SEEKING AN ECONOMIC MIRACLE
Despite its political heft and cultural pre-eminence, Uttar Pradesh has historically been an economic laggard. Nonetheless, the Yogi Adityanath-led state government has an ambitious target—to grow the state’s economy past the $1 trillion mark by 2024
With a Rs 5.13 lakh crore budget for 2020-21— the largest in Uttar Pradesh’s history—and plans to build vast amounts of new infrastructure, including 11 airports, seven universities and 28 medical colleges, the Yogi Adityanathled state government has made notable efforts to achieve its stated aim of growing the state’s economy past the $1 trillion mark by 2024. Over the past three years, it has also made a major push to reduce regional inequality across the state’s districts by fast-tracking infrastructure, education and health-related development in the state’s poorer regions—Purvanchal, Madhyanchal and Bundelkhand. However, the economic shock of the coronavirus crisis has raised a major challenge going forward. If Chief
Minister Adityanath proves able to pull the state out of its low per capita income trap, improve wages and labour productivity and create the jobs required for a structural transformation of the state, he is likely to leave a deep impact on Uttar Pradesh, bettering his chances of making a strong comeback in 2022.
THE COVID-19 CRISIS
As early as March 27 this year, just two days after the national lockdown was implemented to prevent the spread of COVID-19, CM Adityanath had begun discussions within his government on how to tackle the migrant exodus. He quickly fired up the bureaucracy, arranging for thousands of buses in April to carry migrant workers who wanted to leave UP back to their home states. From May 4, as the movement of
“In the COVID-19 crisis, Chief Minister Adityanath has proved an astute administrator in the process of bringing migrant workers and students back home”
PROF. BADRI NARAYAN Director, Govind Ballabh Pant Institute, Prayagraj
migrant workers across the country began to gather steam, thousands of returning migrants began arriving at the Charbagh railway station in Lucknow every day, aboard Shramik Special trains from Maharashtra, Gujarat, Karnataka and Andhra Pradesh.
Senior government officials were tasked with arranging food, water and quarantine facilities, with the Adityanath administration promising Rs 1,000 to each returning migrant, three months of free rations and announcing plans to provide jobs. “About 800,000 migrant workers have been provided fresh ration cards. We see them as the main strength of Uttar Pradesh,” says Sidharth Nath Singh, state minister for exports, investment and MSMEs (micro, small and medium enterprises). Senior officials were also appointed as nodal officers to liaise with other state governments to ease the return process. “By June 3, over 3 million migrants had returned [to UP],” says additional chief secretary Awanish Awasthi. “They have been provided transport, food, medicines and accommodation during their quarantine.”
Primary schools and intermediate colleges, emptied by the lockdown, were designated as isolation centres where returning migrants were housed for the mandatory 14-day quarantine. Various local bodies and workers were brought into the effort, from village surveillance committees and anganwadi and ASHA (accredited social health activist) workers in villages to ward councillors and resident welfare associations in urban areas. Though the state’s Covid numbers are surging—23,492 cases and 697 deaths as on July 1—they remain lower than those of other
large states like Maharashtra, Gujarat and Tamil Nadu. This, in part, is a direct result of the comprehensive efforts that have been launched by the state government.
“Despite his firebrand image, Chief Minister Adityanath has [shown himself as] an excellent team player and an astute administrator in the process of bringing migrant workers and students back home,” says Professor Badri Narayan, director of the Govind Ballabh Pant Institute in Prayagraj. “He has displayed a rare degree of medical alertness.”
A TRILLION-DOLLAR MANTHAN
Before the pandemic began, the state government had embarked on a singularly challenging effort—to grow UP’s economy past the $1 trillion mark before 2024. On July 27, 2019, the chief minister had met with professor Archana Shukla, director of the Indian Institute of Management, Lucknow (IIM-Lucknow) at an official dinner. Their meeting led to three manthan (brainstorming) sessions in September that year at the sprawling IIM-Lucknow campus on Sitapur Road, where cabinet ministers and key bureaucrats from the state government worked
on a blueprint to achieve that economic goal.
“The chief minister was present on all three days, along with his cabinet ministers. Key bureaucrats were also present in the last two sessions. Priority areas and sub-areas were identified by the participants, with the IIM faculty acting as moderators,” says Shukla. She says that the identified priority areas included the agriculture, infrastructure, MSME, health, religious tourism, industrial, services and energy sectors. Simultaneously, the importance of improving education, skill development and law and order was highlighted. The manthans also emphasised on the need for coordination across administrative departments, helping to identify the overlapping concerns of different sectors. “The fact that there was a deadline, and that resources are limited meant that the focus was on identifying the most effective manner in which these [sectors] could be boosted; on capacity building and action plans,” says Shukla.
