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Key allies of India's Modi demand almost $6 bln for their states this year - document programs

Two crucial allies of Indian Prime Minister Narendra Modi have requested for about $6 billion in funds for their home states, pressing the federal government to raise costs when it provides its budget later this month, according to a file reviewed and a source familiar with the matter.

Modi's Bharatiya Janata Celebration (BJP) is having to count on two local celebrations - Andhra Pradesh's Telugu Desam Party and Bihar's Janata Dal (United) - to run the federal government, after it stopped working to win a majority by itself in the just recently concluded nationwide elections.

These 2 states are now demanding 480 billion rupees ($ 5.75 billion) in extra funds for the fiscal year ending March 2025, according to the file - which listed demands from among the state governments - and the source.

In addition, both states have actually asked the federal government to nearly double unconditional long-lasting loans provided by the government to all states for infrastructure costs to 1 trillion rupees ($ 11.98 billion), according to the document and the source.

The Indian government has actually reserved 1.3 trillion rupees in loans to states in its interim spending plan in February, of which more than half is conditional on the execution of certain economic reforms.

The states likewise want more headroom to obtain funds from the market, a limitation set by the federal government, according to the document and the source.

India's federal financing ministry did not right away react to a request for remark.

In the interim spending plan presented in February, the government has actually targeted a financial deficit of 5.1% of GDP. The final budget plan is due to exist before the end of this month.

Beyond the immediate financing demand, Bihar is seeking funds for 9 new airports, 2 power jobs, 2 river water programmes and setting up seven medical colleges, according to the file.

The period over which funds for these tasks are being sought has actually not been specified.

The southern state of Andhra Pradesh has sought funds for establishing its capital city and an essential irrigation task, the source said.

(source: Reuters)