Will UP’s Road To $1 Trillion Economy Become CM Adityanath’s Claim To Political Glory?

Will UP’s Road To $1-Trillion Economy Become CM Adityanath’s Claim To Political Glory?

A few years ago, the national government under Prime Minister Narendra Modi declared its goal of growing India’s economy to $5 trillion by 2024–2025. The $5 trillion goal can still be reached by 2026–2027, according to chief economic adviser V Anantha Nageswaran, despite Covid-19, the economic fallout from the Russia–Ukraine war, and other reasons that are slowing down the $5 trillion train.

The most populous state in India, which has set a goal of becoming a $1 trillion economy by 2027—one-fifth of what the nation is aiming for in the same year—reflects the same level of confidence.

The BJP government in Uttar Pradesh, led by Chief Minister Yogi Adityanath, is trying to make the state, which presently contributes 8% to the national GDP, the second-largest economy in India with an emphasis on infrastructure, that goal in mind.

The government of Uttar Pradesh has agreed to a Memorandum of Understanding (MoU) with Deloitte India, selecting the company as its consultant to lead the state’s aim to create a $1 trillion economy. Deloitte India has been tasked with creating an action plan following extensive research across sectors. Two committees—one led by the state’s chief secretary and the other by a group of ministers—would study the proposal.

CM Adityanath had stated upon the signing of the MoU, “Now is the moment of Uttar Pradesh and taking full advantage of its potential, the state would become the most important base for multidimensional growth of the country.”

Before and after the CM and his party won a convincing majority and returned to power for the second time in 2022, a number of pledges were made. Nearly if the state has managed to regulate its notorious law and order situation in the past, it is still one of the three poorest in the nation, with a per capita income that is not even half that of the average in India.

The path to $1 trillion in Uttar Pradesh would also map CM Adityanath’s political future by serving as a model for how the CM, who is frequently viewed as controversial, successfully turned around the fortunes of one of the BIMARU states.

Game of Numbers

The Uttar Pradesh government claimed that the state has grown to be India’s second-largest economy prior to the assembly elections. Later, as data from the Reserve Bank of India (RBI) revealed that its claim was false, it had to retract it.

After Maharashtra and Tamil Nadu, Uttar Pradesh currently has the third-largest economy, according to figures from the National Statistical Office and the Reserve Bank of India.

In comparison to Tamil Nadu’s GSDP of Rs 17.97 lakh crore and leader Maharashtra’s GSDP of Rs 28.18 lakh crore for 2019–20, the state’s GSDP was Rs 16.87 lakh crore (at current prices). The GSDP for 2019–20 was estimated by Uttar Pradesh to be Rs 16.89 lakh crore at the beginning.

The initial projection of Uttar Pradesh’s GSDP for 2020–2021 was Rs 17.91 lakh crore; this figure was later changed to Rs 19.40 lakh crore. The GSDP for 2021–2022 was estimated by the state government‘s Directorate of Economics and Statistics to be at Rs 19.10 lakh crore.

Its nominal GSDP is projected to reach Rs 20.48 lakh crore in 2022–23. In order to meet the 2027 goal, the state must increase its GSDP to around Rs 79 lakh crore (almost $1 trillion at the present exchange rate) in the following five years.

Uttar Pradesh is one of the three poorest states in India, according to the Niti Aayog’s Multidimensional Poverty Index (MPI) baseline assessment based on the National Family Health Survey-4 (2015–16).

The multidimensional poverty rate of Uttar Pradesh is 37.79%, which places it just behind Jharkhand (42.16) and Bihar (51.91 per cent).

Uttar Pradesh’s per capita income in 2019–20, at Rs 41,023, was less than half of the national average of Rs 86,659. The state ranks 32 out of 36 states and Union Territories at 2011–12 prices. However, according to data from the Centre for Monitoring Indian Economy, the state’s unemployment rate decreased from 4.4 to 2.9% in March to 2.9 per cent in April 2022.

