Union Budget 2024: No ‘special category status’ but Bihar gets major fund allocation for infra projects

While there is no promise on providing special category status, Prime Minister Narendra Modi-led central government in its Union Budget 2024-25 has made a substantial allocation of Rs 58,900 crore for development of infrastructure projects in Bihar.

The allocation includes Rs 26,000 crore for development of road projects, Rs 21,400 crore for development power plant at Pirpainti and Rs 11,500 crore for flood control measures.

Finance Minister Nirmala Sitharaman made the announcement in this regard in the Union Budget presented in the parliament on July 23.

“The states in the Eastern part of the country are rich in endowments and have strong cultural traditions. We will formulate a plan, Purvodaya, for the all-round development of the eastern region of the country covering Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh,” Sitharaman said in her budget speech.

“This will cover human resource development, infrastructure, and generation of economic opportunities to make the region an engine to attain Viksit Bharat,” she added.

A special financial support of Rs 26,000 crore has been announced for development of four road projects in Bihar. This include (1) Patna-Purnea Expressway, (2) Buxar-Bhagalpur Expressway, (3) Bodhgaya, Rajgir, Vaishali and Darbhanga spurs, and (4) additional 2-lane bridge over river Ganga at Buxar.

Power projects, including setting up of a new 2400 MW power plant at Pirpainti, will be taken up at a cost of Rs 21,400 crore.

“New airports, medical colleges and sports infrastructure in Bihar will be constructed,” the Finance Minister said. However, she did not elaborate on the proposed investments on these projects.

“An additional allocation to support capital investments will be provided. The requests of Bihar Government for external assistance from multilateral development banks will be expedited,” the Finance Minister said.

On the Amritsar Kolkata Industrial Corridor, the centre has proposed to support development of an industrial node at Gaya. This corridor will catalyse industrial development of the eastern region. The industrial node at Gaya will also be a good model for developing our ancient centres of cultural importance into future centres of modern economy. This model shall showcase “Vikas bhi Virasat bhi” in our growth trajectory, Sitharaman said.

The Centre also announced the development of Vishnupad Temple Corridor and Mahabodhi Temple Corridor, as well as Nalanda, as tourist destinations.

The budget announcements came a day after her Minister of State for Finance Pankaj Chaudhary told the Lok Sabha that granting special status to Bihar was not possible on account of the report of the inter-ministerial group report from 2011.

“The Special Category Status for plan assistance was granted in the past by the National Development Council (NDC) to some States that were characterized by a number of features necessitating special consideration,” the junior union finance minister said in written reply to a question in the lower house of parliament.

The features on the basis of which special category status is provided included (i) hilly and difficult terrain, (ii) low population density and/or sizeable share of tribal population, (iii) strategic location along borders with neighbouring countries, (iv) economic and infrastructural backwardness and (v) non-viable nature of State finances.

“Earlier, the request of Bihar for Special Category Status was considered by an Inter-Ministerial Group (IMG) which submitted its Report on 30th March, 2012. The IMG came to the finding that based on existing NDC criteria, the case for Special Category Status for Bihar is not made out,” the minister added.

A special status ensures more central support to a backward state to expedite its growth. While the Constitution does not provide for a special status for any state, it was introduced on the recommendations of the Fifth Finance Commission in 1969. Among the states that have received a special status so far are Jammu and Kashmir (now a Union Territory), Noreastern states and hill states such as Himachal Pradesh and Uttarakhand.

A state with a special category status gets more funding support from the Centre in the Union government’s schemes and several concessions in taxes.

Meanwhile, the Bihar state Assembly saw a ruckus and the raising of slogans by the opposition RJD and Congress against the Centre’s refusal to grant special status to the state.

Reacting to the opposition criticism, Chief Minister Nitish Kumar said the state never got its due when the RJD was in power in Bihar. “These people who are making so much noise should remember that when they were part of the ruling dispensation at the Centre, the state never got its due. Whatever progress you can see is a result of the state government’s efforts since we assumed power in 2005. So bad was the situation until then that even in a city like Patna, people feared going out of their homes after dark,” PTI quoted the Chief Minister as saying.