Uttar Pradesh's 2026-27 Budget: A Strategic Blueprint for Growth
As Finance Minister Suresh Khanna prepares to present the Uttar Pradesh government's 2026-27 budget on Wednesday, all eyes are on Lucknow. This budget marks a significant milestone—it will be Khanna's seventh consecutive budget presentation and the Yogi Adityanath government's tenth straight fiscal plan. More importantly, it is anticipated to be the final budget before the crucial 2027 assembly elections, scheduled for February-March next year, adding political weight to its economic implications.
Budget Size and Economic Context
The budget outlay for the upcoming fiscal year is projected to see an approximate 10% increase from the current year, potentially reaching the landmark figure of Rs 9 lakh crore. This represents a substantial growth from the current fiscal's outlay of approximately Rs 8.33 lakh crore. It is noteworthy that the initial budget for 2025-26, tabled last year, was set at Rs 8.08 lakh crore but was later augmented with a supplementary budget.
Experts predict that, mirroring last year's approach, the Finance Minister will table a revenue surplus budget. The previous budget recorded a revenue surplus of around Rs 60,000 crore, demonstrating the state's improving fiscal health. Uttar Pradesh's economic trajectory appears promising, with the state steadily progressing toward becoming a 1-trillion-dollar economy. The current Gross State Domestic Product (GSDP) stands at an impressive Rs 30.8 lakh crore, and estimates suggest it could surpass Rs 36 lakh crore by the end of 2026-27.
Key Focus Areas and Sectoral Allocations
The budget is expected to maintain a strong emphasis on core development sectors, with infrastructure, education, and agriculture taking center stage once again. Last year's allocations saw 22% dedicated to infrastructure, 13% to education, and 11% to agriculture. This year, the government's push in these areas is set to continue, supported by several planned development projects, including new expressways that aim to enhance connectivity and boost economic activity across the state.
In a strategic shift, the 2026-27 budget will also place significant focus on women and youth empowerment. This aligns with broader social and economic goals, aiming to foster inclusive growth. Additionally, the budget is anticipated to introduce a couple of new schemes designed to address specific needs and opportunities within these demographic groups.
Employment and Skill Development Initiatives
A major highlight of the upcoming budget is its expected focus on job creation and employment opportunities. However, sources within the finance department indicate a pragmatic approach. Recognizing the government's limited capacity to generate large-scale employment directly, the emphasis will likely shift toward skill development. By enhancing the skill sets of the workforce, the aim is to empower individuals to pursue entrepreneurial ventures or secure better employment in existing sectors.
Consequently, the budget is projected to allocate resources toward skill development programs and the Micro, Small, and Medium Enterprises (MSME) sector. Strengthening MSMEs is seen as a vital strategy for fostering economic resilience and creating sustainable job opportunities at the grassroots level.
Fiscal Challenges and Concerns
Despite the optimistic outlook, the Finance Minister faces notable challenges. One significant concern stems from the GST liberalization implemented during Diwali last year, which reduced tax rates on most items from the 28% slab. While beneficial for consumers, this move is expected to result in a short-term loss to the state exchequer, posing a fiscal challenge that the government must navigate carefully.
Another pressing issue is the pending central share dues. The state government is particularly concerned about the non-payment of dues related to the "piped water to all household" initiative under the Namami Gange project. Sources reveal that Uttar Pradesh is awaiting payments totaling Rs 33,000 crore under this project, which could impact budget planning and implementation timelines.
Conclusion: A Budget with Broad Implications
The Uttar Pradesh budget for 2026-27 is poised to be a comprehensive document that balances developmental aspirations with fiscal prudence. By focusing on infrastructure, education, agriculture, women, youth, and skill development, it aims to lay a robust foundation for the state's economic future. However, addressing the challenges of GST revenue loss and pending central dues will be crucial for its successful execution. As the last budget before the 2027 elections, its outcomes will likely resonate deeply in the political and economic landscape of Uttar Pradesh.
