One of the major factors behind Bihar’s sweeping electoral verdict for the NDA is the state’s expanding freebies economy. According to analysts, the massive win was powered in part by unprecedented female voter turnout, driven by a Rs 10,000 cash grant for women—underscoring how direct benefit transfers and populist spending have become central to electoral strategy.
The Rs 10,000 grant was among several populist measures announced by the incumbent government ahead of the election. Other schemes included free electricity, a monthly stipend for students, a Rs 5,000 grant to construction workers, among others.
However, several political economists and research reports warn that the politics of freebies could have serious fiscal implications, and Bihar may have to rely on additional debt financing to sustain this level of expenditure.
Madhavi Arora, Chief Economist at Emkay Global, said: “The outlay on these schemes could be more than ₹40,000 crore in FY26 alone, or nearly 4% of Bihar’s GSDP. For context, this would be more than the state’s budgeted capex outlay for FY26.”
The state’s finances are already under significant strain in FY25, with total expenditure at Rs 3.49 lakh crore while net receipts stood at just Rs 2.45 lakh crore. This pushed the fiscal deficit to Rs 82,478 crore, or 9.2% of GSDP, far above the budgeted Rs 29,095 crore (3% of GSDP).
Revenue collection remains weak. With GST rate rationalisation expected to reduce revenues further, and the state’s enforcement of alcohol prohibition resulting in near-zero excise collections, Bihar’s own tax and non-tax revenue accounts for only 25% of its total receipts of Rs 2.45 lakh crore. In comparison, Uttar Pradesh’s own revenue accounts for 40% of its total receipts, while for Kerala, it is 74%.
Some economists argue that debt-financing may be the only viable way for the state to deliver on its promises. They also note that implementation could take time, as several of these schemes were not budgeted for in the current fiscal plan and were announced just weeks before the election. Economists caution that the freebies-led approach may also undermine long-term development.
“Bihar is running short of money and does not have enough resources. During his earlier three terms, the Nitish Kumar government primarily depended on one-time grants from the Centre for infrastructure development. So, if you try to give so much money to women in the form of monthly stipends or Jeevika Didis, it is ultimately going to impact development and infrastructure projects,” said Bipul Kumar, political analyst and professor at the A N Sinha Institute of Social Studies.
While the Centre is expected to continue providing fiscal support, the sustainability of these schemes remains a major concern.
According to economists, central transfers (tax devolution + grants) account for over 70% of Bihar’s total revenue in FY25P.
“Bihar does not have a lot of its own tax revenue, so the rising fiscal burden of these schemes will cause further strain on its already stretched fiscal position. Unless the job-creation drive is meaningfully integrated with private-sector expansion, many proposed ‘jobs’ may end up being low-wage, temporary positions tied to asset-creation schemes with limited multiplier effects. Delivering at this scale will depend on large central inflows, robust private investment, innovative financing models, and prudent fiscal management—particularly since the scale of commitments far exceeds Bihar’s present fiscal capacity,” said Manoranjan Sharma, Chief Economist at Infomerics Ratings.