Experts flag dependence of state on central funds

Patna: The Bihar budget 2026-27, presented on Tuesday, has failed to enthuse the experts, who have pointed out that the state economy continues to remain heavily reliant on central assistance.

“According to the 2025-26 budget estimates, Bihar ranks 10th among Indian states in terms of budget size, compared to Uttar Pradesh with Rs 8.1 lakh crore, followed by Maharashtra at Rs 7.6 lakh crore. For the 2026–27 period, Bihar’s per capita budget allocation stands at around Rs 27,000. The state remains heavily dependent on central transfers, comprising tax devolution at 55.4% of revenue and grants-in-aid at 18.2%, together accounting for 73.6% of the state’s total revenue. While the state estimates Rs 1.58 lakh crore in central devolution, the Union Budget estimates for Bihar stand at Rs 1.52 lakh crore. This leaves a gap of nearly Rs 6,000 crore, amounting to around 2% of the total budget,” said Bakshi Amit Kumar Sinha, a faculty member at the Bihar Institute of Public Finance and Policy (BIPFP).




Aviral Pandey, assistant professor of economics at Patna University, said while fiscal discipline has been maintained with the fiscal deficit close to 3% and improvement in own tax revenues, Bihar continues to face a low-income, high-population constraint. “The increase in budget outlay by Rs 30,694 crore reflects consolidation rather than experimentation under the NDA govt. The budget lays the foundation for gradual and stable growth, but its long-term success will depend on whether investments in skills, women’s workforce participation, tourism, sports, urbanisation and private capital are effectively translated into productive and sustainable employment beyond govt-financed expansion,” he said.

According to Bakshi, the state has prioritised development expenditure by allocating Rs 2.31 lakh crore, which constitutes 66.5% of the total budget, marking an increase of nearly 12% over the previous year. However, he pointed out that a large portion of the budget is directed towards maintenance and establishment costs. “Committed expenditure accounts for 65% of the budget, leaving only 35% for specific schemes. Within revenue receipts, interest payments consume nearly 9%, pensions account for 12%, and salaries make up 25%. A major area of concern is the 2.2% decline in capital outlay for 2026-27 compared to the 2025-26 fiscal year,” he said.

Pandey said the rise in capital expenditure underlines the govt’s emphasis on infrastructure development, including improved connectivity, reliable power supply for domestic and industrial use, increased availability of affordable housing in urban areas, strengthened health facilities and better education. These measures, he said, are aimed at enhancing human capital and promoting ease of living as key growth drivers.

“Data shows that between 2016-17 and 2025-26, Bihar’s economic expansion in absolute terms has been around Rs 40,000. While this may not be the fastest among states in absolute terms, it is significant given the state’s low initial base. The consistent annual increase of around Rs 7,000 since 2021-22 points to a clear post-pandemic acceleration. The budget also emphasises that under Saat Nischay–3, the NDA govt will focus on creating 1 crore jobs, doubling per capita income and empowering women through self-help groups,” the Patna University teacher added.

The budget also signals a conscious push towards tourism and sports promotion, reflecting an attempt to diversify the state’s economy and leverage Bihar’s cultural assets to generate youth-oriented employment beyond traditional sectors, Pandey said.