The BJP has won power in West Bengal for the first time, marking a significant political shift in eastern India, while in Tamil Nadu, the newly formed TVK has emerged as the single-largest party. Campaign promises by both parties include large-scale welfare outlays, with estimated incremental costs of Rs 72,600 crore in West Bengal and Rs 87,900 crore in Tamil Nadu, according to Emkay Research.

In West Bengal, the BJP pledged monthly cash transfers of Rs 3,000 to eligible women and unemployed youth, while TVK in Tamil Nadu promised Rs 2,500 per month to women under 60, six free LPG cylinders annually, and Rs 15,000 per year in farm investment support. These commitments amount to 3.4% and 2.2% of each state's GSDP, respectively.

Post-election fiscal deficits have historically risen, data from 11 states show: the average deficit increased from 2.5% of GSDP in pre-election years to 3.4% in post-election years, with nine of the 11 states recording higher deficits. Both West Bengal and Tamil Nadu have exceeded 3% fiscal deficit in each of the past six years.

The 16th Finance Commission has recommended that state fiscal deficits remain capped at 3% of GSDP for 2026–31, citing risks to financial stability. It emphasized strict enforcement under Article 293(3) of the Constitution to control state debt levels.

The implementation of new welfare schemes is expected to strain state finances in the near term, potentially limiting funds for capital expenditure and infrastructure development. Both state governments are expected to present their first budgets later this year, outlining fiscal management plans.