NEW DELHI (Reuters) - Two key allies of Indian Prime Minister Narendra Modi have asked for about $6 billion in funds for their home states, pressuring the federal government to raise spending when it presents its budget later this month, according to a document reviewed by Reuters and a source familiar with the matter.
Modi's Bharatiya Janata Party (BJP) is having to rely on two regional parties - Andhra Pradesh's Telugu Desam Party and Bihar's Janata Dal (United) - to run the government, after it failed to win a majority on its own in the recently concluded national elections.
These two states are now demanding 480 billion rupees ($5.75 billion) in additional funds for the financial year ending March 2025, according to the document - which listed demands from one of the state governments - and the source.
In addition, both states have asked the federal government to nearly double unconditional long-term loans offered by the government to all states for infrastructure spending to 1 trillion rupees ($11.98 billion), according to the document and the source.
The Indian government has set aside 1.3 trillion rupees in loans to states in its interim budget in February, of which more than half is conditional on the implementation of certain economic reforms.
The states also want more headroom to borrow funds from the market, a limit set by the federal government, according to the document and the source.
India's federal finance ministry did not immediately respond to a Reuters request for comment.
In the interim budget presented in February, the government has targeted a fiscal deficit of 5.1% of GDP. The final budget is due to be presented before the end of this month.
Beyond the immediate funding demand, Bihar is seeking funds for nine new airports, two power projects, two river water programmes and setting up seven medical colleges, according to the document.
The period over which funds for these projects are being sought has not been specified.
The southern state of Andhra Pradesh has sought funds for developing its capital city and a key irrigation project, the source said.
($1 = 83.4760 Indian rupees)
(Additional reporting by Nikunj Ohri; Editing by Anil D'Silva)
By Sarita Chaganti Singh and Nikunj Ohri
