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UPPCS Mains
2026 Edition
General Studies Paper VI · UP Special
Smart Notes

Economy of UP

English Medium
5
Chapters
15
Topics
45
Figures & Maps
14
Tables
What's Inside
  1. 01Overview of the UP Economy and the State Budget
  2. 02Public Finance, Tax Reforms and ODOP
  3. 03Investment and Public–Private Partnership
  4. 04Welfare Schemes, Human Resources and Skill Development
  5. 05Development Indices and Regional Disparities
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Economy of UP
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Economy of UP
UPPCS Mains · Smart Notes

Contents

Economy of UP · General Studies Paper VI · UP Special
  1. 01Overview of the UP Economy and the State Budget3 topics
    1. 1.1Main Features of the UP Economy: GSDP, Sectoral Structure and the One-Trillion-Dollar Goal
    2. 1.2UP State Budget: Priorities, Infrastructure and Welfare Provisions
    3. 1.3Infrastructure and Physical Resources: Economic Diversification and Regional Equity
  2. 02Public Finance, Tax Reforms and ODOP3 topics
    1. 2.1Public Finance and Fiscal Policy of UP: Revenue, Debt and Central Transfers
    2. 2.2Tax and Economic Reforms in UP
    3. 2.3One District One Product: Economic Scheme and Skill Component
  3. 03Investment and Public–Private Partnership3 topics
    1. 3.1Investment Climate of UP: Policies, Invest UP and Ease of Doing Business
    2. 3.2Global Investors Summits of UP: Achievements and Gaps
    3. 3.3Public–Private Partnership in UP: Evolution, Models and Employability
  4. 04Welfare Schemes, Human Resources and Skill Development4 topics
    1. 4.1Welfare Schemes of the UP Government: Overview and Role
    2. 4.2Women and Child Welfare and Rural Women's Empowerment in UP
    3. 4.3Welfare Schemes for Divyangjan in UP
    4. 4.4Skill Development and Educated Unemployment in UP
  5. 05Development Indices and Regional Disparities2 topics
    1. 5.1Development Indices of UP: SDG Index, MPI, HDI and Poverty
    2. 5.2Regional Disparities in UP: Bundelkhand, Purvanchal and Backward Regions
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Economy of UPChapter 01 · Topic 1
Chapter 01

Overview of the UP Economy and the State Budget

Economy of UP · 3 topics
Topic 1

Main Features of the UP Economy: GSDP, Sectoral Structure and the One-Trillion-Dollar Goal

Chapter Overview

Uttar Pradesh, India's most populous State (Census 2011), is a large economy with a low income per person: it produces 9.1% of India's output, yet its per capita income is 53.5% of the national average (UP Economic Survey 2025-26). The UP Budget 2026-27, presented in February 2026, is the State's largest at ₹9,12,696.35 crore, and UP's first Economic Survey was tabled the same month.

The chapter moves from the economy to the Budget and then to infrastructure. Topic 1 sets out the main features of the UP economy (GSDP, sectoral structure and the one-trillion-dollar goal); Topic 2 reads the State Budget for its priorities, infrastructure and welfare provisions; Topic 3 shows how infrastructure and physical resources diversify the economy and narrow regional gaps.

Topic Flow
  1. 1Main Features of the UP Economy: GSDP, Sectoral Structure and the One-Trillion-Dollar Goal
  2. financed and steered by
  3. 2UP State Budget: Priorities, Infrastructure and Welfare Provisions
  4. whose capital spending builds
  5. 3Infrastructure and Physical Resources: Economic Diversification and Regional Equity

Gross State Domestic Product (GSDP) is the value of all final goods and services produced within a State in a year; Uttar Pradesh, India's most populous State (Census 2011), has one of the largest State economies. Its GSDP reached ₹30.25 lakh crore in 2024-25, 9.1% of India's economy (UP Economic Survey 2025-26).

