New Delhi: India’s most populous state – Uttar Pradesh – dreams of becoming a trillion dollar economy in the next five years. Since November, Chief Minister Yogi Adityanath has been saying that a blueprint is being prepared to achieve this goal. The idea is to make UP, which contributes around 8 per cent to India’s GDP, a key driver of PM Narendra Modi’s ambition of making the country a $5 trillion economy.
At current prices, Uttar Pradesh’s Gross State Domestic Product (GSDP) – the sum of the output of all sectors of the economy – was estimated to be around $255 billion at the end of 2021-22, a quarter of the target.
In real terms (at 2011-12 prices, a measure that takes into account inflation), it stood at Rs 11.8 trillion (about $155 billion) as of March 31, 2022, according to data from the Union Ministry of Statistics and Program Implementation (MoSPI). . ,
Speaking to ThePrint, experts said that to achieve the $1 trillion target, UP will have to grow at least 32 per cent per annum – a rate they say the state has never achieved. Haven’t seen so far.
Under Yogi Adityanath’s first term (2017 to 2022), UP’s GSDP growth rate averaged 3.2 per cent annually – from Rs 10.12 trillion in 2016-17 to Rs 11.8 trillion (in real, 2011-12 prices).
In comparison, the GSDP growth rate under Adityanath’s predecessor, Akhilesh Yadav of the Samajwadi Party (SP) (CM from 2012 to 2017) was 6.9 per cent per annum.
When he came to power, the GSDP of UP was Rs 7.24 trillion.
However, experts say the figures need to be seen in context before passing judgment on someone’s administrative capability. First, he says, when Adityanath took over, the country was still reeling from the effects of demonetisation. Second, he says, the figures for Akhilesh’s tenure may reflect the impact of the development work done by him after the 2014 Lok Sabha election shock.
Reached for comment, Alok Kumar, principal secretary (planning and program implementation) of the UP government and nodal officer for the ‘One Trillion Dollar Economy’ project, shed light on the numbers.
Kumar said he expected the growth figure for 2021-22 and 2022-23 to go up as the Indian government revised its figures after “adjustments”.
The state’s GDP grew by an average of 4 per cent in the first three years of Yogi Adityanath’s tenure.
In 2016-17, Uttar Pradesh registered a GSDP growth rate of 11 per cent in real terms, which fell to 4.4 per cent by 2017-18. In 2018-19, its annual GSDP growth fell to 3.9 per cent, and, in the previous pre-pandemic year – 2019-20 – it was slightly higher at 3.9 per cent, according to MoSPI data.
In 2020-21, when the impact of the Covid pandemic began to show, Uttar Pradesh’s GSDP shrank by 5.5 per cent. India’s GDP declined by 5.9 percent during the same period.
In 2021-22, Uttar Pradesh’s GSDP is projected to grow by 9 per cent, which can be attributed to the low-base effect.
The slow growth in the state’s GSDP can be at least partially attributed to a decline in the state’s manufacturing sector, which became 12.2 per cent of the state’s GSDP in 2021-22, down from 15 per cent in 2016-17.
Under the Akhilesh Yadav government (2012-2017), the industrial sector – of which manufacturing is a sub-sector – grew at a rate of about 10 per cent (compounded annually) every year.
In the first three years, the industrial sector grew by an average of 2 percent every year. The growth was 15 per cent in 2015-16 and 28 per cent in 2016-17.
The growth rate in the manufacturing sub-sector was 26 per cent in 2015-16 and 47 per cent in 2016-17. According As per the data available in UP Economics and Statistics Department.
Meanwhile, the industrial sector (in real terms) shrunk during Yogi Adityanath’s tenure.
In 2016-17, Uttar Pradesh’s industrial sector grew at a rate of 28 per cent, but declined by 4.7 per cent in 2017-18. Despite the low base, the growth of the industrial sector stood at 1 per cent in 2018-2019 and 3.5 per cent in 2019-2020. During the pandemic, it declined by 6.2 per cent and then increased by 10 per cent in 2021-22.
