PRIME Minister Narendra Modi’s face was glowing as he approached the podium to address a charged crowd celebrating the BJP’s stunning election victory in the state of Bihar.
After thanking the people of Bihar, Modi immediately relapsed into the BJP’s familiar narrative. Criticising the Indian National Congress, Modi pejoratively referred to it as ‘Muslim League-Maoist Congress’ — in part an allusion to the Congress’s purported soft spot for Bihar’s Muslims who constitute 18 per cent of the state’s population.
The BJP’s jubilation is not without cause. The party has emerged as the single largest party for the first time in Bihar by improving its tally to 89 seats compared to 74 in 2020. All in all, the National Democratic Alliance — the BJP and its allies — surged ahead with 202 seats in the 243-seat assembly.
It is important to understand the drivers behind this remarkable electoral victory in Bihar as the same formula is likely to be repeated in upcoming state elections. Before Chief Minister Nitish Kumar, the BJP’s ally in the recent elections, took over two decades ago, Bihar, a state of some 135 million people, had rampant lawlessness or ‘Jungle Raj’.
In the first decade, Kumar focused on providing public goods, mainly roads, bridges and access to electricity. But, failing to create jobs for India’s poorest state, Kumar soon ran out of steam. Instead of turning towards pro-market policies that would generate competition, economic growth and jobs, without increasing the state’s fiscal deficit, Kumar turned more statist in Bihar, where state spending was already at 34pc of GDP, double the national average.
As in India, Pakistan’s political parties are aware of the transformative political power of cash transfers.
Manipulation of macroeconomic policy tools to stimulate the economy and create employment ahead of elections to ensure re-election is known to economists. These tendencies were first captured by the ‘political business cycle’ literature that includes the Nobel laureate William Nordhaus amongst its pioneers.
India’s rapid digitisation of government services, however, has exacerbated the phenomenon described by Nordhaus. In perhaps what can be described as digital political business cycles, some politicians can now use digital payment systems to engage in ‘virtual vote buying’ by directly reaching voters just before elections.
In recent years, cash transfer schemes directed specifically at women are increasingly being used by all political parties to win elections in India. Despite waxing eloquent against the use of such tactics — ‘revdi culture’ — Modi’s party used women-oriented financial support schemes ahead of polls in Maharashtra last year.
In the most recent elections, Kumar announced pre-election schemes amounting to 3pc of GDP despite Bihar’s fiscal deficit at 6pc of GDP. Before polls opened, Kumar started sending INR 10,000 to one woman from each family, claiming that this was ‘seed money’ for small businesses such as beauty parlours, dairy units, tailoring and retail kiosks.
It goes without saying that with little oversight, and due to money’s fungibility, the amount was probably consumed immediately. Economists warn that such populist policies can create serious fiscal implications, with Bihar being forced to rely on additional debt financing to sustain such expenditures.
According to Indian political analyst Neerja Chowdhury, these cash transfers underpinned the election results in Bihar. The 2025 Bihar election saw a record overall voter turnout of 66.91pc, the highest since 1951.
This was driven by a landmark surge in female participation, where female turnout stood at 71.6pc — significantly outpacing male turnout (62.8pc) and marking a clear watershed from the 60.48pc and 59.69pc female turnouts of the previous two elections. In a sense, by directly doling out cash to voters, the BJP and its allies were able to encourage women to break from traditional loyalties of caste and identity.
To be sure, the BJP’s rivals in Bihar had also promised goodies — one government job for every family — if they were voted into office. In this case, however, voters did not consider these to be credible commitments as government job promises appeared too good to be true.
It appears that, as in India, Pakistan’s political parties are fully aware of the transformative political power of cash transfers. This is the reason why, despite being allies at the federal level, Pakistan’s two main political parties were recently at loggerheads.
After the recent floods, the PPP had asked the PML-N’s government in Punjab to provide flood relief through the PPP’s signature Benazir Income Support Programme (BISP). Despite repeated requests, the PML-N resisted their federal ally’s demand with full force in the province, arguing that the amounts provided through the BISP were not enough to cover flood-related damage.
Meanwhile, BISP allocations have been rising steadily over the years. This year, the BISP allocation was increased by 20pc to Rs716 billion. The ability of cash transfers to tip the electoral scales in India, and Pakistani politicos’ cognisance of this phenomenon, does not bode well for Pakistan’s future fiscal management.
Where providing unconditional cash transfers to poor citizens is commendable, political competition may lead to exponential increases in BISP allocations in the future, especially as we get close to the next elections.
Back in India, there were multiple fatalities in a bomb blast near the Red Fort in Delhi the night before the second round of elections in Bihar. Though it is too early to trace a connection, this tragic incident may have also impacted electoral outcomes, especially in the aftermath of the Pakistan-India conflict earlier this year.
In a bid to highlight his strongman image, Modi repeatedly alluded to the Pakistan-India conflict on the campaign trail. Under fire from opposition leader Rahul Gandhi for “lacking courage”, the BJP even branded Gandhi the “poster boy of Pakistan”. Surprisingly, where the usually bellicose Indian media seems to have simmered down, Pakistan keeps living rent-free in the BJP’s imagination.
In all likelihood, Modi’s victory in Bihar and the BJP’s strong political momentum for the upcoming state elections are going to embolden foreign policy hawks in India. This is especially so since India was unable to achieve any of its military or political objectives in the recent conflict with Pakistan.
The BJP’s surprising performance underscores its strategy for cementing power in different Indian states: direct cash transfers and a potent anti-Pakistan narrative. As the party seeks to maintain this momentum for upcoming state elections, Pakistani policymakers should be wary of runaway social spending, which could ultimately encroach on vital defence resources.
The writer completed his doctorate in economics on a Fulbright scholarship.
X: @AqdasAfzal
Published in Dawn, November 22nd, 2025
