Arunachal Pradesh State Budget 2026-27 Analysis

Key Highlights

• Total expenditure (excluding debt repayment) for 2026-27 is budgeted at Rs 35,295 crore, an 8% decline from the 2025-26 revised estimate of Rs 38,489 crore — one of the few nominal budget contractions among Indian states this year.
• The gross budget size of Rs 36,607 crore is 8.1% below the 2025-26 budget of Rs 39,842 crore, a reduction the state government attributes to a lower devolution share under the 16th Finance Commission.
• Share in central taxes falls 16% to Rs 20,665 crore in 2026-27 as the 16th Finance Commission cut Arunachal Pradesh's share of the divisible pool from 1.76% to 1.35% for 2026-31.
• Fiscal deficit is targeted at Rs 4,551 crore, or 11.0% of GSDP on PRS's methodology that counts central capex loans as borrowing; the state's own budget documents, which exclude those loans, show a deficit of just Rs 701 crore (1.7% of GSDP).
• The state expects a revenue surplus of Rs 3,672 crore (8.9% of GSDP) in 2026-27, down 47% from the Rs 6,991 crore surplus in the 2025-26 revised estimates.
• Committed expenditure jumps to Rs 18,486 crore — 60% of revenue receipts — with salaries alone at Rs 14,254 crore (up 22% year-on-year); in 2024-25 committed items consumed only 34% of revenue receipts.
• Capital outlay is cut 27% to Rs 8,231 crore from Rs 11,352 crore in the 2025-26 revised estimates, with transport capital spending down Rs 4,229 crore and education capital down Rs 1,392 crore.
• Arunachal Pradesh has budgeted Rs 3,850 crore in 50-year interest-free central capex loans for 2026-27 — an extraordinary 9.3% of GSDP — which sit outside the state's borrowing ceiling.
• Own tax revenue rises 12% to Rs 3,634 crore (8.8% of GSDP), led by State GST of Rs 2,461 crore, which contributes 68% of own tax collections.
• Education gets Rs 3,295 crore (9.3% of sectoral spending against a 14.5% all-state average), including Rs 500 crore for Mission Shikshit Arunachal 2029.
• Rural roads receive a dedicated Rs 500 crore under the Chief Minister's State Rural Roads Development Programme for roads not covered by PMGSY, alongside Rs 300 crore of capital outlay for minor irrigation.
• Outstanding liabilities are projected at 35.1% of GSDP excluding central capex loans — and 70.3% including them — up from 26.6% (excluding) in 2023-24.
• Nominal GSDP for 2026-27 is projected at Rs 41,341 crore, essentially flat (+0.1%) after the state revised its 2025-26 GSDP estimate down 14% from Rs 47,823 crore to Rs 41,314 crore.