Five states scheduled to hold Assembly elections this year are poised to gain from several region- and sector-linked initiatives in manufacturing, infrastructure, and agriculture, even though the Union Budget did not include explicit state-wise proposals for them. Finance Minister Nirmala Sitharaman framed these measures as part of a nationally applied development strategy, with schemes designed to be accessed by all states through challenge-mode funding and reform-linked criteria.
Election Context and Political Landscape
Tamil Nadu, West Bengal, Kerala, Assam, and Puducherry are set to go to polls in 2026. Of these, only Assam and Puducherry are currently ruled by the Bharatiya Janata Party, while the other three politically significant states—Tamil Nadu, West Bengal, and Kerala—are governed by the Dravida Munnetra Kazhagam, Trinamool Congress, and the Left Democratic Front, respectively. The budget outlined a range of sectoral corridors, industrial clusters, and city-focused growth models that are likely to benefit these states.
Strategic Approach to Regional Development
"We followed an approach that allows the Centre to address region-specific economic needs while keeping the Budget aligned with a pan-India framework and avoiding state-specific allocations during an election cycle," Sitharaman said at a post-budget press conference. This strategy aims to balance development priorities with electoral sensitivities, ensuring initiatives apply to both poll-bound and non-poll-bound states to avoid charges of political favoritism.
Key Manufacturing and Infrastructure Initiatives
Among the key announcements was support for setting up dedicated rare earth corridors in mineral-rich states, including Tamil Nadu and Kerala, as well as Odisha and Andhra Pradesh. This move builds on a scheme for rare earth permanent magnets launched in November 2025 and is aimed at promoting mining, processing, research, and manufacturing of critical inputs used in electronics, clean energy, and defence.
The minister emphasized that these corridors would help reduce import dependence and strengthen domestic supply chains in sectors that are increasingly strategic amid global disruptions. Additionally, the Budget proposed launching a scheme to support states in establishing three dedicated chemical parks through a challenge route, using a cluster-based, plug-and-play model.
Regional Push and Broader Benefits
In a broader regional push, the budget reiterated focus on the Purvodaya states and the North-East region to accelerate development and employment generation. As part of this effort, the finance minister proposed the development of an integrated East Coast Industrial Corridor, with a well-connected node at Durgapur, alongside the creation of five tourism destinations across the five Purvodaya states and the provision of 4,000 electric buses to strengthen urban and inter-city mobility.
Agriculture-Linked Regional Initiatives
Some of the agriculture-linked regional initiatives also have implications for poll-bound states. Citing India’s position as the world’s largest producer of coconuts, the finance minister proposed a Coconut Promotion Scheme to enhance productivity and competitiveness through interventions such as replacing old and non-productive trees with improved saplings in major coconut-growing states.
Around 30 million people, including nearly 10 million farmers, depend on coconut cultivation for their livelihoods, making the scheme particularly relevant for coastal states, with Tamil Nadu and Kerala among the key coconut-growing regions. The budget also announced a focused programme to revive the Indian sandalwood ecosystem, which is closely linked to the country’s cultural heritage, benefiting farmers and communities in Tamil Nadu and other states such as Telangana and Andhra Pradesh.
Expert Analysis and Implications
"A region-focused budget that routes funding through national schemes rather than explicit state-wise packages allows the Centre to balance development priorities with electoral sensitivities. By designing initiatives that apply to both poll-bound and non–poll-bound states, the government has sought to avoid charges of political favouritism while still addressing regional economic and livelihood concerns," said Arvind Mohan, a political commentator and former political researcher at Lokniti, the research programme of the Delhi-based Centre for the Study of Developing Societies.
This approach ensures that while the budget maintains a national framework, it strategically targets regions with upcoming elections through sector-specific benefits, fostering economic growth without overt political bias.