Though UP is a politically prominent state, it remains an economic laggard. The paradox is intriguing: despite nine of India’s 14 prime ministers being from the state and despite accounting for 80 MPs in the 545-member Lok Sabha, UP has never had the economic heft of Maharashtra or Gujarat. Even the fact that the IndoGangetic plains between the holy river Ganga and the Yamuna are among the most fertile alluvial plains in the world did not until recently translate into agricultural might. Instead, India’s political pivot remains the quintessential BIMAROU state, with migrant labour
being a chief export—the Union finance minstry’s 2016 Economic Survey pegged the nation’s migrant workforce at over 100 million. Professor Amitabh Kundu, a demographer with the Research and Information System for Developing Countries, a New Delhibased policy research institute, estimates that 25 per cent of India’s interstate migrants are from UP.
Curled around the mighty Ganges and Yamuna and crisscrossed by their tributaries, UP is the most populous state in India, with 16 per cent of India’s population (about 230 million) living in only 7 per cent of its geographical area. The state accounts for just 8 per cent of India’s GDP, a result of its historic lack of industrialisation and urbanisation. Of late, the state has become the largest producer of grains, oilseed and milk and the second-largest producer of sugarcane and sugar in India. Despite that, its agricultural and labour productivity and wages are among the lowest in the country.
ANALYSING THE ECONOMY
UP’s GSDP (gross state domestic product) grew 6.5 per cent in 2018-19 over the previous year, dropping from the 8.8 per cent growth rate in 2015-16. This is partly explained by a general decline in India’s economic fortunes; nonetheless, this is about half the growth rates clocked by nearby states like Bihar and West Bengal in recent years. According to the state’s budget papers for 2019-20, agriculture, industry (especially manufacturing) and services contributed about 24 per cent, 26 per cent and 50 per cent, respectively, to UP’s economy in 2018-19. In comparison, these three sectors contribute about 17 per cent, 29 per cent and 54 per cent, respectively, to the national economy. In other words, compared to India as a whole, UP’s economy is more dependent on agriculture than on manufacturing and services. This, says economist Sabyasachi Mitra of the
Asian Development Bank (ADB), is “the major factor underlying the slow growth and high poverty rates in the state”.
UP’s agricultural growth rate increased from 5.6 per cent in 2015-16 to 7.6 per cent in 2017-18, a result of the good monsoon that year following two years of drought in 2014-16. However, in 2018-19, the growth rate fell to 3.5 per cent. According to the Central Statistical Organisation, manufacturing and services in the state grew at 5.9 per cent and 7.8 per cent, respectively, in 201819. Given the Covid pandemic, the figures for 2020 are likely to be worse.
Industrially speaking, Ghaziabad, Gautam Buddh Nagar, Kanpur, Lucknow, Faizabad, Sonbhadra, Mirzapur and Balrampur are the most developed districts in the state. Some of the state’s prominent industrial sectors include the marble industry in Agra, woodcraft in Saharanpur, chikankari (embroidery) in Lucknow, leather in
Kanpur and Agra, brass in Moradabad, glass in Firozabad, ceramics and pottery in Khurja and carpet weaving in Bhadohi. Handlooms and handicrafts are a very important source of income in UP, with thousands of handlooms and power looms used by small and large manufacturers in the state, mostly in eastern UP. The main centres in eastern UP include Tanda, Varanasi, Azamgarh, Bhadohi and Mau. In western UP, the important centres are Meerut, Etawah, Etah and Kasganj.
A December 2019 research paper by the ADB highlights three points of concern for the state’s economy. First, the gap between UP’s per capita income and the national average has widened consistently since 2005—in 2017-18, it stood at less than 50 per cent of the national average. Second, overall labour productivity (output per worker) is also around half the national average. Third, labour wages in the state are about 14 per cent lower than the national average (according to data from 2015-16).
To develop UP’s industries, the Yogi Adityanath government has made a notable push to attract investment, which has borne some fruit. For instance, at the UP Investors’ Summit in February 2018, the state government signed memorandums of understanding with various public and private sector companies worth Rs 4.68 lakh crore, of which the development of industrial and infrastructure projects valued over Rs 1.25 lakh crore has begun. The government says that 371 projects have been implemented, with the state labour ministry estimating that all the proposed projects could (directly and indirectly) generate over 3.3 million jobs.