Building A Massive Infrastructure Project

The ability of Uttar Pradesh’s development plan to encourage infrastructure development and attract investors will determine its success. The state government plans to attract investments totalling Rs 10 lakh crore over the next two years in order to get ready for a global investors’ summit that will take place in January 2023.

In addition to building an international airport, the chief minister of Ayodhya has convened talks to investigate the feasibility of utilizing hydrogen fuel cell technology for power generation and the construction of the Ayodhya Dam.

Adityanath has also established lofty goals for the public works department, which has been given the job of building 16,500 km of roads, 200 railway overbridges, 1,000 mini-bridges, and 300 bridges over the course of the next five years.

“Our state boasts more expressways and national highways than any other state in the nation…Prior to Adityanath taking office in 2017, there were just three airports; currently, we are developing 17.

At Jewar, the biggest airport in Asia is also under construction and will be finished on schedule. Almost every location now has flights from Uttar Pradesh, according to an interview with Brajesh Pathak, the state’s deputy chief minister, with Outlook Business.

According to N.R. Bhanumurthy, vice-chancellor of the Dr B.R. Ambedkar School of Economics University in Bengaluru, there appears to be a change in how Uttar Pradesh is currently functioning in comparison to a number of other states.

Leading industrialist Gautam Adani pledged an investment of Rs 70,000 crore at the third Uttar Pradesh Investors Summit, which was held in June of this year. The Adani Group also plans to invest Rs 24,000 crore in road and transportation infrastructure and Rs 35,000 crore in multi-modal logistics and the defence industry. In Kanpur, it is also working to construct the biggest ammunition complex in South Asia.

Mukesh Ambani of Reliance Industries pledged to invest Rs 10,000 crore in the state through Reliance Jio over three years during the summit’s 2018 iteration. Jio has already committed Rs 20,000 crore to the state’s 4G communications project.

The Tata Group revealed last year that it would give the Indian Air Force 56 C-295 combat planes in collaboration with Airbus. According to reports, Uttar Pradesh would be the most likely location for the Tata and Airbus manufacturing facility.

“The state seems to be receiving significant investments. The infrastructure of the highways has clearly improved. The state is building a number of motorways and airports. All of these are assisting them in developing a marginally better brand than how the state was previously viewed, claims Bhanumurthy.

He claims that as growth might result in better living conditions and increased opportunities for advancement, it is considered to improve other social variables. According to him, investments increase employment in the areas where they are made, and everything taken together gives people a better quality of life.

Bhanumurthy continues, “As far as the social sector is concerned, they may take longer to show improvement. Things like education, health metrics, and poverty won’t alter quickly.

Easing Business Woes To Attract Investment

The majority of private sector investment in India is still focused in states like Gujarat, Tamil Nadu, and Maharashtra, among others, even if a number of projects have been launched in Uttar Pradesh.

According to a CARE Rating assessment, Tamil Nadu attracted the most investment among Indian states in the first half of FY21. In Tamil Nadu, almost 16% of the total investments were made. In May 2020, in the midst of the pandemic, the Uttar Pradesh government suspended the majority of its labour rules for three years in an effort to entice investors and make conducting business easier.

Only three clauses from the Employee Compensation Act of 1923, the Bonded Labour (Abolition) Act of 1976, and the Building and Other Construction Workers’ Act (Regulation of Employment and Conditions of Service) of 1996 were kept in the 2020 legislation.

There is no longer any need for the Employees’ Provident Funds and Miscellaneous Provisions Act, the Trade Unions Act, the Factories Act, the Minimum Wages Act, the Contract Labor Act, the Industrial Disputes Act, the Working Journalists Act, the Payment of Bonus Act, and the Inter-State Migrant Workmen Act.

“They must be granted a temporary exemption from the state’s labour regulations in order to promote new investments, build new industrial infrastructure, and benefit the state’s already-existing companies and industries.

As a result, it’s critical that Uttar Pradesh loosen its current labour restrictions over a three-year term. The “Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020” has been introduced in order to achieve this “Then, the government released a statement.

