Uttar Pradesh continues to cement its position as a key driver of India’s economic growth, with a recent report projecting the state to account for 16.3% of the country’s total capital expenditure in FY 2025–26—the highest among all states. This will mark the second consecutive year that Uttar Pradesh, under the leadership of Chief Minister Yogi Adityanath, remains at the top in terms of capital spending.
Capital expenditure refers to the amount spent by governments on the construction or acquisition of fixed assets such as roads and highways, schools, hospitals, etc. Simply put, it is expenditure made for future infrastructure and development.
According to a recent report by the Bank of Baroda, the combined capital expenditure of 26 Indian states is projected to reach Rs 10.2 lakh crore in FY 2025–26, up from Rs 8.7 lakh crore in the previous fiscal year. The report highlights that Uttar Pradesh (16.3%), Gujarat (9.4%), Maharashtra (8.3%), Madhya Pradesh (8.1%), and Karnataka (7.6%) will together account for more than 50% of the total capital spending.
UP’s top position in this list signals its rapid progress in infrastructure and industrial development. In FY 2024–25 as well, UP led with the highest capital expenditure share of 16.9%, followed by Maharashtra (10.9%), Gujarat (8.1%), Madhya Pradesh (7.5%), and Odisha (6.4%).
UP emerges as investors’ top destination
Strategic planning by the Yogi government in recent years—through investor summits, development of logistics hubs, and large-scale infrastructure projects such as expressways and airports—has made Uttar Pradesh the frontrunner in capital investment. Key examples include the UP Defence Industrial Corridor, International Film City, construction of medical colleges, and the Ganga Expressway. Due to significant improvements in ease of doing business and law and order, UP has become the first choice of both domestic and foreign investors.
The massive investment proposals received during the Global Investors Summit 2023 are now being implemented, resulting in increased capital expenditure and new employment opportunities for the youth. In addition, coordinated efforts by the central and state governments have led to enhanced budget allocation, project approvals, and financial assistance, which has further boosted capital expenditure in sectors like health, education, infrastructure, and urban development.
UP leads in revenue generation as well
The report also estimates that the combined revenue of 26 states will grow by 10.6% to Rs 69.4 lakh crore in FY 2025–26. Revenue receipts are expected to increase by 12.3%, and capital receipts by 6.6%. Uttar Pradesh will again lead with a 13.3% share in total revenue collection, followed by Maharashtra (11.3%), and Madhya Pradesh, Karnataka, and Rajasthan (5.9% each).
