For the Bharatiya Janata Party, the timing is crucial. West Bengal remains among the party’s toughest electoral challenges, and economic policy has become inseparable from political strategy.
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Budget 2026 and its political significance
In recent years, the union government has allegedly used budgetary signalling to influence electoral narratives in key states.
The most prominent example came from Bihar, where the previous budget delivered a number of high-visibility announcements.
The July 2024 Budget outlined infrastructure and development projects valued at over Rs 60,000 crore for the state, followed by commitments such as Rs 11,500 crore specifically for flood control, moves widely interpreted as reinforcing political messaging in a poll-bound ally-state.
West Bengal’s political class is now asking whether Budget 2026 will attempt a similar approach — not through overt “special packages” — but through subtle fiscal choices that could reshape the electoral conversation.Adding a tangible layer to these expectations, PM Modi recently flagged off India’s first Vande Bharat Sleeper Train connecting Howrah and Guwahati (Kamakhya) from Malda Town Railway Station.
Get the latest on Budget 2026 and related developments here.
Later in the day, he also virtually inaugurated the return Guwahati–Howrah Vande Bharat Sleeper Train. The initiative strengthens rail connectivity in poll-bound West Bengal while showcasing the Centre’s development focus.
During his two-day tour of eastern India, PM Modi dedicated multiple rail and road projects and laid the foundation stone for initiatives worth Rs 3,250 crore.
Ahead of the flag-off, Union Railways Minister Ashwini Vaishnaw highlighted the scale of ongoing rail development.
“Under the Amrit Bharat Station Scheme, 101 stations in West Bengal are being redeveloped. PM Modi has allocated Rs 13,000 crore for railway development in the state,” Vaishnaw said.
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Federalism under strain
At the heart of the debate lies the question of fiscal federalism.
Leaders from both the ruling Trinamool Congress and the Opposition CPI(M) argue that the nature of Centre-state relations has fundamentally shifted since 2014.
According to CPI(M) General Secretary Md Salim, India has moved “from Cooperative Federalism to Coercive Federalism, where financial transfers depend on political alignment.”
TMC spokesperson Dr. Pradipta Mukherjee was even more direct, describing the Union Budget’s approach as “vote bank politics” rather than cooperative governance.
“The Central Government prioritises allocations based on electoral gains rather than the actual needs of the states,” he told ET Online, pointing to what he views as the sharp contrast between the Centre’s high-profile focus on Bihar’s elections and what he describes as the continued neglect of West Bengal.
Meanwhile, Tanya Bagchi, a Kolkata-based political analyst, speaking to ET Online, said, “While the Centre speaks of cooperative federalism, the Budget does not offer enough room for states to plan according to their own priorities. For a large and diverse state such as Bengal, greater predictability in fund flow and decision-making is essential.”
The BJP-led Centre, however, has repeatedly rejected the charge of political vendetta, insisting that fund releases are governed by accountability and compliance standards.
Attempts to get in touch with multiple state BJP spokespersons by ET Online yielded no response.
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MGNREGA: From welfare scheme to political flashpoint
No single programme illustrates this confrontation more sharply than MGNREGA — now replaced in December 2025 by the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 (commonly called VB‑G RAM G) following parliamentary passage and presidential assent.
The new law retains rural employment support while modifying the structure, funding and statutory guarantees of the old scheme.
However, the scheme remains a financial lifeline in rural Bengal, where seasonal migration and agricultural distress make guaranteed employment crucial.
The union government halted MGNREGA fund releases to West Bengal in March 2022 under Section 27 of the Act, citing non-compliance and alleged irregularities.
Union Rural Development Minister Giriraj Singh later said that funds would only be released after the Centre was satisfied with transparency and accountability.
The dispute escalated into the courts.
In June 2025, the Calcutta High Court ordered the Centre to restart MGNREGA operations in West Bengal from August 1, 2025, effectively ending a three-year freeze. By November 2025, the High Court was pressing both sides on arrears, while the Centre continued to allege misuse and petitioners demanded wage payments.
For the TMC, the stoppage became political evidence of punishment.
“Because the ruling party at the Centre failed to win the state elections in Bengal, they are now ‘punishing’ the state by choking financial resources,” said Dr Mukherjee.
Meanwhile, the CPI(M) leader framed the issue even more starkly, calling MGNREGA “the most glaring victim” of fiscal coercion, even as the national allocation remains Rs 86,000 crore.
“We are seeing a dangerous precedent where the Union government uses compliance metrics to bypass statutory obligations. The most glaring victim is the poor people of West Bengal. While the 2025-26 Budget maintains a national allocation of ₹86,000 crore, West Bengal has been excluded since late 2021,” Md Salim told ET Online.
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Housing & Education: Expanding the battlefield
MGNREGA is only one front. Funds for the Pradhan Mantri Awas Yojana (PMAY) and Samagra Shiksha have also become politically combustible.
