Bihar Budget 2026-27 Receives Lukewarm Response from Analysts
The Bihar budget for the fiscal year 2026-27, which was presented on Tuesday, has failed to generate enthusiasm among economic experts. They have highlighted that the state's economy remains heavily dependent on central assistance, raising concerns about long-term sustainability and growth prospects.
Heavy Reliance on Central Transfers and Budget Comparisons
According to the 2025-26 budget estimates, Bihar ranks 10th among Indian states in terms of budget size. In comparison, Uttar Pradesh leads with a budget of Rs 8.1 lakh crore, followed closely by Maharashtra at Rs 7.6 lakh crore. For the 2026–27 period, Bihar's per capita budget allocation is approximately Rs 27,000, reflecting the state's economic constraints.
The state's revenue structure shows a significant dependence on central transfers. Tax devolution accounts for 55.4% of revenue, while grants-in-aid make up 18.2%. Together, these central contributions constitute 73.6% of Bihar's total revenue. This heavy reliance underscores the challenges in achieving fiscal autonomy.
Bakshi Amit Kumar Sinha, a faculty member at the Bihar Institute of Public Finance and Policy (BIPFP), pointed out a concerning gap in funding. "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 shortfall of nearly Rs 6,000 crore, which amounts to around 2% of the total budget," he explained.
Fiscal Discipline and Economic Constraints
Aviral Pandey, an assistant professor of economics at Patna University, acknowledged that the budget maintains fiscal discipline, with the fiscal deficit kept close to 3% and improvements in own tax revenues. However, he emphasized that Bihar continues to grapple with a low-income, high-population scenario that limits economic expansion.
"The increase in budget outlay by Rs 30,694 crore reflects consolidation rather than experimentation under the NDA government. 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 government-financed expansion," Pandey stated.
Development Expenditure and Committed Costs
According to Bakshi, the state has prioritized development expenditure by allocating Rs 2.31 lakh crore, which constitutes 66.5% of the total budget. This marks an increase of nearly 12% over the previous year, indicating a focus on growth-oriented spending.
However, he raised concerns about the allocation of funds. "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%," Bakshi noted.
He further highlighted a worrying trend: "A major area of concern is the 2.2% decline in capital outlay for 2026-27 compared to the 2025-26 fiscal year." This reduction could impact long-term infrastructure and development projects.
Infrastructure Focus and Economic Growth Drivers
Pandey pointed out that the rise in capital expenditure underscores the government's emphasis on infrastructure development. Key areas include 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 are aimed at enhancing human capital and promoting ease of living as key growth drivers," he said. 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.
Post-Pandemic Acceleration and Future Goals
Data reveals 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, it is significant given Bihar's low initial economic base. The consistent annual increase of approximately Rs 7,000 since 2021-22 points to a clear post-pandemic acceleration in growth.
The budget emphasizes that under Saat Nischay–3, the NDA government will focus on creating 1 crore jobs, doubling per capita income, and empowering women through self-help groups. These initiatives aim to address core economic challenges and foster inclusive development.
In summary, while the Bihar budget 2026-27 maintains fiscal prudence and prioritizes development, experts remain cautious due to the state's heavy reliance on central funds, high committed expenditures, and the need for effective implementation of growth-oriented policies to ensure sustainable economic progress.
