Presented by Finance Minister Suresh Kumar Khanna, Uttar Pradesh Budget 2025–2026 reaffirmed the amount of ₹8,08,736 crores for infrastructure, welfare, and the economy, and keep in mind that the total is much higher than last year’s ₹6,52,648 crores. The government will likely release policies focusing on specific aspects of economic growth and job creation through digital transformation, building industries, rural development, etc. Even as budgetary allocations are targeted, including higher funding for essential industries like agriculture, healthcare, and education, it also highlights the necessity of maintaining fiscal restraint.
This budget is significant because Uttar Pradesh is emerging as a key driver of India’s economic growth. Explaining further, the chief minister said recent figures also indicated that Punjab was the top state in the country in terms of growth rate in 2023–2024, as per the Gross State Domestic Product (GSDP), with 11.6% growth compared to the country’s 6–7% average and 10% target for the upcoming year.
Economic Growth and Fiscal Health
Uttar Pradesh’s economy is expanding so rapidly that its estimated GSDP in 2024–2025 would be ₹27.51 lakh crore (27.51 trillion). The national and state-level parameters are subject to transient and cyclical trends in economic activity. In 2023–2024, the state’s GSDP continues to grow at excellent rates, at 11.6% and 9.6% of the national average.
The state has better positioned itself to meet its fiscal needs but still has an arduous debt load. The estimated burden on Uttar Pradesh is ₹8,46,095.83 crore as of March 31, 2025, and ₹9,03,924.54 crore as of March 31, 2026. The debt to gross state domestic product (GSDP) ratio is expected to increase from 28.1% in 2015–16 to 30.8% in March 2025.
Budgetary Allocations
For 2025-26, the budget provides allocations in various sectors as follows:
- Development Initiatives: 22% of the budget allocation is fixed for development initiatives related to the state to keep improving infrastructure and public sector services.
- Education: 13% for the modernisation of educational institutions and improving education.
- Agriculture and Allied Services: 11% is allocated for agriculture and allied services targets to boost the productivity of agriculture and related services to support farmers.
- Health: 6% of the budget is allocated to health to promote medical facilities and public health services.
- Social Security: 4% is reserved for social security interventions aimed at the welfare of underprivileged classes.
Key Initiatives
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Infrastructure Development
Infrastructure development gets the biggest bang with a capital expenditure allocation of 20.5% in the budget. Around ₹1,500 crore is allocated for key projects such as the Uttar Pradesh Defence Industrial Corridor (UPDIC) and new expressway development. Through these initiatives, connectivity is expected to improve, along with investment in the state and an increase in economic activity.
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Technological Advancements
Recognising technology’s role in the economy, the budget also announced the establishment of an Artificial Intelligence (AI) City in Lucknow with ₹ 5 cr in initial investment. A research park for cyber security has also been proposed to make Uttar Pradesh a centre for tech innovation and research.
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Education Reforms
The government intends to modernise the instructional framework by outfitting smart study halls and labs in schools and polytechnic organisations. The initiative aims to be enabled by a qualified educational workforce that meets students’ needs and the transformational nature of economic change.
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Urban Development
According to the budget, ₹145 crore has been provided for transforming 58 municipal bodies into model smart municipalities, with each body receiving ₹2.5 crore each as part of the same. This program supports improving urban infrastructure, service delivery, and sustainable urbanisation.
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Social Welfare Programs
That includes those who can be below the poverty line in 2023, which would consist of MPs from 2024, should they not lift their families out of poverty in this lifetime of work: ₹1,25,000 per year for every family in each Post Office and Gram Panchayat is what Zero Poverty Abhiyan (since October 2, 2024). This scheme is a testimony of the government’s resolve to eliminate poverty and ensure the holistic development of every person.
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Addressing Minority Welfare
The budget has allocated ₹1,998 crore for developing minority communities, including ₹365 crore for scholarships to minority students. Critics maintain that these provisions are insufficient to promote systemic changes like the renovation of madrasa education. They believe the budget lacks initiatives to practically address and improve the education and socio-economic conditions of an important section of the state’s population that falls within the Muslim community. The Muslim community is also known for its academic prowess but is still living in poverty.
Challenges and Future Outlook
The estimated fiscal deficit for FY 2025–2026 is ₹91,400 crore, or 2.97% of the GSDP, by the Fiscal Responsibility and Budget Management (FRBM) guidelines, which call for a deficit of no more than 3%.
The budget demonstrates Uttar Pradesh’s unwavering dedication to growth and development, but it remains difficult to address the state’s steadily rising debt levels and guarantee inclusive development. With a primary focus on infrastructure, education, and technological advancement, the state clearly envisions being an economic powerhouse, but balanced and equitable development will be the key to successful and sustainable growth.
Several challenges to economic development, even as the Uttar Pradesh government has charted out an ambitious economic roadmap, remain to be addressed:
- Debt Management: The increased debt must be prudently managed to ensure long-term economic stability.
- Inclusive Growth: If economic growth does not translate into inclusive growth for all sections of the society, including the minority communities.
- Execution of Infrastructure Projects: Infrastructure is expected to yield direct economic benefits to the economy; hence, the need for well-designed execution of infrastructure projects is almost equally important.
Conclusion
Overall, the Uttar Pradesh Budget 2025-26 reflects a deep cognisance of demographic and economic changes with prosperity in mind while not slumping the fiscal discipline. It shows the differences between governments eager to improve the economy holistically, which means investing funds in the real sectors of education, health care, and agriculture. These initiatives, coupled with projects like the Artificial Intelligence (AI) City, expressways and the Zero Poverty Abhiyan, all mark Uttar Pradesh’s ambition to become an economic powerhouse of India. However, the key to making the budget’s vision a reality will be how well these initiatives are carried out.
Even though the future appears bright, issues like growing debt and the requirement to represent all resource allocation must be considered. The viability of the budget will hinge on the government’s ability to fund its borrowing while maintaining growth-enhancing expenditures. However, if approved on time, the Uttar Pradesh Budget 2025–2026 can provide the state economy with much-needed better and more promising growth and establish a fund for the state’s economic growth.