Size of the UP Economy against India

  1. GSDP at current prices: measured at current prices in the 2011-12 series, UP's GSDP fell in the COVID-19 year and then rose fast; e.g. ₹17,00,062 crore (2019-20), ₹16,40,097 crore (2020-21) and ₹25,47,861 crore (2023-24) (CAG, 2025).
  2. Share of India: UP produces close to a tenth of India's output but holds about a sixth of its people (Census 2011); e.g. 8.6% of India's economy in 2016-17 and 9.1% in 2024-25 (UP Economic Survey 2025-26).
  3. Per capita income: income per person (NSDP, that is GSDP minus depreciation, divided by population) stays about half of India's because a very large population shares the output; e.g. ₹1,09,844 in 2024-25; 50.2% (2014-15) to 53.5% (2024-25) of the national average (UP Economic Survey 2025-26).
  4. Growth rate: nominal growth includes the rise in prices, while real growth at constant 2011-12 prices shows the true rise in output; e.g. real growth 9% vs India 6.5% in 2024-25 (UP Budget 2026-27); nominal 11.55% vs India 9.60% in 2023-24 (CAG, 2025); growth and development: see GS-3 Indian Economy Ch 2, Topic 4.
UP's GSDP at current prices, 2019-20 to 2023-24 (CAG series)
Fig. 1.1 UP's GSDP at current prices, 2019-20 to 2023-24 (CAG series)

Sectoral Structure and How It Is Changing

  1. Agrarian base: agriculture and allied activities give about a quarter of gross state value added (GSVA) yet employ the largest share of workers; e.g. agriculture 25.72% of GSVA in 2023-24 (CAG, 2025); UP first in foodgrain, sugarcane, potato and milk (PIB, 2023); see GS-6 Agriculture Ch 1, Topic 1.
  2. Industry and MSMEs: manufacturing, construction and utilities form the secondary sector, led by MSME clusters such as Kanpur leather, Firozabad glass and Moradabad brass; e.g. industry grew 28.47% in 2021-22 after −1.22% in 2020-21, a base effect, that is a rebound from a low year (CAG, 2025); about 95 lakh MSMEs, the most in India (PIB, 2023).
  3. Services: trade, transport, IT, tourism, finance and public administration form the largest sector, with IT and electronics growing around Noida and Lucknow; e.g. services 49.33% (2019-20) and 46.46% (2023-24) of GSVA (CAG, 2025); pilgrim tourism at Ayodhya and Varanasi; structural change: see GS-3 Indian Economy Ch 1, Topic 1.
  4. Fall in poverty: growth has come with a large fall in multidimensional poverty (MPI), which counts deprivations in health, education and living standards; e.g. 5.94 crore people left multidimensional poverty, 2013-14 to 2022-23, the most of any State (NITI Aayog, 2024); see Ch 5, Topic 1.
Three sectors of the UP economy and their shares of GSVA, 2023-24
Fig. 1.2 Three sectors of the UP economy and their shares of GSVA, 2023-24

Key Findings of the UP Economic Survey 2025-26

UP became the first State to present its own Economic Survey (the "Economic Review" 2025-26), tabled in the Assembly in February 2026; its main findings are below.

Table 1.1 Source: UP Economic Survey 2025-26. Its GSDP series differs from the CAG and Budget series, so growth is not compared across them.
AreaFinding
Size of the economyGSDP ₹13.30 lakh crore (2016-17) to ₹30.25 lakh crore (2024-25); ₹36 lakh crore expected in 2025-26
Growthabout 10.8% a year on average, 2016-17 to 2024-25
Share of India8.6% (2016-17) to 9.1% (2024-25)
Per capita income₹54,564 (2016-17) to ₹1,09,844 (2024-25), about ₹1.20 lakh estimated for 2025-26; 53.5% of the national average
Sector shares, 2024-25primary 25.8%, secondary 27.2%, tertiary 47%
Investmentproposals above ₹50 lakh crore; MoUs of ₹2.94 lakh crore at the World Economic Forum 2026
Exports4th in the Export Preparedness Index 2024 and 1st among landlocked States
Jobs and skillsrural employment person-days up 85.41%, from 1,814.34 lakh (2017-18) to 3,363.97 lakh (2024-25), first in India; first in numerical skills (India Skill Report 2025)
Fiscal healthdebt at 28% of GSDP; own tax revenue up 2.5 times to ₹2.09 lakh crore
Inclusion10.22 crore Jan Dhan accounts, the most of any State; 5.46 crore Ayushman Bharat cards; 96.12% institutional deliveries (2024-25)

The One-Trillion-Dollar Goal and the State's Strategy

  1. Trillion-dollar goal: UP aims at a one-trillion-dollar economy, about a fifth of India's five-trillion-dollar goal, but no official target year has been fixed; e.g. goal cited at the Global Investors Summit 2023, Lucknow (PIB, 2023); the Survey says only "in the coming years" (UP Economic Survey 2025-26).
  2. Investment-led path: sector policies, single-window clearance and investor summits aim to raise private investment and build sector hubs beyond the NCR; e.g. Industrial Investment and Employment Promotion Policy 2022, Export Promotion Policy 2025–30, Data Centre Policy 2026 (Invest UP, 2026); hubs: Lucknow AI, Kanpur drones, Noida electronics (UP Economic Survey 2025-26); see Ch 3, Topic 1.

