Cash transfers to women may cost Bihar 2.6% of GSDP, could double under Maharashtra model

Congress promises could cost high

As political parties unveil welfare promises ahead of the Bihar assembly elections, the cost of implementing large-scale cash transfer schemes for women could turn out to be significantly higher for one of India’s poorest states.

A Moneycontrol analysis shows that even under the most conservative assumptions, providing Rs 2,500 per month to women could cost the state Rs 28,326 crore annually—slightly less than Bihar’s budgeted fiscal deficit for FY26, or 2.6 percent of Gross State Domestic Product (GSDP).

This conservative scenario uses data from Bihar’s caste census, which estimates that over a third of the state’s 27.8 million households earned less than Rs 6,000 per month in 2022–23. Under this assumption, the number of eligible women is estimated at 9.4 million, or one woman per poor household.

Congress President Rahul Gandhi has promised a Rs 2,500 monthly transfer for women in Bihar if voted to power.

If the scheme targets all adult women who are multidimensionally poor, as per NITI Aayog's data, the cost escalates to Rs 40,626 crore annually. Bihar’s multidimensional poverty rate is 33.76 percent, which would raise the number of eligible adult women beneficiaries from 9.4 million to 13.5 million.

By FY26, Bihar is projected to have 40.1 million women above 18 years of age. For comparison, the state's planned capital outlay in FY26 is Rs 40,532 crore, while its GST collections are projected at Rs 34,009 crore—both lower than the cost of the expanded transfer scheme.

Maharashtra-Delhi models would cost more

The fiscal burden could be even heavier if Bihar follows the Maharashtra or Delhi models, where the scale of enrollment is broader.

In Delhi, an internal study estimated that 47 percent of adult women (0.38 of 0.8 million) may need support.

In Maharashtra, the scheme has enrolled 24.6 million women, nearly half of the state's adult female population. If Bihar adopts a similar scale, it would need to cover 19 million women, pushing the total annual cost to Rs 57,140 crore—5.2 percent of the state’s GDP.

This figure nears Bihar’s projected own tax revenue of Rs 59,520 crore and is more than the grants-in-aid from the Centre, which are expected to be Rs 54,575 crore in FY26.

Can Bihar afford these transfers?

From an affordability perspective, Bihar’s fiscal capacity appears severely constrained. In FY24, its fiscal deficit was 4.2 percent of GSDP, well above the FRBM target of 3 percent, and nearly double that of Maharashtra, which reported a deficit of 2.2 percent.

The state is expected to miss its fiscal deficit target again in FY25, and FY26 projections suggest it is operating at the margins of compliance.

Even more concerning is that Bihar’s spending on health, education, and roads is set to shrink in FY26 compared with the previous year, suggesting limited flexibility for new welfare expenditure.

On a long-term basis, Bihar’s debt levels are among the highest in the country. In FY24, its outstanding debt was 38.9 percent of GSDP, more than twice that of Maharashtra (17.7 percent). The state hopes to bring this down to 37 percent in FY26, but any additional expenditure burden—such as a large cash transfer scheme—could derail this plan.