Lucknow: Uttar Pradesh is looking at the Union Budget 2026–27 as a key opportunity to secure enhanced financial support from the Centre ahead of the 2027 Assembly elections. The state government expects a larger share of central tax devolution and increased grants to strengthen infrastructure, agriculture, and industrial growth.
Pre-Budget Proposals Submitted to the Centre
During pre-budget consultations in New Delhi, State Finance Minister Suresh Khanna presented a detailed list of development proposals to Union Finance Minister Nirmala Sitharaman. Key proposals included:
- Rs 32,075 crore for metro rail expansion in Lucknow, Kanpur, Agra, and other growing cities
- Establishment of an AIIMS in western Uttar Pradesh to enhance healthcare access
- Setting up an IIT in Bundelkhand to improve technical education in underserved regions
Officials emphasized that these initiatives are vital to sustaining Uttar Pradesh’s growth momentum and improving public services in critical sectors.
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Anticipated Increase in Central Tax Devolution
Uttar Pradesh’s share in central taxes and duties is expected to see a significant rise. Estimates suggest that the state’s allocation may increase from Rs 2.55 lakh crore in 2025–26 to nearly Rs 2.80 lakh crore in 2026–27, continuing an upward trend observed in recent years. Between 2024 and 2025 alone, the state’s share grew by over Rs 36,000 crore, highlighting the increasing fiscal support flowing to India’s most populous state.
Growth in Centrally Sponsored Schemes
Financial assistance under centrally sponsored schemes (CSS) is also projected to increase. The total outlay for such programs could rise from Rs 96,000 crore to around Rs 1 lakh crore. These schemes, funded in a 60:40 or 90:10 ratio between the Centre and the state, cover sectors such as:
- Education
- Healthcare
- Rural development
- Infrastructure
Such schemes are critical for welfare delivery and development execution, especially in a state with Uttar Pradesh’s size and demographic diversity.
Additional Central Assistance and Interest-Free Loans
Uttar Pradesh had already received Rs 10,000 crore in the previous Union Budget under Finance Commission recommendations. For 2026–27, allocations under centrally implemented schemes are expected to rise from nearly Rs 13,000 crore to around Rs 15,000 crore.
Furthermore, the state could benefit from the Centre’s interest-free loan initiative aimed at boosting capital expenditure. After securing Rs 18,000 crore last year, the state may receive roughly Rs 20,000 crore, significantly strengthening infrastructure development across Uttar Pradesh.
Expected Impact on State Development
With increased central funding, Uttar Pradesh is poised to:
- Expand urban transport networks with metro and expressway projects
- Improve access to healthcare and education through new AIIMS and IIT campuses
- Accelerate industrial and agricultural growth
- Enhance public services and welfare programs across rural and urban areas
Officials say these developments will boost economic activity, create employment opportunities, and support broader growth plans, particularly in the lead-up to the 2027 Assembly elections.
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