MONK WITH A MISSION
In March 2017, when Yogi Adityanath, mahant of the Gorakhnath temple and five-time Lok Sabha MP from Gorakhpur, was appointed chief minister, he was widely considered a surprise choice. However, for the Bharatiya Janata Party (BJP), which had won the UP assembly election with an unprecedented majority that year (312 of 403 seats), he was the natural choice because of his reputation for getting things done—someone who was seen as being able to deliver both political and economic results.
In the three years and three months that he has been chief minister, Adityanath has been seen as taking a hard line on crime. For instance, in the india today-Karvy Insights State of the States (SOTS) survey, when asked whether violence against women like harassment, molestation and rape had increased or decreased under his dispensation, 52 per cent of the respondents said it had decreased while only 14 per cent said it had increased.
Adityanath’s government has also shown a focus on infrastructure—in 2017, it announced a 110-km, fourlane expressway to link Gorakhpur with the proposed 350-km Purvanchal Expressway (Lucknow to Ghazipur the longest such expressway in the country). These roads bring crucial ‘north-south’ connectivity to eastern UP, where all major roads are aligned east to west. The Gorakhpur expressway is also expected to connect with a new highway being constructed by the National Highways Authority of India that links Varanasi to Ayodhya—these roads, linking the state’s three holy cities, could provide a major boost to religious tourism in the state—a central plank in the state government’s plans for a $1 trillion economy.
According to the UP tourism department, in 2019, the Prayagraj Ardh Kumbh Mela saw the highest footfall the mela has ever witnessed—a record 240 million people, including 1.1 million foreign tourists. This was more than the annual tourist footfall in
the state between 2014 and 2017. The chief minister was widely congratulated for his use of this cultural event to supplement the state’s coffers—the city of Allahabad (now Prayagraj), received a major infrastructural facelift with the funds generated. This development was central to religious tourism becoming a key aspect of the state’s development blueprint.
The chief minister has also announced a number of social and income support schemes. An apprenticeship scheme offers educated, unemployed young people Rs 2,500 per month as training allowance, while a similar programme—the Kanya Sumangala Scheme for young women—has been given a budget of Rs 1,200 crore. A pension scheme for destitute women has been allocated Rs 1,432 crore, under which Rs 500 will be sent to beneficiaries every month. The state government is also conducting an awareness programme to prevent female foeticide in 68 of the state’s 75 districts under the central governmnet’s ‘Beti Bachao, Beti Padhao’ scheme. In a similar vein, the state government says it has constructed 1.3 million houses under the Pradhan Mantri Awas Yojana (Rural) and 26.1 million toilets under the Swachh Bharat Abhiyan (Gramin). The state labour ministry says that in 2019, 145.9 million man-days of employment were created under MNREGA, the Mahatma Gandhi National Rural Employment Guarantee Act.
Healthcare is another focus of the government—a new medical university is being planned in Lucknow, as well as a satellite centre of the King George Medical University in Balrampur. AIIMS-style medical colleges have been opened in Gorakhpur and Rae Bareli, with plans to open 28 medical colleges across the state in all.
BOOSTING INFRASTRUCTURE The size and scope of UP’s budget for 2020-21, passed on February 18, offers some insight into the state government’s blueprint for a $1 trillion economy. Estimated at Rs 5.12 lakh crore, the budget’s key focus areas are infrastructure, youth education and employment, women’s empowerment and agriculture.
To boost infrastructure, the budget proposes the construction of 11 new airports at a cost of Rs 2,592.5 crore. Work on two airports has commenced. One is the Taj International Airport (Noida International Greenfield Airport) at Jewar in Gautam Buddh Nagar, 80 km from Delhi. Together with the fact that Noida is emerging as an IT hub in the state, as well as the expansion of Greater Noida and Ghaziabad, this airport is expected to boost western UP’s global connectivity, revive the stagnant realty sector and generate employment, providing a fillip to the state’s growth. The second airport, which has been allocated Rs 500 crore, is in Ayodhya. With the Ram Janmabhoomi issue having been legally settled, this city is expected to become a major destination for religious tourism, for which the new airport will act as a multiplier. Together with the airports at Varanasi and Gorakhpur—all three in eastern UP—it is hoped that the improved aerial connectivity will transform the fortunes of the penury-stricken Purvanchal region. An increase in tourism would generate employment, especially in the hospitality sector, boost consumption and reduce outmigration of both skilled and unskilled workers from the region.
Keeping in mind the regional inequality between the relatively prosperous western part of the state and the impecunious east, infrastructure development projects are focused on eastern UP and Bundelkhand. These include the 340 km Purvanchal Expressway, the 296 km Bundelkhand Expressway and the 596 km Ganga Expressway.
