Victory cheers, debt tears

BIHAR IS NOT ALONE IN ADOPTING EXPANSIVE WELFARE PROMISES. ACROSS INDIA, WELFARE SPENDING HAS BECOME CENTRAL TO ELECTION CAMPAIGNS

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The Bihar election delivered a clear mandate, but the celebrations mask a harder truth: the state is walking into a period of acute fiscal strain powered by an explosion of welfare promises. The politics worked; the economics now begins to bite. The immediate political gains from targeted benefits and cash transfers are undeniable. They create visible impact, reach millions quickly, and generate electoral goodwill. But the economic price of these commitments is now coming into sharper focus.

It is to be observed how such a massive mandate would impact or reshape Bihar's economy. Early assessments suggest that the NDA's new welfare promises could cost over Rs 40,000 crore in FY26 approximately 4% of Bihar's GDP, Rs 2 lakh crore in five years. For a state already operating with tight fiscal margins, this is not just a budgetary challenge; it signals a structural shift in how development would be financed or get constrained. Bihar's public debt has surged to Rs 4.06 lakh crore, with the state paying or Rs 63 crore in daily interest or Rs 23014 crore for 2025-26. It plans net borrowings of Rs 32,918 crore, pushing its debt-to-GDP ratio to nearly 40%-one of the highest in India. This is despite the state recording strong nominal GDP growth of roughly 11% over the past decade.