Expect our state's share in tax devolution to rise to 20%: UP finance minister

Uttar Pradesh has maintained a steady track record in managing its finances.

- 

Over the past eight years, the state has largely adhered to fiscal consolidation, despite having the country's largest population. In an interview with Virendra Singh Rawat and Sanjeeb Mukherjee in Lucknow, the state's Finance Minister Suresh Khanna outlined the measures taken to ensure a revenue surplus and control unnecessary expenditure. Edited excerpts:How have you kept the finances of such a large state under control?

· Uttar Pradesh has taken several steps to maintain fiscal discipline, including strict adherence to the Fiscal Responsibility and Budget Management (FRBM) Act and cutting unnecessary expenditures. We also ensure that operational expenses are met from revenue receipts, avoiding borrowings for day-to-day expenses. These measures have consistently resulted in a revenue surplus, except in the Covid-affected year of 2020-21. This surplus has helped us manage our fiscal deficit within the limits set by the FRBM Act.

GST collection for UP in the first half of FY26 had been lower than in the corresponding period of FY25. What explains this?

· GST collection depends on the consumption of goods and services. Sometimes consumption is higher than the tax collected. Also, when consumption is low, we receive less tax. This is temporary. The most important objective of tax policy is to raise revenue by minimising tax rates. Lower taxes stimulate demand, which strengthens the economic condition. While reduced GST rates may temporarily affect revenue, higher demand for goods and services should offset this in the long run.