Mineral corridors to infra boost: What FM Nirmala Sitharaman's Budget has for poll-bound states

Nirmala Sitharaman, Finance Minister of India. (PTI)

• FM announces measures for states, focusing on economic growth and infrastructure
• Semiconductor Mission 2.0 launched, rare earth corridors in mineral-rich states
• Capital expenditure for FY2027 increased to Rs 12.2 lakh crore

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Finance Minister Nirmala Sitharaman on Sunday announced several measures for states and smaller cities, identifying them as the new engines of economic growth. Several of the FM's announcements are also set to benefit states that are set to go to polls during the year.

Underlining the government's focus on the semiconductor mission and emphasis on building domestic capital-goods capabilities and creating an independent supply chain, the Finance Minister identified mineral-rich states such as Odisha, Tamil Nadu, Andhra Pradesh and Kerala as key to securing access to rare earth resources.

"We will launch Indian Semiconductor Mission 2.0 to produce equipment and materials, design full stack Indian IP and fortify supply chains. The allocation for electronics component manufacturing programme will be nearly doubled from Rs 23,000 crore to Rs 40,000 crore. The government will help establish dedicated corridors in states like Odisha, Kerala, Andhra Pradesh and Tamil Nadu for manufacturing of rare earth magnets," the FM said.

The government also announced plans for three dedicated chemical parks, a move expected to support downstream manufacturing. One freight corridor mentioned by the FM in her speech was Dankuni in West Bengal to Surat in Gujarat.

During her speech, the Finance Minister also announced the government's plans to operationalize 20 new national waterways over the next five years to promote environmentally sustainable cargo movement.

The Finance Minister also mentioned support for high-value agricultural produce such as coconut, cashew and coco which could help farmers in coastal states such as Tamil Nadu and Kerala. "Union Budget 2026: "To diversify farm outputs, increase productivity, enhance farmer income, we will support high-value such as coconut, cashew, coco in coastal areas and nuts such as walnuts and pinenuts," the FM said during her speech.

Amid several announcements for the tourism sector, identified as the centre of its employment and growth strategy, the FM announced the creation of special trails for wildlife tourism. These include turtle trails along nesting sites in Odisha, Karnataka and Kerala, and bird-watching trails around Pulicat Lake, a coastal wetland shared by Andhra Pradesh and Tamil Nadu.

Besides specific announcements, there was broad mention of infrastructure push in tier-2 and tier-3 cities which the FM referred to as the "new engines of economic growth". How this translates into capital expenditure by the Centre in poll-bound states will be clear only later. The FM announced an increase in capital expenditure for FY2027 to Rs 12.2 lakh crore.

Besides these, the FM also announced NIMHANS 2 in Tezpur, Assam for mental health and trauma care.

Four major states are heading into polls later this year. These include West Bengal, Assam, Tamil Nadu and Kerala. Elections are also due in Puducherry, a union territory. Of these, the BJP is only in power in Assam and has never been in power on its own in any other state.