New Delhi, Nov. 19 -- Welfare promises being made by political parties ahead of elections in recent years are beginning to reshape the fiscal landscape of Indian states. Political considerations are pushing spending up, even as revenue sources remain stressed and capital outlay meant to power long-term growth is uneven. Bihar's existing strain is unmissable, but the pressures are now visible across several states heading into or emerging from polls, pointing to a structural shift in how state finances can balance welfare and sustainability.

Bihar is a case in point. Populist welfare schemes announced during the recent poll campaign, including a Rs.10,000 grant to women, could cost the state over Rs.41,000 crore, Emkay Global estimates. T...