Concerns about the UP Economy

UP's economy has grown fast in size, but income per person, the quality of jobs and the spread of growth across regions remain weak, so the debate is over how inclusive the growth is.

  1. Per capita lag: the gap with India narrows slowly, because the population is large and much of the workforce stays in low-productivity farming; e.g. per capita GSDP ₹1,07,468 vs India ₹2,11,725 in 2023-24, about half (CAG, 2025).
  2. Jobs and informality: low headline unemployment hides underemployment, informal work and low female participation, a sign of low employment elasticity (jobless growth); e.g. youth unemployment 9.1% in UP vs 10.2% in India (PLFS 2023-24); 47.11 lakh families got work under VB-G RAM G Act, 2025 (MGNREGA) in 2025-26 (UP Budget 2026-27).
  3. Regional imbalance: growth concentrates in western UP and the NCR, while Bundelkhand and the eastern districts lag in income, industry and jobs; e.g. aspirational districts such as Shravasti, Bahraich, Chandauli and Sonbhadra (UP Budget 2026-27); see Ch 5, Topic 2.

Way Forward to a Larger and Fairer Economy

  1. Labour-intensive growth: favour MSMEs, food processing, ODOP crafts and tourism, which create many jobs per rupee invested, alongside large plants; e.g. MSME Promotion Policy 2022 (Invest UP, 2026); One District One Product (2018): see Ch 2, Topic 3.
  2. Skills and women's work: match training to industry demand and help women into paid work, so that more workers move out of low-productivity farming; e.g. 149 State ITIs upgraded with Tata Technologies; ₹1,000 crore for Kaushal Vikas Mission training (UP Budget 2026-27); see Ch 4, Topic 4.
  3. Plan for lagging areas: make the Economic Survey annual, plan with district income data and steer funds to the weakest districts on NITI Aayog's aspirational model; e.g. aspirational districts and blocks of UP: see Ch 5, Topic 2.

UP already has the size of a large economy; raising income per person through more jobs, better skills and faster growth in Bundelkhand and the east will decide whether the trillion-dollar goal brings broad prosperity.

Based on NCERT, Standard Books references, Keywords from Syllabus and Previous Year question Papers

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Economy of UPChapter 01 · Topic 2
Topic 2

UP State Budget: Priorities, Infrastructure and Welfare Provisions

After the size and structure of the State's economy (Topic 1), the State Budget is the Annual Financial Statement of estimated receipts and spending laid before the Legislature each year under Article 202 (Consolidated Fund of UP: see GS-5 Ch 11, Topic 2). The UP Budget 2026-27, presented in February 2026, is the State's largest at ₹9,12,696.35 crore, 12.9% above 2025-26 (UP Budget 2026-27).

Size and Structure of the UP Budget 2026-27

  1. Budget process: the Finance Department prepares the Budget, the Legislature votes demands for grants department by department, and an Appropriation Act authorises spending; e.g. education, sports, arts and culture get ₹1,08,154 crore, 28% more than in 2025-26 (UP Budget 2026-27); police provisions: see GS-5 Ch 14.
  2. Revenue and capital receipts: revenue receipts (taxes, central transfers, grants) create no liability, while capital receipts are mainly borrowings and loan recoveries; e.g. ₹7,28,928.12 crore revenue and ₹1,19,305.06 crore capital receipts (UP Budget 2026-27).
  3. Revenue spending and capital outlay: revenue expenditure (salaries, pensions, interest, subsidies) builds no assets; capital outlay builds roads, canals and buildings and is about one-fifth of the Budget; e.g. ₹6,64,470.55 crore revenue expenditure; ₹1,77,744.12 crore capital outlay, 19.5% of the Budget (UP Budget 2026-27).
  4. Fiscal deficit: the 2026-27 deficit, the State's net borrowing for the year, stays just below the 3% of GSDP limit for States; e.g. ₹1,18,480.59 crore, 2.98% of GSDP (UP Budget 2026-27); meaning, trend and FRBM rules: see Ch 2, Topic 1.
Table 1.2 Budget estimates of each year. Sources: UP Budget 2021-22, 2023-24, 2025-26 and 2026-27.
BudgetSize (₹ crore)Fiscal deficit (% of GSDP)Infrastructure itemsWelfare and new items
2021-225,50,2714.17Ganga Expressway land ₹7,200 crore; Bundelkhand Expressway ₹1,492 croreJal Jeevan Mission (Rural) ₹15,000 crore; new: Saksham Suposhan, Pravasi Shramik Udyamita Vikas, Atmanirbhar Krishak Samanvit Vikas (₹100 crore)
2023-246,90,2423.48energy ₹43,330 crore; roads and bridges ₹38,338 crore; urban development ₹28,465 croretube-well power subsidy 100% (₹1,500 crore); PMAY-Gramin ₹3,005 crore for about 12.4 lakh houses
2025-268,08,736.063.0infrastructure 22% of the Budgeteducation 13%, health 6%, social security 4%
2026-279,12,696.352.98energy ₹65,926 crore; roads and bridges ₹34,468 crore; Jewar airport ₹750 croreold-age and farmer pension ₹8,950 crore; Samuhik Vivah ₹750 crore

