When Finance Minister Nirmala Sitharaman presents the Union Budget on February 1, not only will the global financial situation and how India navigates it be on her mind, but also key developments on the domestic front. Budget 2026 will be presented against the backdrop of assembly elections due in a few months, adding a clear political context to the government’s fiscal choices.
Sitharaman, who has presented the budget in a paperless format since 2021 using a tablet carried in a red bahi-khata-style cover, will be under pressure to balance macroeconomic priorities with regional and electoral considerations, as has been the case in previous poll years.
For the ruling BJP, the stakes are high. The party is looking to retain Assam, where it currently governs, as it is seen as the gateway to BJP’s dominance in the Northeast, while stepping up efforts to win West Bengal, a state that has eluded the party so far, and improve its performance in Kerala, Tamil Nadu and Puducherry. Together, these states are central to the party’s longer-term political strategy in eastern and southern India.
As past budgets reflect, Sitharaman has kept the political interests of her party in mind, suggesting that poll-bound states are unlikely to be overlooked.
The 2021 Union Budget, presented months before elections in Assam, West Bengal, Kerala and Tamil Nadu, included a series of state-specific infrastructure announcements. The announcements were also shaped by the prevailing pandemic at the time, signalling that only certain types of projects were prioritised.
Major national highway projects were announced across all four states. Tamil Nadu featured prominently with multiple highway corridors, while Kerala was promised new stretches, including part of the Mumbai–Kanyakumari corridor. West Bengal saw plans for large-scale road upgradation along key economic routes, and Assam was positioned as a major recipient of ongoing and future highway investments over a multi-year period.
The finance minister also announced a dedicated welfare package for tea workers in Assam and West Bengal, targeting a politically significant workforce in both states. All four states went to polls within months of the budget.
Now, five years later, the stakes are even higher for the party.
Do budget announcements impact polls?
The 2025 budget, presented ahead of elections in Delhi and Bihar, offers another example. Sitharaman announced significant personal income tax relief measures that were highlighted by the BJP as part of its middle-class outreach.
Bihar, in particular, saw a series of tailored announcements, including the creation of a Makhana Board, plans for a national food technology institute, expansion of IIT-Patna, support for the Western Kosi Canal, and renewed focus on tourism around key Buddhist heritage sites. These measures were widely interpreted as state-specific signals in the run-up to the polls.
All these announcements were aggressively highlighted by the party during the respective election campaigns. Tax relief did have an impact in the Delhi polls, as the national capital is home to a large and thriving middle class. The party returned to power after 27 years.
In Bihar, the NDA’s performance was much stronger than last time.
With five states set to go to polls, the upcoming budget is likely to feature announcements for these states, which can be highlighted during campaigning, as the BJP faces formidable regional leaders such as Mamata Banerjee, M.K. Stalin and Pinarayi Vijayan.
The upcoming budget also comes at a time of internal transition within the BJP, following the appointment of Nitin Nabin as the party’s new national president. The assembly elections later this year will be among the first major electoral tests for the new leadership.
As the youngest party president, signalling a generational shift within the BJP, the budget is expected to place renewed emphasis on employment, skilling and youth-oriented programmes, alongside region-specific development priorities. This is likely to provide Nitin Nabin with key talking points for his outreach and campaign speeches.
While the presentation format has evolved over the years, the political context in which the budget is delivered has not. As in previous election years, the Union Budget is likely to serve not only as an economic roadmap, but also as an early signal of the government’s political priorities.