Similar trends emerge in other areas as well. The average annual growth in agricultural production was 9.1 per cent during Akhilesh Yadav’s tenure and 8.6 per cent during Yogi Adityanath’s first term.
Manufacturing grew by an average of 14.6 per cent during Akhilesh’s tenure and 0.6 per cent per year during Yogi’s first term. The services sector grew by 7.3 per cent under Yadav and 4.1 per cent under Adityanath. Construction increased by 4 percent under Akhilesh Yadav’s rule and 3.1 percent during Yogi’s rule.
Principal Secretary Alok Kumar said that no trend can be arrived at from these figures as the manufacturing growth figures for 2015-16 and 2016-17 were “the result of old adjustments” in the central government’s figures.
“The higher increase in the growth rate in the manufacturing sector is not only related to those years, but is also the result of adjustments to old calculations. One can understand that a growth rate of 47 per cent in the manufacturing sector in one year is too good to be true and these figures cannot be seen as showing a trend,” he said.
The “adjustment” mentioned by Kumar has no mention in the Uttar Pradesh government data puts on your website,
When asked about the reduction in the growth rate between 2017-18 and 2018-19, he said that one cannot call it a decline. He said the growth rate figures for 2021-22 and 2022-23 may also go up after the central government revised its figures after “more adjustments”.
What does the development path of UP tell?
Experts point to several reasons behind the growth trend of Uttar Pradesh.
First, he says, is the concentration of industrial activity in the western parts of Uttar Pradesh. In a series on GSDP of UP, published ThePrint found that, as of 2020, nearly 68 per cent of Uttar Pradesh’s manufacturing output came from a few districts in its western parts, which are close to India’s capital Delhi.
“In my understanding, Noida has been the main driver of the state’s economy (contributing around 10 per cent to this huge economy). If growth has slowed down, the focus should be on Noida (GB Nagar),” said Vikas Vaibhav, assistant professor of economics at OP Jindal Global University in Sonepat.
“In Noida too, there is a need to focus on the growth of the manufacturing sector and real estate sector. I don’t think the district domestic product data has been released by UP-DES (Directorate of Economics and Statistics) after 2019-20.
Santosh Mehrotra, professor of economics at Jawaharlal Nehru University’s Center for Informal Sector and Labor Studies, said some political-economic factors are at work behind UP’s GSDP figures.
“When Akhilesh Yadav became the Chief Minister, it was often rumored that there were 4-5 CMs in the state, one for Akhilesh himself, his father and some for his Pot, who were conservative in their approach towards managing the state,” he said. “After losing the 2014 Lok Sabha elections [SP won 5 seats], Akhilesh realized that in order to be re-elected as CM, he needed to take full control and overdo it in terms of economic output to make up for the loss in the first two-three years.
“Being an engineer and MBA himself, Yadav took business seriously, so several highways, probably the Lucknow Metro and other big developmental projects were completed in the last two years of his tenure, which could explain the rise. GDP numbers during those years,” Mehrotra said.
Mehrotra said, the 2016 demonetisation might have affected the development path of Uttar Pradesh as well.
“Uttar Pradesh is a labour-surplus state. During demonetisation, many small and micro enterprises in the state were facing cash crunch. These enterprises operate on very low working capital, mostly on cash, so by the next financial year, their capacity to produce more has shrunk,” he said.
“Also, the state is more interested in inviting big personalities to its big investor summits. But they will set up large scale enterprises only when it is safe to do so, which the mafia this government is fighting rarely allows.
Talking about the state’s $1 trillion ambition, Mehrotra suggested that it was a difficult target.
“Forget quadrupling the size of the economy, even if it were to double the size of its GDP in this time, it would have to grow by more than 14 per cent in real terms, a fate the state has never achieved. not done.”
Vaibhav agreed that the target was overly optimistic.
“My understanding is that despite the good intentions of the government (and its officials), UP’s economy is not doing well. This is in line with the standard economic understanding that the government can only act as a facilitator/enabler rather than being the prime mover in economic development,” he said. “Good intentions alone may not be enough.”
(Editing by Sunanda Ranjan)