Uttar Pradesh eyes stronger central support in Union Budget 2026–27 ahead of assembly elections

Uttar Pradesh is looking at the Union Budget 2026–27 as a major opportunity to secure stronger financial backing from the Centre, especially as the 2027 Assembly elections approach.

The state government expects a larger share of central tax devolution, along with increased grants to strengthen infrastructure, agriculture, and industrial growth. Officials in the state finance department believe the upcoming budget could deliver a meaningful increase in overall central transfers, including higher allocations under centrally sponsored schemes and additional benefits linked to the Finance Commission recommendations.

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During recent pre-budget consultations in New Delhi, State Finance Minister Suresh Khanna presented a detailed list of development proposals to Union Finance Minister Nirmala Sitharaman to accelerate Uttar Pradesh’s growth momentum. A prominent demand included Rs 32,075 crore to expand metro rail projects in Lucknow, Kanpur, and Agra, as well as metro systems in other growing cities.

The state also sought approval for an AIIMS in western Uttar Pradesh and an IIT in the Bundelkhand region—initiatives considered vital for improving access to advanced healthcare and quality technical education in regions requiring stronger institutional presence.

According to sources familiar with the discussions, Uttar Pradesh’s share in central taxes and duties may witness a notable jump in the next financial year. The state’s allocation is projected to increase from around Rs 2.55 lakh crore in 2025–26 to nearly Rs 2.80 lakh crore in 2026–27. This would extend the upward trend observed in recent years. Between 2024 and 2025 alone, the state recorded an increase exceeding Rs 36,000 crore in its share of central taxes, underlining the expanding scale of fiscal support flowing to the country’s most populous state.

Financial assistance under centrally-sponsored schemes is also expected to grow. The total outlay for such schemes in Uttar Pradesh could rise from nearly Rs 96,000 crore to about Rs 1 lakh crore. These programmes, generally funded in a 60:40, and in some cases 90:10 ratio between the Centre and the states, cover critical sectors such as education, healthcare, rural development, and infrastructure. For a state of Uttar Pradesh’s size and demographic diversity, these schemes remain central to welfare delivery and development execution.

Uttar Pradesh had already received Rs 10,000 crore in the previous Union Budget following Finance Commission recommendations. Allocations under schemes fully financed and implemented by the Centre are also expected to increase, potentially moving from nearly Rs 13,000 crore to around Rs 15,000 crore in 2026–27. In addition, the state may benefit further from the Centre’s interest-free loan initiative aimed at boosting capital expenditure. After securing Rs 18,000 crore under this scheme last year, Uttar Pradesh could see the figure climb to roughly Rs 20,000 crore, providing a significant push to infrastructure development across the state.

Taken together, the anticipated enhancement in central funding could reinforce Uttar Pradesh’s development agenda. Expanded urban transport networks, new premier health and education institutions, and greater capital investment are likely to accelerate economic activity, improve public services, and support the state’s broader growth plans in the lead-up to the Assembly elections.