Amid reports that the Janata Dal (United) is on the verge of breaking its alliance with the Bharatiya Janata Party, the Centre on Thursday appeared to reach out to Bihar Chief Minister Nitish Kumar by approving a special package of Rs. 12,000 crore for his State for the remaining period of the 12th Five Year Plan.

The Cabinet Committee on Economic Affairs, which met here on Thursday, gave its approval to continue the special plan for Bihar in the remaining four years (2013-14 to 2016-17) of the Twelfth Five Year Plan with a total allocation of Rs. 12,000 crore for the entire Plan period.

The decision came at a time when JD (U), which is the senior partner in Bihar Government, has strained relations with BJP and has indicated that it will break ties if its NDA partner names Gujarat Chief Minister Narendra Modi as the Prime Ministerial candidate for next Lok Sabha polls.

The Congress is said to be watching the political developments closely and is reportedly eyeing JD (U) as a prospective ally.

Union Information and Broadcasting Minister Manish Tewari, however, denied there is anything political in the Cabinet decision.

“UPA has been running a government for the past nine years. It has been our endeavour not to mix politics and governance. But we live in a democratic country and everybody is free to draw his or her own conclusions,” Mr. Tewari told reporters when asked if the package has come in the wake of strained relations between JD (U) and BJP.

Bihar had demanded Rs. 20,000 crore from the Centre.

Deputy Chief Minister Sushil Kumar Modi expressed dismay at the package, alleging justice has not been done as this amount is too less and the State has not been given a special status as demanded.

“This is not a new package but a continuation of the package which was started by the Atal Bihari Vajpayee government.

We had demanded Rs. 20,000 crore but only Rs. 12,000 crore has been granted. We have doubts whether even this whole amount will be given. They have given us a lollipop and this is too little,” Mr. Modi, who hold the finance portfolio, told reporters here.

The Centre maintained though this is a continuation of the package, there has been a “substantive amount of enhancement”.

The CCEA did not approve any fund for West Bengal though there were reports that it was being considered. Mr. Tewari maintained a special plan for the State was announced in December 2011.

The CCEA cleared a package of Rs. 4,400 crore for Bundelkhand region of Uttar Pradesh which is facing drought.

While this allocation also allegedly had political overtones as the SP government, which is supporting UPA from outside and its support has become crucial after DMK pulled out its ministers, the government denied it.

A similar package had been approved last year but U.P. could use only 50 per cent of it and returned the rest.

Asked about the issue, Mr. Tewari said: “Whenever matters come up to CCEA, they go through a very robust and vigorous consultation process and if it involves the State Government they are also consulted. It comes up only after a very robust vetting process and obviously the concerned ministry would have taken cognisance of all this.”

The government also decided to continue the special plan for the KBK districts (Kalahandi-Bolangir-Koraput) of Odisha with an allocation of Rs. 250 crore per annum in the remaining four years (2013-14 to 2016-17) of the Twelfth Plan.