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06-07-2024
Bureau Report + Agencies
NEW DELHI: Two key allies of Indian Prime Minister Narendra Modi have asked for about $6 billion in funds for their home states, pressuring the federal government to raise spending when it presents its budget later this month, according to a document reviewed by Reuters and a source familiar with the matter.
Modi’s Bharatiya Janata Party (BJP) is having to rely on two regional parties Andhra Pradesh’s Telugu Desam Party and Bihar’s Janata Dal (United) to run the government, after it failed to win a majority on its own in the recently concluded national elections.
These two states are now demanding 480 billion rupees ($5.75 billion) in additional funds for the financial year ending March 2025, according to the document which listed demands from one of the state governments and the source.
In addition, both states have asked the federal government to nearly double unconditional long-term loans offered by the government to all states for infrastructure spending to 1 trillion rupees ($11.98 billion), according to the document and the source.
The Indian government has set aside 1.3 trillion rupees in loans to states in its interim budget in February, of which more than half is conditional on the implementation of certain economic reforms.
The states also want more headroom to borrow funds from the market, a limit set by the federal government, according to the document and the source.
India’s federal finance ministry did not immediately respond to a media request for comment.
In the interim budget presented in February, the government has targeted a fiscal deficit of 5.1% of GDP. The final budget is due to be presented before the end of this month.
Beyond the immediate funding demand, Bihar is seeking funds for nine new airports, two power projects, two river water programs and setting up seven medical colleges, according to the document.
The period over which funds for these projects are being sought has not been specified.
The southern state of Andhra Pradesh has sought funds for developing its capital city and a key irrigation project, the source said.
On the other side, fixing India’s trade imbalance with Russia and securing the discharge of Indians misled into fighting in the Ukraine war will be among Prime Minister Narendra Modi’s priorities during talks in Moscow next week, a top official said on Friday.
Modi will visit Russia on July 8-9 for talks with President Vladimir Putin as part of annual summits between New Delhi and Moscow, launched in 2000.
Modi’s visit coincides with the July 9-11 NATO summit in Washington at which the Ukraine war will hold centre stage, and the timing has raised questions about the signal India could be sending but Indian Foreign Secretary Vinay Kwatra, the most senior diplomat in the foreign ministry, rejected any connection and said Modi’s visit was part of the calendar of summits between the two countries.
“The bilateral visit this time is just a scheduling priority that we have undertaken and that’s what it is,” he told reporters in response to a question at a briefing on Modi’s visit. New Delhi shares historic bonds with Moscow going back to the days of the Soviet Union but has moved closer to the West, especially Washington, in recent decades as it liberalized its economy and expanded its geopolitical ties.
At the same time, it has sought to maintain what is seen as strategic autonomy in its self-interest.