Infrastructure and Farm Provisions

  1. Energy: a top provision funds generation, transmission and supply of power, with rural areas now getting about 19 hours a day; e.g. ₹65,926 crore, 8% above 2025-26 (UP Budget 2026-27).
  2. Transport links: roads, bridges, expressways and airports cut travel time; UPEIDA builds the Ganga (Meerut–Prayagraj) and Bundelkhand expressways; e.g. ₹34,468 crore for roads and bridges and ₹750 crore for Noida International Airport, Jewar, in Paschimanchal (UP Budget 2026-27).
  3. Urban and water: urban development and Jal Jeevan Mission (2019) fund city services, housing and piped water to rural homes, cutting water-borne disease and women's time fetching water; e.g. urban development ₹26,514 crore and Jal Jeevan Mission ₹22,452 crore (UP Budget 2026-27); water supply and sanitation ₹24,504 crore, including Swachh Bharat Mission 2.0 ₹1,632 crore, in 2023-24.
  4. Irrigation: irrigation and flood control works extend canal irrigation, ease the strain on groundwater and protect crops in the flood-prone east and drought-prone Bundelkhand; e.g. ₹18,290 crore (UP Budget 2026-27); ₹10,952 crore for irrigation projects, including ₹3,400 crore minor irrigation, in 2023-24; groundwater extraction 70.0% in UP vs 60.6% in India (CGWB, 2025).
  5. Agriculture: farm provisions fund free power for private tube wells (since 2023), natural farming and food processing in India's leading sugarcane State; e.g. ₹10,888 crore for agriculture, 20% above 2025-26; ₹2,400 crore for tube-well power; ₹300 crore for the food processing policy (UP Budget 2026-27); UP grew 48.6% of India's sugarcane in 2024-25 (MoA&FW, 2025).
Major allocations in the UP Budget 2026-27
Fig. 1.3 Major allocations in the UP Budget 2026-27
Expressways and the airport funded in recent UP Budgets
Fig. 1.4 Expressways and the airport funded in recent UP Budgets

Welfare Provisions for the Poor, Women and Youth

The Budget funds welfare through pensions, schemes for girls, scholarships, housing and fuel (scheme design and delivery: see Ch 4, Topic 1).

  1. Pensions by DBT: old-age and farmer, destitute women (widow) and divyang pensions pay a monthly sum by Direct Benefit Transfer straight into bank accounts; e.g. ₹8,950 crore for 67.50 lakh old-age and farmer pensioners at ₹1,000 a month; ₹3,500 crore destitute women; ₹1,470 crore divyang (UP Budget 2026-27).
  2. Girls and marriage: Mukhyamantri Kanya Sumangala Yojana backs girls' health and education with staged cash support, and Mukhyamantri Samuhik Vivah Yojana funds mass weddings for poor families; e.g. six stages, from birth and full immunisation through Classes 1, 6 and 9 to a degree course (Kanya Sumangala portal, 2026); ₹400 crore for Kanya Sumangala; ₹750 crore for Samuhik Vivah, whose grant rises from ₹51,000 to ₹1.01 lakh (UP Budget 2026-27).
  3. Students and youth: scholarships, the Rani Lakshmi Bai Scooty Yojana for meritorious girl students and free Abhyudaya coaching for competitive exams help poor students continue their studies; e.g. ₹3,060.50 crore OBC and ₹977 crore SC scholarships; ₹400 crore for scooties; ₹1,000 crore for CM-YUVA's guarantee-free, interest-free loans for young entrepreneurs' micro-units; 23,000+ youth at 163 Abhyudaya centres (UP Budget 2026-27), coached for Civil Services, JEE, NEET and NDA.
  4. Housing and fuel: rural housing and free LPG refills for Ujjwala (2016) families cut the living costs of poor households, especially women; e.g. ₹6,102 crore for PMAY-Gramin and ₹1,500 crore for free LPG refills (UP Budget 2026-27); two free refills a year (UP Budget 2025-26).
  5. Welfare share: social sectors take a large slice of each Budget, showing a tilt towards human development alongside capital spending; e.g. education 13%, health 6% and social security 4% of the Budget (UP Budget 2025-26); 5.46 crore Ayushman Bharat cards for cashless hospital treatment (UP Economic Survey 2025-26); Atal Residential Schools for construction workers' children.

