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The central government has ensured all poll-bound states receive a substantial share in the Union Budget 2026-2027 presented by Finance Minister Nirmala Sitharaman on Sunday, February 1.

This year, Assembly elections will be held in Assam, West Bengal, Tamil Nadu, Kerala and the Union Territory (UT) of Puducherry. Except for Assam, all other states are ruled by non-Bharatiya Janata Party (BJP) governments.

However, the Budget did not offer much for Telangana, except for railway corridors between Hyderabad and major Indian cities.

Individual states

West Bengal’s Durgapur will get an integrated East Coast Industrial Corridor with a well-connected node.

To promote mining, processing, research and manufacturing, a dedicated Rare Earth Corridor for Odisha, Kerala, Andhra Pradesh and Tamil Nadu will be established.

The government plans to operationalise 20 new national waterways, with Odisha as its epicentre, starting with the development of National Waterway-5, connecting mineral-rich areas of Talcher (popularly known as the City of Black Diamond) in Angul with key ports of Paradeep and Dhamra and industrial area Kalinganagar.

“Uttar Pradesh’s temple town Varanasi and Bihar’s capital city Patna will have a ship repair ecosystem catering to inland waterways,” Sitharaman said.

Railway projects

Union Finance Minister announced a series of high-speed railway corridors between Maharashtra, Telangana, Karnataka and Tamil Nadu. These are:

• Pune-Hyderabad
• Hyderabad-Bengaluru
• Hyderabad-Chennai
• Chennai-Bengaluru
• Mumbai-Pune

Agriculture

The Finance Minister announced the development of ecologically sustainable mountain trails and the expansion of high-density cultivation of walnuts, almonds and pinenuts for local farmers of Himachal Pradesh, Uttarakhand and Jammu and Kashmir.

Farmers cultivating high-value crops like coconut, sandalwood, cocoa and cashew in coastal Indian states like Kerala, Karnataka and Tamil Nadu are set to get a boost over the next five years.

The government announced a Coconut Promotion Scheme, which will replace old trees with new varieties in major coconut-growing states.

Education

The Finance Minister announced the establishment of the National Institute of Design (NID) for the Eastern Region of India.

Tourism

The government plans to create five tourism destinations across the Purvodaya states – Bihar, Jharkhand, West Bengal, Andhra Pradesh and Odisha. About 4,000 electric buses will hit the roads to enhance green mobility.

For the Northeastern states like Assam, Manipur, Arunachal Pradesh, Sikkim, Mizoram and Tripura, Sitharaman announced Buddhist circuits aimed at preserving temples and monasteries and strengthening pilgrimage.

Coastal states Kerala, Odisha and Karnataka will get Turtle Trails, resting along the major nesting sites. India’s second-largest brackish water lagoon, Pulikat Lake, will be adorned by bird watching trails across the Andhra Pradesh and Tamil Nadu borders.

The government plans to promote trekking routes across India with Himachal Pradesh, Uttarakhand and Jammu and Kashmir (Himalayan range), Araku Valley (Andhra Pradesh) in the Eastern Ghats and Podhigai Malai in Tamil Nadu and Kerala.

Fiscal benefits for States and UTs

Based on the 16th Finance Commission’s recommendations, the Centre has allocated Rs 14 lakh crore to states for 2026–27. This includes funds for rural and urban local bodies and disaster management.

All states will continue to receive 41 per cent of central tax revenues.

For Union Territories, the budget provides direct funding:

• Andaman and Nicobar Islands: Rs 6,703.76 crore
• Chandigarh: Rs 5,728.72 crore
• Dadra and Nagar Haveli and Daman and Diu: Rs 2,840.20 crore
• Ladakh: Rs 5,246.44 crore
• Lakshadweep: Rs 1,682.35 crore