To speed up the pace of industrialisation, the state government has been organising investor summits, like DefExpo 2020, held in Lucknow on February 5, and the UP Global Investors Summit 2020, which had to be postponed because of the pandemic. The DefExpo was aimed at building a defence manufacturing corridor along the proposed Bundelkhand Expressway, to help India’s self-reliance in defence production as well as bringing jobs and boosting growth in UP’s economically backward region. The Adityanath government has also sanctioned 20 special economic zones (SEZs) in the state, focused on IT, ITeS (IT-enabled services), electronic
THE STATE HAS CONSTRUCTED A RECORD 1.3 MILLION HOUSES UNDER THE PM AWAS YOJANA AND 26.1 MILLION TOILETS UNDER THE SWACHH BHARAT MISSION
hardware and software, handicrafts and agri-based industries.
PERFORMANCE ASSESSMENT The India Today State of the State (SOTS) survey is aimed at identifying the strengths of each district in the state and the challenges facing them by analysing their performance over the past decade across 10 categories: Education, Infrastructure, Water & Sanitation, Health, Law & Order, Agriculture, Prosperity, Industry, Services and Overall. Each category has two ‘winning’ districts—the ‘best performing’ and the ‘most improved’. For UP, the first SOTS survey was conducted in 2016. This year’s survey follows the same template, but offers a richer and more robust analysis.
SOTS 2020 shows that western UP, as a whole, is above the state average in nine categories of development. Eastern UP is below the state average in three categories of development: Infrastructure, Water & Sanitation and the Overall category, ahead of the state average in Prosperity and on par in the five other categories: Education, Health, Agriculture, Services and Law & Order. The southern region of Bundelkhand, bordering Madhya Pradesh, has a slightly better record. Bundelkhand is below the state’s average in Prosperity, equal to the state’s average in Services but ahead in seven categories. Awadh, or Madhyanchal, with 21 districts, including the industrial corridor of Lucknow and Kanpur has a comparatively poorer record: it equals the state’s average in Education and Services, but scores below average in the other seven categories of development.
The survey finds that in 7 of the 10 categories, the ‘best performing’ districts are in western UP. Seven out of the bottom 10 districts belong to the eastern region. In ‘most improved’ districts, the western region again secured the majority: 8 out of the top 10 districts. In the bottom 10, 5 districts belong to the eastern region. The survey also reveals that four out of the top 10 districts in Services belong to western UP. However, in terms of improvement in Services, eight out of 10 districts belong to eastern UP. To boost industrialisation and plug the regional imbalance, the Adityanath government has launched the ‘One District, One Product’ scheme as part of a broader strategy of concentrated agri and industrial development for each district, offering an array of fiscal incentives, credit and marketing and policy support.
GOVERNMENT INTERVENTIONS As mentioned, in the three years and two months that Yogi Adityanath has been chief minister of UP, he has developed a reputation for taking a tough stance on crime and being willing to implement difficult decisions, even if they prove controversial. His government has taken significant steps to alter the infrastructural face of eastern UP’s cities—some 300 projects worth Rs 30,000 crore have been launched in Varanasi, including highways, hospitals and sewage plants. Efforts have also been made to develop the state as a major investment destination via summits, including the UP Investor’s Summit in February 2018, which attracted about Rs 4.7 lakh crore of investment, and another summit in July 2019 which marked the launch of projects worth 65,000 crore.
I n 2020, chief minister Adityanath launched widespread police reforms, introducing a commissionerate system of policing for Gautam Buddha Nagar and Lucknow. The previous year, the state had been a major contributor to the Pradhan Mantri Awas Yojana, building 430,000 homes, according to one estimate. During the 2019 Lok Sabha elections, the BJP, in a spectacular performance, won 62 out of 80 seats despite the Samajwadi Party-Bahujan Samaj Party (SP-BSP) alliance. Although the Lok Sabha elections were fought with Prime Minister Modi as the main draw, Adityanath’s campaign played a significant role.
As a result, the chief minister is well thought of across the state. The india today-Karvy Insights Citizens’ Survey shows that Adityanath’s
approval ratings for governance are at about 60 per cent across the state—62 per cent in Bundelkhand, 61 per cent in Madhyanchal and 60 per cent in Purvanchal and Paschimanchal. Even in the poorest 100 blocks of the state, his approval ratings remain at 60 per cent. Other state leaders do not fare nearly so well—SP leader Akhilesh Yadav notched a 30 per cent rating, while BSP supremo Mayawati managed only 10 per cent.
