Budget 2026 Focuses on Development Initiatives for Poll-Bound States
Finance Minister Nirmala Sitharaman may not have unveiled state-specific financial packages in the Union Budget 2026, but she strategically integrated several poll-bound states into ambitious national development projects. With assembly elections scheduled later this year in West Bengal, Tamil Nadu, Kerala, Assam, and Puducherry, the budget emphasizes infrastructure, logistics, and sustainable initiatives that promise long-term benefits for these regions.
West Bengal's Infrastructure Boost
West Bengal received significant attention in the budget through multiple infrastructure proposals. A key announcement is the development of a new dedicated freight corridor from Dankuni in West Bengal to Surat in Gujarat. This project aims to promote environmentally sustainable and efficient cargo movement, potentially reducing logistics costs for eastern Indian industries and improving connectivity between eastern and western markets.
Additionally, the Centre plans to develop an Integrated East Coast Industrial Corridor, with a well-connected industrial node at Durgapur, a major manufacturing hub in West Bengal. This initiative aligns with the government's 'Purvodaya' vision to accelerate industrial growth in eastern India. The budget also proposes creating five tourism destinations across the five 'Purvodaya' states, including West Bengal, to boost employment and regional development.
To support sustainable urban mobility, the government will allocate provisions for 4,000 electric buses in these regions. In rail connectivity, Sitharaman announced plans for seven high-speed rail corridors nationwide, with one proposed route linking Varanasi in Uttar Pradesh to Siliguri in northern West Bengal. This corridor is expected to cut travel time and enhance economic integration of north Bengal with the rest of the country.
However, Trinamool Congress national general secretary Abhishek Banerjee criticized the Centre, accusing it of neglecting West Bengal in the budget speech and branding its people as Bangladeshis. He highlighted unmet promises and lack of concrete measures for farmers and youth.
Tamil Nadu's Rail and Tourism Projects
Tamil Nadu benefits from several high-profile announcements in Budget 2026. The state will receive a high-speed rail link for Chennai, with Hyderabad-Chennai and Chennai-Bengaluru routes included in the seven proposed high-speed rail corridors. These corridors are designed to act as growth connectors between major cities.
The budget also includes an ecologically sustainable mountain trail in Podhigai Malai in the Western Ghats and a rare earth corridor to promote mining, processing, research, and manufacturing. Tamil Nadu is a key state in this corridor, which extends the Centre's Rare Earth Permanent Magnets scheme launched in November 2025.
Other initiatives for Tamil Nadu focus on tourism and cultural heritage. Bird watching trails will be developed along Pulikat lake, which spans Tamil Nadu and Andhra Pradesh. The archaeological site of Adichanallur will be transformed into a vibrant experiential cultural destination, with excavated landscapes opened to the public through curated walkways. Immersive storytelling technologies will be introduced in conservation labs and interpretation centers to enhance visitor experience.
Given Tamil Nadu's rich temple heritage, including pilgrimage centers like Rameswaram and temple-towns such as Madurai, Kancheepuram, and Kumbakonam, these tourism initiatives are expected to boost local economies.
Kerala's Limited Gains
Kerala's mentions in Budget 2026 are relatively sparse. The state will be part of the rare earth corridors and Turtle Trails initiatives. The Turtle Trails project aims to establish conservation and eco-tourism sites along key nesting areas in coastal regions. The rare earth corridors focus on boosting mining, processing, research, and manufacturing in the sector.
However, Kerala was excluded from the proposed high-speed rail corridors, while neighboring states like Tamil Nadu, Karnataka, and Telangana featured in the network expansion. This omission drew criticism from both the ruling Left Democratic Front and the Opposition United Democratic Front, who argued that the budget largely sidelined the state.
Thiruvananthapuram MP Shashi Tharoor expressed disappointment, noting that while an All India Institute of Ayurveda was mentioned, its location was unspecified. He highlighted Kerala's strong Ayurveda heritage but lamented the lack of concrete promises. Tharoor also pointed out missed opportunities, such as ship repair projects for inland waterways being allocated to Varanasi and Patna instead of Kerala, despite the state's extensive river networks.
Assam's Infrastructure and Tourism Focus
Assam stands to gain from Budget 2026's emphasis on infrastructure development in Tier-2 and Tier-3 cities, as well as initiatives supporting MSMEs. The state has a large number of small and medium enterprises that could benefit from these measures.
A significant announcement for Assam is the proposed development of a Buddhist Circuit in the North-Eastern Region, covering Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram, and Tripura. This scheme will include preservation of temples and monasteries, pilgrimage interpretation centers, connectivity improvements, and pilgrim amenities.
The budget also proposes upgrading the National Mental Health Institutes in Tezpur as a Regional Apex Institution. Additionally, the creation of five tourism destinations in the 'Purvodaya' states, including Assam, aims to boost regional development.
Assam Chief Minister Himanta Biswa Sarma welcomed the budget, highlighting several points in a series of social media posts. He noted that the announcement of Self-Help Marts will strengthen Assam's efforts to build a robust ecosystem under the Lakhpati Didi initiative. Sarma also emphasized that the budget's focus on skilling aligns with Assam's vision to become a hub for skilled professionals in healthcare, AI, and other sectors. He added that the Rs 2 lakh crore allocation under Special Assistance to States for Capital Investment will accelerate infrastructure activities in Assam.
Overall, while Budget 2026 avoided big-ticket state-specific announcements, it integrated poll-bound states into broader national initiatives, offering a mix of infrastructure, tourism, and industrial projects that could shape their economic futures.
