Bihar's Economic Suicide: Both Alliances Playing With Fire; Budget Becomes A Political ATM For Vote-Bank Politics

The Bihar election has descended into a dangerous contest of fiscal recklessness, where both the ruling National Democratic Alliance (NDA) and the opposition Mahagathbandhan are treating the state exchequer as an electoral weapon. In the battle to outbid each other in promises, they have pushed economic prudence aside and turned the manifesto into a marketplace of freebies. This is not a vision for development — it is political opportunism at the expense of Bihar’s long-term stability.

NDA’s Populist Overdrive

The NDA’s newly released manifesto, presented with much fanfare, projects itself as a document of continuity and progress. Yet behind the glossy language lies a heavy populist core. It promises one crore jobs, free education for girls, women’s empowerment packages, agricultural subsidies, and a slew of new welfare schemes. The estimated annual cost of these commitments crosses ₹36,000 crore, a figure wholly incompatible with Bihar’s financial reality.

Bihar’s debt-to-GSDP ratio has already breached 38 percent, among the highest in the country. The state’s own tax and non-tax revenues contribute barely a quarter of total receipts, forcing dependence on central transfers. Despite this, the NDA seeks to expand recurring expenditures that will further strain revenue and debt management.

The hypocrisy is striking. Prime Minister Narendra Modi had once labelled the freebie culture as “revdi politics,” warning that such promises are “dangerous for the nation’s economy.” Yet, the same alliance that condemned populism now practices it without restraint in Bihar. The manifesto does not specify how these schemes will be financed — there is no mention of expanding revenue bases, attracting private investment, or creating sustainable jobs. It is a vote-buying exercise disguised as development.

The NDA’s strength historically lay in its focus on infrastructure, law and order, and administrative discipline. But this year’s document appears driven by electoral anxiety, not economic logic. By copying the opposition’s style of mass giveaways, it has abandoned its own narrative of reform and prudence.

Mahagathbandhan’s Fiscal Fantasy

If the NDA’s populism is worrying, the Mahagathbandhan’s manifesto is a fiscal time bomb. Its “Tejashwi Pran” document promises one government job per family, revival of the old pension scheme (OPS), free electricity up to 200 units, universal health cover, and cash support for women. The annual financial impact is projected by economic experts at ₹60,000–70,000 crore, and the cumulative cost of implementing all pledges could exceed ₹6 lakh crore — roughly twice the size of Bihar’s entire annual budget.

This is not ambition; it is economic hallucination. Even if partially implemented, the plan would consume the entire revenue pool, leaving nothing for capital investment or basic services. The OPS alone could add another ₹15,000 crore a year to the burden, undoing years of effort to restore fiscal order.

The slogan of “one family, one job” may sound revolutionary, but it is arithmetically impossible. Bihar has over 2.7 crore households — fulfilling even half this promise would require hiring more than the total number of existing state employees. It is an electoral bluff dressed as a welfare commitment.

The Fiscal Abyss

Bihar’s economy continues to suffer from structural weaknesses — minimal industrialisation, low per-capita income, and dependence on agriculture and remittances. The growth rate, though high on paper (9.2 percent in 2023–24), is misleading because it stems from a low base and public spending, not from private sector dynamism.

Debt repayment and interest already consume nearly 20 percent of the state’s expenditure. Salaries, pensions, and subsidies together swallow more than 70 percent of total revenue. What remains for roads, schools, and hospitals is a fraction of what is needed. In such circumstances, any fresh wave of populist schemes would push Bihar perilously close to insolvency.

The 2024–25 revised estimates showed a fiscal deficit nearing 9 percent of GSDP, which the government hopes to compress to 3 percent in 2025–26. But with competing parties promising freebies worth tens of thousands of crores, this target is destined to collapse.

Freebies as Electoral Bribes

The Supreme Court has repeatedly cautioned political parties against using freebies as electoral inducements, warning that such tactics distort democratic choice and undermine financial responsibility. What we are witnessing in Bihar is the institutionalisation of electoral bribery through manifestos.

Both alliances have reduced fiscal discipline to a joke. Welfare is no longer about empowerment; it is about distributing cash and subsidies to secure votes. When ruling parties indulge in the same populist excess they once criticised, they erode moral credibility and institutional accountability. Bihar’s budget has effectively been converted into a political ATM — where promises are dispensed today, and repayment is left for future generations.

A Betrayal of Bihar’s Future

The consequences will be grave and lasting. Once these promises begin to bite, Bihar will be forced to borrow even more, widening the debt trap. The state’s credit rating will deteriorate, borrowing costs will rise, and essential services will face crippling shortages. The very citizens promised relief will suffer from inflation, delayed salaries, and stagnating public investment.

This is not a theoretical risk — it is already happening. Development projects worth thousands of crores remain stalled due to lack of funds. Bihar cannot afford another round of fiscal adventurism. The younger generation, which needs jobs and education, will inherit a mountain of liabilities instead.

Endless Exodus: The Betrayal of Bihar’s Workforce

One of the most glaring omissions in both manifestos is the near-complete neglect of the hundreds of thousands of migrant labourers from Bihar’s villages who continue to leave home year after year for lack of any local opportunity. According to the 2011 Census, there were 74.54 lakh out-migrants from Bihar across 34 states and Union Territories — accounting for 7.2% of the state’s population. A more recent study finds that 50% of Bihar households are exposed to migration, many depending on remittances because local jobs simply do not exist. Seventy years after independence, neither the ruling National Democratic Alliance nor the opposition Mahagathbandhan has offered a credible roadmap to halt this exodus — no large-scale industrial hubs, no district-wise job-creation strategy, no policy to convert migrant manpower into local employment. That omission is a profound betrayal of the very villagers from whose votes these parties solicit support.

Conclusion: Politics without Economics Is Ruin

Bihar’s tragedy is not just poverty — it is political myopia. Both the NDA and the Mahagathbandhan have abandoned the path of economic realism. They compete not in performance, but in populism. Their manifestos are written not in vision, but in debt and deception.

A responsible political class would explain how it plans to raise revenue, attract investment, and rationalise expenditure. Instead, both sides have chosen to pander to emotions and short-term electoral gains.

The voters of Bihar must see through this charade and ask one fundamental question: “Who will pay for these promises?” Until that question is answered with honesty and arithmetic, Bihar will remain a prisoner of its own populist politics — a state rich in slogans but bankrupt in substance.

(Writer is Senior Political Analyst and Strategic Affairs Columnist based in Shimla)

Published on: Thursday, November 06, 2025, 08:47 AM IST