Uttar Pradesh govt's market borrowings may reach Rs 6.43 trn in FY26

The Uttar Pradesh government has estimated its market borrowings to reach ₹6.43 trillion in the upcoming financial year (FY26).

 

Although the market borrowings would rise by nearly ₹47,000 crore in absolute terms, it shows a declining trend when marked up to the state’s estimated gross state domestic product (GSDP) in the upcoming financial year (FY26).

 

The borrowings are likely to be 20.89 per cent of the projected ₹30.77 trillion GSDP in FY26, against ₹5.96 trillion per the revised budgetary estimates for FY25. The dip indicates a robust tax and non-tax revenue achieved by the Yogi Adityanath government.

 

The country’s federal policy think tank NITI Aayog has ranked UP among the front runners in the fiscal health index of states.

 

 

States routinely mop-up market funds to meet expenditure requirements by floating government securities (G-sec) and bonds.

 

The Reserve Bank of India (RBI) regulates market borrowings to facilitate fiscal prudence and ensure the funding comes at lower costs and minimum risk.

 

The G-sec and bonds are issued through a bidding process conducted by the RBI with primary participants comprising banks, dealers, and financial institutions.

 

Meanwhile, UP’s quantum of loans from financial institutions is also estimated to decline in percentage terms.

 

The state is estimated to raise financial institutions credit of ₹19,410 crore in FY26, which is 0.63 of the GSDP against the corresponding figure of ₹18,801 crore or 0.68 of the GSDP of ₹27.51 trillion in FY25.

 

“UP’s tax buoyancy in recent years is a testimony to the fiscal discipline path. It has given the much needed fiscal and financial headroom to the Yogi government," economist Prof A P Tiwari said. He noted that the growing tax kitty will catalyse the ambitious $ trillion economy target of the state.

 

Meanwhile, UP has estimated a rise of 16 per cent in 2025-26 tax revenue.

 

Against its own tax kitty and share in central taxes, which is nearly ₹4.75 trillion in FY25, the Yogi government has estimated the corresponding tax kitty to touch ₹5.50 trillion in FY26.

 

UP’s fiscal deficit is estimated at Rs 91,400 crore, which is 2.97 per cent of the year's estimated GSDP; thus taming it below the Fiscal Responsibility and Budget Management (FRBM) norm of under 3 percent.