“States with a lot of natural resources have an advantage when wooing businesses. The simplicity of running a business is crucial for attracting investors. A number of criteria must be considered in order to determine whether a state is friendly to business, including the state’s labour laws, the quality of its physical infrastructure, and the level of education of its workforce.

States that are able to handle these naturally have an advantage when it comes to attracting investment, according to Devendra Pant, the chief economist at India Ratings and Research.

Uttar Pradesh reaps the geoeconomic rewards of its natural riches. One of the most productive areas in India is the Gangetic plain. Currently, agriculture contributes 23%, the industry contributes 27%, and services make up 50% of Uttar Pradesh’s gross state product (GSDP).

Agriculture, forests, and minerals serve as the cornerstones of Uttar Pradesh’s economy. With roughly 73 cotton mills, the handloom sector is one of the biggest in the state and comes in third in terms of the cotton textile industry. It operates 24 cooperative sugar mills under state management as the largest producer of sugarcane in the nation.

The manufacturing sector must increase five times from its current size of Rs 5.6 lakh crore to Rs 27.6 lakh crore in order for the economy to reach the $1 trillion mark. Agriculture would need to grow by 2.5 times to boost its contribution from the current level of Rs 4.7 lakh crore to Rs 11.8 lakh crore, while services would need to grow by 4 times to increase from the current level of Rs 10.3 lakh crore to Rs 40 lakh crore.

Power To Fuel Investment

The commercial and technical losses of the loss-ridden Uttar Pradesh Power Corporation Ltd (UPPCL) would rise as the demand for electricity rises. Additionally, UPPCL is having trouble controlling widespread power theft and ineffective collection methods.

The Uttar Pradesh government requested financial support of around Rs 50,000 crore from the Center in December of last year under the Revamped Distribution Sector Scheme. The DISCOM has pledged to reduce the UPPCL’s average total technical and commercial losses from 29 per cent to 16 per cent.

Agra DISCOM had the largest losses at 38.24%, followed by Varanasi (32.32%), and Lucknow (32.32%). (31.76 per cent). Losses for the DISCOMS in Meerut and Kanpur are significantly lower, at 15.94% and 19.52%, respectively.

“A positive aspect of Uttar Pradesh is that it long had a revenue surplus. To ensure sustainable growth over the long run, they are attempting to make changes to their current policies. But it’s crucial to have a power infrastructure in place if you want to draw in investment.

Additionally, social infrastructure is required, such as a skilled labour force (for formal sector jobs). “A state with superior electricity sector reforms and better road infrastructure will attract more investments, all other things being equal,” asserts Pant.

Remnants Of Jungle Raj

The state’s level of law and order is a significant element of economic growth. A firm needs favourable social conditions for efficient operations in order to survive and grow.

The Goonda Act, National Security Act, and Gangster Act are all vigorously implemented by the Uttar Pradesh government, which has a zero-tolerance approach against criminal activities, according to Pathak in an interview. Those who belong to the mafia, rioters, and other anti-social (groups) face harsh penalties as well.

“Our government has given the state police administration all the tools and freedom it needs to deal with crime sternly, which has given criminals shivers throughout the state. We have made it quite apparent that criminal mentality has no place in the state. To keep the legal and security situation under control in whatever circumstance, we will even create new laws if necessary, he continued.

CM Adityanath criticized the former SP and BSP regimes for causing turmoil during their administrations earlier this year while asserting that no communal riots had broken out in the state since he assumed power in 2017.

“In overall, Uttar Pradesh’s law and order situation appear to have improved. Additionally, there has been a significant improvement in the governance system overall. In comparison to the past, that appears to be assisting them in how they spend public funds, according to Bhanumurthy.

Its ruthless treatment of anybody suspected of inciting any social upheaval has also come under fire. Many people have denounced the bulldozer paradigm of delivering justice quickly by undermining judicial procedures.

It remains to be seen if CM Adityanath will continue to be the taskmaster to deliver on his $1 trillion economic pledge and carve out a position for himself as a strong leader who can inspire real change as the government pushes for extensive infrastructure building.

edited and proofread by nikita sharma