Singh Gives Bihar $2 Billion as Battle to Win Allies Heats Up

India’s cabinet approved an aid package worth 120 billion rupees ($2.2 billion) for Bihar, a sign the government may be trying to encourage the state’s ruling party to leave the main federal opposition alliance.

Bihar, one of India’s poorest states, will receive the funds under the so-called Backward Regions Grant Fund over the next four years, Information and Broadcasting Minister Manish Tewari said after the cabinet meeting in New Delhi today.

The award came as Bihar Chief Minister Nitish Kumar’s Janata Dal (United) has publicly rowed with its senior alliance partner, the Bharatiya Janata Party, over the growing clout of Narendra Modi a year before the next election is due.

Kumar has expressed concern that the nomination of the BJP’s Modi as the prime ministerial candidate may anger Muslims who accuse him of failing to stop riots that targeted their community in 2002 in Gujarat state, which Modi governs. More than 1,000 people died in the violence, most of them Muslims.

Congress and BJP are trying to woo regional parties before the election to be held by May 2014 as opinion polls predict neither will lead their coalitions to a clear victory.

The Congress-led government of Prime Minister Manmohan Singh has lost two key allies since September -- Mamata Banerjee’s Trinamool Congress and the Tamil Nadu-based Dravida Munnetra Kazhagam.

Modi was elevated to the BJP’s highest decision-making body last month, bolstering his stature amid jockeying to lead the party into the parliamentary polls. Modi’s third consecutive election victory in Gujarat, last year, and his high opinion- poll ratings have made him a favorite among party members.

Besides Bihar, the eastern state of Odisha will get 2.5 billion rupees per annum for the next four years for the development of three districts, while the Bundelkhand region of Uttar Pradesh and Madhya Pradesh states will receive 44 billion rupees to combat drought over four years, Tewari said.

To contact the reporters on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net; Abhijit Roy Chowdhury in New Delhi at achowdhury11@bloomberg.net

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net

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