Yogi Adityanath, Chief Minister of Uttar Pradesh, recently praised state’s economic strides at Industry Leaders Roadshow in Bengaluru. He pointed to a revenue surplus achieved over past six years. Uttar Pradesh is shaking off its old “BIMARU” label,once used for lagging northern regions. With a reported surplus of ₹59,327 crore for fiscal 2024-25, as noted by the Comptroller and Auditor General (CAG),it leads among 13 states with surpluses, making up nearly half of total ₹1.27 lakh crore surplus.
But dig deeper, and surplus doesn’t reflect true fiscal health. Raises questions about spending habits. CAG findings show many states,including Uttar Pradesh,aren’t hitting surpluses due to strong revenue or discipline. Instead,they're not using budgeted funds fully. Uttar Pradesh, India’s most populous state and third-largest economy, shows this with major underspending.
Borrowing should go to capital projects, not revenue expenses. Though Uttar Pradesh shows high surplus and manageable deficit, spending patterns reveal reliance on underspending. Past decade's data shows state has underspent by at least 15% since 2019-20. Raises budget efficiency concerns.
Compared to Maharashtra,with similar budgets,Uttar Pradesh’s financial management seems weaker. Despite a 16% revenue shortfall,Uttar Pradesh reported a surplus by cutting revenue expenditure 15.4%. Maharashtra stuck closer to budget, ending with small revenue deficit.
What if Uttar Pradesh spent as budgeted? If its spending matched Maharashtra or average state deviation,surplus would flip to deficit. Capital expenditure also shows issues,with a ₹41,800 crore shortfall in 2024-25,a 27% budget deviation. Suggests chronic underspending, not just revenue shortfall reaction.
Developmental spending in Uttar Pradesh is low, with per capita figures lagging other major economies. State’s fiscal picture is muddied by heavy central transfer reliance,over 50% of revenue—one of highest among major states. Despite substantial central funds, Uttar Pradesh struggles to use them effectively, with a 38.4% budget deviation for Centrally Sponsored Schemes .
While Uttar Pradesh’s surplus might suggest smart fiscal management,reality is more tangled. Underspending pattern signals troubling fiscal health where unspent funds dwarf deficit. Raises tough questions about financial governance effectiveness and true economic state…
