Context:
Uttar Pradesh has secured the top position in the country for the highest investment in development and infrastructure, according to a recent report submitted by the Bank of Baroda.
More On News:
- This was due to the fastest industrial development in the state during the past 8 years.
- Uttar Pradesh is projected to account for 16.3% of India’s total capital expenditure in the financial year 2025–26, the highest among all states.
- This marks the second consecutive year that the state will lead in capital spending.
- The capital expenditure means the amount that governments spend on the construction or acquisition of permanent assets such as roads and highways, schools, and hospitals, among other infrastructures
- As per a recent report by the Bank of Baroda:
- The combined capital expenditure of 26 Indian states is projected to rise to ₹10.2 lakh crore in FY 2025–26, up from ₹8.7 lakh crore in the previous financial year.
- Uttar Pradesh is expected to lead with a 16.3% share, followed by Gujarat (9.4%), Maharashtra (8.3%), Madhya Pradesh (8.1%), and Karnataka (7.6%).
- Together, these five states will account for over 50% of the total capital expenditure across the country.
- Uttar Pradesh’s prominent position reflects the state’s rapid pace of infrastructure and industrial development compared to other states.
- In the financial year 2024–25, UP led the nation in capital expenditure, accounting for 16.9% of the total followed by Maharashtra (10.9%), Gujarat (8.1%), Madhya Pradesh (7.5%), and Odisha (6.4%).
- UP’s Investment and Growth Surge in Report:
- Report indicate that large-scale initiatives undertaken by the Uttar Pradesh government in recent years such as strategic planning, investor summits, the development of logistics hubs, expressways, and airports have positioned the state as a national leader in capital investment.
- Major projects like the UP Defence Industrial Corridor, International Film City, new medical colleges, and the Ganga Expressway stand out as key examples driving this growth.
- UP has emerged as the preferred destination for domestic and foreign investors.
- UP has become the first choice for both domestic and foreign investors due to improvements in the ease of doing business and better law and order conditions.
- The combined efforts of the Central and State Governments have substantially increased budget allocations, project approvals, and financial support.
- According to the report, this has led to a significant rise in capital expenditure across key sectors such as health, education, infrastructure, and urban development.
- For the current financial year, the total receipts of 26 states are estimated at Rs 69.4 trillion, reflecting a 10.6 percent increase compared to the previous year.
- The bank projects a 12.3 percent growth in revenue receipts and a 6.6 percent rise in capital receipts.
Keyfacts of Report:
- Uttar Pradesh is projected to hold the largest share at 13.3 percent, followed by Maharashtra in second place with 11.3 percent.
- Madhya Pradesh, Karnataka, and Rajasthan each have a share of 5.9 percent. Notably, Tamil Nadu does not feature in the top five this time.
- All states will remain highly dependent on internal taxes, with GST constituting the largest portion of their own tax revenue.
- It is estimated that 89 percent of states’ revenues will come from various taxes, including GST, sales tax, excise duty, and stamp duty.
- GST accounts for the largest share at 44.2 percent.
- States with the highest dependence on GST include Nagaland (67.3 percent), Delhi (59.7 percent), and Bihar (57.1 percent),
- Madhya Pradesh (38.6 percent), Andhra Pradesh (37.4 percent), and Arunachal Pradesh (19.7 percent) have the lowest reliance on it.
- State excise duty on alcohol and tobacco contributes an estimated 13.9 percent to tax revenues. The top three states in this category are Sikkim (27.3 percent), Andhra Pradesh (24.9 percent), and Uttar Pradesh (21.4 percent).