Five states scheduled to go for Assembly elections this year are expected to gain from several region- and sector-linked initiatives in manufacturing, infrastructure and agriculture, even though the Union Budget did not make explicit state-wise proposals for them.
Finance minister Nirmala Sitharaman framed the measures as part of a nationally applied development strategy, with schemes designed to be accessed by all states through challenge-mode funding and reform-linked criteria.
Tamil Nadu, West Bengal, Kerala, Assam and Puducherry go to polls in 2026. Of these, only Assam and Puducherry are currently ruled by the Bharatiya Janata Party, while the other three politically significant states—Tamil Nadu, West Bengal and Kerala—are governed by the Dravida Munnetra Kazhagam, Trinamool Congress and the Left Democratic Front respectively.
The budget outlined a range of sectoral corridors, industrial clusters and city-focused growth models that are likely to benefit states such as Tamil Nadu, Kerala, Assam, West Bengal and Puducherry.
“We followed an approach that allows the Centre to address region-specific economic needs while keeping the Budget aligned with a pan-India framework and avoiding state-specific allocations during an election cycle,” Sitharaman said at a post-budget press conference.
Among the key announcements was support for setting up dedicated rare earth corridors in mineral-rich states, including Tamil Nadu and Kerala, as well as Odisha and Andhra Pradesh. The move builds on a scheme for rare earth permanent magnets launched in November 2025 and is aimed at promoting mining, processing, research and manufacturing of critical inputs used in electronics, clean energy and defence.
The minister said the corridors would help reduce import dependence and strengthen domestic supply chains in sectors that are increasingly strategic amid global disruptions.
The Budget also proposed launching a scheme to support states in establishing three dedicated chemical parks through a challenge route, using a cluster-based, plug-and-play model.
The initiative is intended to enhance domestic chemical production, reduce import dependence and attract private investment to states that are able to offer suitable infrastructure, regulatory support and land availability. Several eastern and southern states are seen as potential beneficiaries given their existing industrial bases and port connectivity.
In a broader regional push, the budget reiterated focus on the Purvodaya states and the North-East region to accelerate development and employment generation.
As part of this effort, the finance minister proposed the development of an integrated East Coast Industrial Corridor, with a well-connected node at Durgapur, alongside the creation of five tourism destinations across the five Purvodaya states and the provision of 4,000 electric buses to strengthen urban and inter-city mobility.
Some of the agriculture-linked regional initiatives also have implications for poll-bound states. Citing India’s position as the world’s largest producer of coconuts, the finance minister proposed a Coconut Promotion Scheme to enhance productivity and competitiveness through interventions such as replacing old and non-productive trees with improved saplings in major coconut-growing states.
Around 30 million people, including nearly 10 million farmers, depend on coconut cultivation for their livelihoods, making the scheme particularly relevant for coastal states, with Tamil Nadu and Kerala among the key coconut-growing regions.
The budget also announced a focused programme to revive the Indian sandalwood ecosystem, which is closely linked to the country’s cultural heritage. The initiative is aimed at benefiting farmers and communities engaged in sandalwood cultivation and processing in Tamil Nadu and other states such as Telangana and Andhra Pradesh.
“A region-focused budget that routes funding through national schemes rather than explicit state-wise packages allows the Centre to balance development priorities with electoral sensitivities. By designing initiatives that apply to both poll-bound and non–poll-bound states, the government has sought to avoid charges of political favouritism while still addressing regional economic and livelihood concerns,” said Arvind Mohan, a political commentator and former political researcher at Lokniti, the research programme of the Delhi-based Centre for the Study of Developing Societies.