Impact on the UP Economy

  1. Multiplier effect: capital outlay builds assets that raise output and draw private investment, so a rupee spent adds more than a rupee to GSDP; e.g. capital outlay up 17% to ₹1,47,492 crore (UP Budget 2023-24); role of infrastructure: see Topic 3.
  2. Lower farm costs: free tube-well power and irrigation spending cut farm costs and protect crops in drought-prone Bundelkhand and the flood-prone east; e.g. tube-well power subsidy raised from 50% to 100% with ₹1,500 crore (UP Budget 2023-24); Atmanirbhar Krishak Samanvit Vikas Yojana, ₹100 crore for integrated farm-sector development to raise farm incomes (UP Budget 2021-22).
  3. Human capital: new schemes of 2021-22 targeted child nutrition and self-employment for workers who returned during COVID-19, building health and incomes; e.g. Mukhyamantri Saksham Suposhan Yojana for children under five and anaemic girls aged 11–14, and Mukhyamantri Pravasi Shramik Udyamita Vikas Yojana for returned migrants (UP Budget 2021-22); 39.7% of UP children under five stunted (NFHS-5): see Ch 4, Topic 2.

Concerns in the UP Budget

Budgets keep growing, but much of the money is already committed and part of it is borrowed, so the debate is over how much real room the State has.

  1. Committed expenditure: salaries, pensions and interest pre-empt most revenue receipts and squeeze money for new schemes and assets; e.g. 57% of revenue receipts in 2023-24 (UP Budget 2023-24) and 61% in 2021-22 (UP Budget 2021-22).
  2. Outstanding liabilities: debt built up over past Budgets makes interest a large fixed cost that limits money for new schemes; e.g. 32.1% of GSDP and interest of ₹50,256 crore budgeted for 2023-24 (UP Budget 2023-24); debt trend: see Ch 2, Topic 1.
  3. Central transfers: Union tax shares and scheme grants fund a large part of each Budget, so their size and timing limit the State's choices; e.g. 51% of revenue receipts in the COVID-19 year (UP Budget 2021-22); transfers in detail: see Ch 2, Topic 1.
  4. Implementation gaps: land acquisition, contractor delays and weak monitoring mean that allocations do not always become finished assets on time; e.g. Mukhyamantri Awas Yojana (Gramin): 3.67 lakh houses completed against a target of 4.61 lakh, 2018-19 to 2025-26 (UP Budget 2026-27); targeting errors that leave out eligible families: see Ch 4, Topic 1.

Way Forward for the UP Budget

  1. Deficit discipline: borrow only for capital outlay and hold each Budget's deficit near the 2026-27 level, so that interest does not crowd out welfare; e.g. deficit down from 4.17% (UP Budget 2021-22) to 2.98% of GSDP (UP Budget 2026-27); UP FRBM Act and 16th Finance Commission limit: see Ch 2, Topic 1.
  2. Own revenue: widen the own tax base through GST compliance, stamp duty and excise, and recover user charges, to cut dependence on transfers; e.g. UP tax reforms: see Ch 2, Topic 2; GST: see GS-3 Indian Economy Ch 4, Topic 2.
  3. Outcome focus: tie allocations to outcomes with DBT, geo-tagging and third-party checks, finish ongoing projects before starting new ones and fund their maintenance; e.g. new schemes of ₹43,565.33 crore and ₹2,000 crore for the Atal Infrastructure Mission (UP Budget 2026-27).
Six priorities that recur in recent UP Budgets
Fig. 1.5 Six priorities that recur in recent UP Budgets

With capital outlay near one-fifth of the Budget and the deficit under 3% of GSDP, UP's next step is to raise its own revenue and track outcomes, so that bigger Budgets become lasting assets and better lives.

Based on NCERT, Standard Books references, Keywords from Syllabus and Previous Year question Papers

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