for February 5, and Bihar, likely by November. In contrast, five states will go to polls in 2026, including Assam, where the BJP is the ruling party, and West Bengal, where it is the principal Opposition. Tamil Nadu, Kerala, and Puducherry will also have elections by April 2026. 

The upcoming Budget, therefore, will be presented in a more favourable political context for the government. However, it might still need to consider the demands put forth by the JDU-BJP ruling coalition in poll-bound Bihar. During his visit to Bihar on November 13, the Prime Minister inaugurated and laid foundation stones for projects worth Rs 12,100 crore. 

Last month, in a 32-page memorandum submitted to Sitharaman, Bihar Deputy Chief Minister Samrat Choudhary sought Rs 13,000 crore in aid from the Centre for flood management in North Bihar, upgrading Darbhanga airport, new airports in Rajgir and Bhagalpur, and funding for Raxaul airport. He also requested the construction of 10 new Kendriya Vidyalayas, a 1 per cent Gross State Domestic Product relaxation for additional borrowing, and approval of a small modular nuclear reactor, apart from high-speed corridors. 

The Union Budget for 2024-25 had allocated Rs 59,000 crore for road connectivity, power, and flood management in Bihar. Chief Minister Nitish Kumar had then said the Centre should either grant Bihar special category status (SCS) or a special package. “They (the central government) said SCS has been discontinued. So, instead, financial assistance should be given to help Bihar develop. They have now started it,” Kumar said. Meanwhile, the TDP expects the Centre to continue fulfilling commitments made in the Andhra Pradesh Reorganisation Act. 

Another highlight of the July Budget was the proposal for ‘Purvodaya,’ aimed at the all-round development of the eastern region covering Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh. The BJP won the Assembly polls in Odisha, forming its first single-party majority government in the state. Jharkhand was then preparing for Assembly polls, while Bihar and Andhra were run by the NDA. Despite setbacks in the Lok Sabha polls, the BJP has identified West Bengal as a key state where it hopes to perform well in the next Assembly elections in April-May 2026. It remains to be seen if the Centre continues its focus on the ‘Purvodaya’ plan. 

In the July Budget, the government reached out to the middle classes by announcing income tax relief and a Rs 2 trillion outlay for job creation schemes over the next five years. According to post-poll surveys, the BJP faced voter ire in some states due to livelihood issues and the lack of job opportunities. The words ‘jobs’ and ‘unemployment’ appeared 32 times in the Finance Minister’s speech. 

The BJP and its allies performed well in urban areas during the Haryana and Maharashtra Assembly polls. Whether the 2025-26 Budget offers more substantive outreach to the middle classes will be known on Saturday.