UP’s Fiscal Discipline Shines Despite Low Per Capita Income, Says Finance Commission Chief

Unknown Apr 02, 2026 2 Views

Despite Uttar Pradesh ranking as the second-lowest in per capita income in India—just ahead of Bihar—the state has received praise for being one of the best in financial management, as noted by Arvind Panagariya, the Chairman of the 16th Finance Commission. While speaking in Lucknow, Panagariya pointed out UP’s impressive tax collection and wise fiscal management, which serve as a model for other states to follow.

Key Highlights

•⁠ ⁠UP’s tax collection relative to its Gross State Domestic Product (GSDP) is among the highest in the country, showcasing effective revenue generation and economic reforms.

•⁠ ⁠The state keeps its spending within budget and maintains its fiscal deficit and debt-to-GDP ratio well within acceptable limits, ensuring that interest payments don’t overshadow developmental investments.

•⁠ ⁠Thanks to horizontal devolution, UP receives a larger portion of central taxes due to its lower per capita income, which further bolsters its financial standing.

•⁠ ⁠The Finance Commission chief stressed that UP’s financial discipline and responsible spending are commendable, suggesting that other states could take a page from UP’s book when it comes to tax collection and budget management.

Outlook

With ongoing fiscal responsibility and strong revenue growth, Uttar Pradesh is in a great position to use its financial stability to drive development forward, all while striving to enhance per capita income and living standards for its large population.

Source: Times of India, Economic Times, Moneycontrol

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