A parliamentary panel urged the education ministry in March 2025 to resolve the PM-SHRI and Samagra Shiksha disputes and release pending funds to West Bengal and other states, warning that students should not suffer because of administrative conflict.
“Despite the Centre’s neglect, the Bengal Government has supported the people through state-funded alternatives,” said Dr Mukherjee.
Speaking to ET Online, the TMC spokesperson argued the state has been forced to compensate with its own programmes such as Banglar Bari for housing, Karmashree for employment, and Krishak Bandhu for farmers, reinforcing their claim that Bengal survives despite, not because of, central cooperation.
The Bihar precedent & the Bengal question
What might, however, unsettle Bengal’s leadership is the contrast with Bihar.
In the successive budget, Bihar was a centrepiece of fiscal messaging, with flood control, tourism circuits, and infrastructure corridors announced alongside the state’s electoral calendar.
At the same time, the Centre has promoted its eastern-India growth narrative through the Purvodaya initiative, which includes West Bengal, Bihar, Jharkhand, Odisha and Andhra Pradesh.
While framed as a regional development strategy, political actors in Bengal note that its real impact will depend on project allocation and execution on the ground.
However, Bagchi said that the turbulent relationship between Bengal and the BJP’s throne in New Delhi might lead to no major “financial push” for the eastern state in Nirmala Sitharaman’s upcoming speech.
“In the past, election-bound states such as Bihar have seen increased financial announcements ahead of polls. With the West Bengal Assembly election due in 2026, there may be some announcements or assurances. However, given the political relationship between the Centre and the state government, any major financial push appears unlikely unless there is a shift in approach,” she said.
What Budget 2026 could change
Budget 2026 offers the Centre multiple levers if it wishes to soften its image in Bengal without abandoning its compliance framework.
But opposition parties in the state argue that any genuine course correction must go far beyond optics and address what they describe as deep structural distortions in fiscal federalism.
The most immediate lever would be administrative: accelerating the release of verified MGNREGA wages, clearing PMAY backlogs, and resolving the long-standing Samagra Shiksha funding impasse while strengthening audit mechanisms.
From the TMC’s standpoint, this must be accompanied by the unconditional release of all pending dues, including funds for rural employment, housing and basic infrastructure such as roads and drinking water, with allocations determined by the needs of Bengal’s people rather than electoral considerations.
Beyond immediate arrears, the CPI(M) is pressing for a broader recalibration of fiscal relations.
The once grand party has demanded a return to genuine cooperative federalism, including a more equitable share of GST revenues, greater devolution of central taxes to states, and an end to what they describe as “arm-twisting” through conditional grants.
The CPI(M) has also called for the release of what it estimates to be Rs 1.6 lakh crore in accumulated arrears owed to Bengal across welfare and development sectors, arguing that untied transfers are essential for restoring state-level policy autonomy.
“We demand the immediate release of the ₹1.6 lakh crore in arrears that belong to the people of Bengal. Transfers to the states must be untied and based on the principle of cooperative federalism, not used as a carrot-and-stick tool for the BJP’s electoral gain,” Md Salim told ET Online.
Second, infrastructure-heavy capex announcements under the eastern-India growth umbrella could place Bengal visibly on the national development map. Pre-budget consultations have already seen states pressing for higher capex assistance and GST-loss compensation.
How Bengal features in those allocations will be closely watched, particularly in districts suffering from chronic agrarian distress and industrial stagnation.
The CPI(M) has urged that any such expansion be matched with targeted support for farmers, including the implementation of MSP as per the Swaminathan Commission formula (C2+50%) for Bengal’s jute, paddy and potato growers, alongside renewed input subsidies to arrest deepening rural indebtedness.
Finally, disaster management offers a potent political opportunity.
Recurrent flooding in North Bengal has triggered repeated confrontations between the state and the Centre, with Chief Minister Mamata Banerjee accusing New Delhi of insufficient assistance.
Both the TMC and CPI(M) argue that the 2026 Budget must go further by declaring the Ganga erosion in Malda and Murshidabad a national disaster, holding the Farakka Barrage Authority accountable for silt management, and establishing a permanent, centrally funded rehabilitation programme for displaced families.
Any significant flood-mitigation and river-management commitment in the budget could therefore carry not only developmental value but also powerful symbolic weight in a region where survival itself has become a political issue.
Three political narratives, one Budget
The TMC maintains that voters will not be swayed by sudden election-season generosity after years of what it calls neglect. The BJP argues that only a “double-engine” government can ensure honest delivery of welfare. The CPI(M) insists both governments are centralising power while ordinary citizens bear the cost.
In that sense, Budget 2026 is unlikely to transform Bengal’s political landscape overnight. But in a state where the language of “dues,” “funds,” and “rights” dominates everyday political conversation, fiscal policy is not merely economic, it is electoral terrain itself.
Whether the Centre chooses to recalibrate its approach in this terrain may determine whether the BJP finally begins to loosen West Bengal’s political grip, or whether the state once again proves immune to the power of New Delhi’s purse.
