More and more states are now turning to fiscal reforms as the only way out of the financial crisis they are facing. Uttar Pradesh is not far behind. Uttar Pradesh, the most populous state of India, with 16% of India's population offers the country the largest market. Uttar Pradesh is passing through fiscal crisis as there is a lack of financial prudence. The State has taken an initiative to implement some of the reforms in the coming years. The study focuses on the trends of the revenues, expenditures and fiscal indications of Uttar Pradesh during the period 1990-91 to 2008-09. The paper also studies the major fiscal reforms taken by Uttar Pradesh in recent years.

Fiscal position has a direct impact on the economic growth because plan financing depends on the financial resources which are at the disposal of government. There is a close relationship between the economic growth and fiscal growth of a region. Fiscal position of states are reflected in a series of annual budgets of the government through indicators like revenue trends, expenditure trends, interest liabilities and fiscal deficit.

Uttar Pradesh (UP), the most populous state of India, with 16% of India's population offers the country the largest market. Almost every sixth Indian lives in UP. It is endowed with natural wealth in abundance, mainly in the mountain ranges of the Himalayas in the North and Vindhyan ranges in the South. After the formation of the new state named as Uttaranchal on November 9, 2000, the land area of UP reduced to 240,928 sq. km. Lucknow—the capital of UP is situated in the central part of the state. At present, the State comprises 19 administrative divisions and 70 districts, which was further reduced but could not be made effective, as the issues became sub judice. Uttar Pradesh was in 13^th place among 15 states with Human Development Index value of 0.388, whereas the highest value was 0.638 in Kerala and all India value was 0.472.

India has experienced rapid economic growth over the past two decades, averaging about 5% per year. Sustaining and accelerating this progress, as per the country's development targets, requires an improvement in government effectiveness, not only at the Central but also at the state level, given the extensive responsibilities of India's state governments for infrastructure and human development. But fiscal deterioration, especially acute during the late 1990s, has weakened the development effectiveness of state governments in India by reducing productive spending and reducing its quality, especially in the poorer states. Structural infirmities in state finances were evident during the late 1990s as reflected in the persistent expansion of Revenue Deficit (RD) and Gross Fiscal Deficit (GFD), large accumulation of debt and growing debt service burden, rising share of committed but non-developmental expenditure, declining share of social sector expenditure, low and declining non-tax revenues and increasing contingent liabilities. "Failure to contain wasteful expenditure and reluctance to raise additional resources on the part of the states are the main problems afflicting most of the state finances" (Kurian, 1999a and 1999b).

A few of the Indian states, such as Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu have been more reform-oriented. But states like Haryana, Kerala, Orissa, Madhya Pradesh, Punjab, Rajasthan and West Bengal have lot to catch up with. Uttar Pradesh is even far more behind.

Public Finance, Uttar Pradesh, Financial Crisis, Fiscal Reforms, Information Technology, Financial Resources, Gross Fiscal Deficit, Human Resource Development, Resource Mobilization, Human Resources, Commercial Banks, Revenue Development, Infrastructure Development Fund, Economic Services, Gross State Domestic Product, GSDP, Power Development Fund.