The central and state governments’ welfare programmes are also well known and spoken of with approval across the state. The top three are the BPL ration card scheme (which allows the purchase of food at governmentregulated prices), the PM Jan Dhan Yojana (for bank accounts) and the PM Ujjwala Yojana (for gas connections). A majority of respondents said they had either benefitted from these schemes themselves, or knew someone who had—65 per cent for the first, 60 per cent for the second and 57 per cent for the third. The scheme that was least-well spoken of was MNREGA, the central government’s employment guarantee programme for the poor.
The state government says that it has set a record in the construction of houses under the PM Awas Yojana (Rural)—1.3 million houses—and that 26.1 million toilets have been constructed under the Swachh Bharat Mission (Gramin). However, the india today-Karvy Citizens’ Survey shows that, on average, only 42 per cent said that either they or someone they knew had got a house through the PM Awas Yojana. In backward Bundelkhand and Madhyanchal, the figure was only 39 per cent, while in prosperous Paschimanchal, it was 45 per cent. In short, even in the best-case scenario, 55 per cent of the respondents were unaware of anyone benefiting from the programme. This shows that either such programmes are not adequately publicised or have a long way to go before the benefits reach the intended beneficiaries. Similarly, when asked about the state government’s financial support programmes—specifically for family pensions and pensions for widows—respondents largely said they were unaware of them, with only 36 per cent and 35 per cent, respectively, saying that they were aware of these schemes. Across the state, only 31 per cent of the respondents knew of someone who had benefited from the business loans available under the PM Mudra Yojana. The lowest awareness was of MNREGA—only 22 per cent knew someone who had got a job under this programme.
Sabyasachi Mitra of the ADB says that if the state government can increase per capita income to around 75 per cent of the national average by 203233, it will lead to better employment, industrialisation and livelihoods, as well as a reduction in poverty. However, this will require massive investment in all sectors of the economy, both public and private—a necessary precondition to achieving the government’s goal of a trillion dollar economy in the next few years. Mitra argues for a demand-driven approach to promote industrial development and job creation.
However, achieving this would require more than a mega manthan of the type that was undertaken in Lucknow. What is needed is state intervention in infrastructure and
skill development, a digitalbased industrialisation strategy and planned urbanisation with the creation of smart cities in poorer zones such as Purvanchal, Madhyanchal and Bundelkhand. This will require the creation of a good governance framework.
GROWING PROSPERITY
An immediate short-term requirement for such an economic transformation is a doubling of agricultural growth rates in the state, given UP’s reliance on agriculture. In this respect, the state would do well to learn lessons from Punjab, Haryana and Madhya Pradesh. According to an ICRIER research paper, ‘Doubling agricultural growth in UP: Sources and Drivers of Agricultural Growth and Policy Lessons’, by Smriti Verma, Ashok Gulati and Siraj Hussain, a central requirement is that the government has to focus on erecting a robust procurement system for wheat and paddy that ensures the minimum support price to farmers. Some initial steps in this regard have been taken by the Adityanath government in 2020 to rescue the harvest of the rabi crop. The state needs to massively improve agricultural infrastructure and practices in the poorer eastern, central and Bundelkhand regions by focussing on improving irrigation systems and agricultural markets, as well as strengthening the supply chain by developing warehouses and cold storage units. Steps like these would improve agricultural productivity and raise wage rates in this sector.
Today, UP is India’s largest producer of milk. Yet, Gulati and Hussain argue that the state needs to ‘propel the dairy sector [forward] by raising milk processing levels from about 12 per cent now to at least 30 per cent over the next five years’. The state also has the second-highest output of sugarcane and sugar in the country, after Maharashtra. ‘Yet, UP needs to rationalise sugarcane pricing based on the 2012 Rangarajan Committee formula. The state must free up molasses from all reservations,’ says Gulati.
Innovative farming practices, including organic cultivation in the production of fruits and vegetables, is another requirement for doubling of agricultural growth rates. Restoring and enhancing the poultry and meat production sectors, together with the development of fisheries, will also go a long way toward improving output and incomes, as well as helping the state move up the export charts.
Agriculture would also benefit from infrastructural investments in rural roads, power supply to rural areas and improved irrigation, especially in the droughtprone Bundelkhand region. Better disaster management systems to control the recurrent floods in the Purvanchal region will help boost agricultural growth and restore sustainable livelihoods. If the Adityanath government implements this package of policy reforms on a priority basis, it can fulfil the prime minister’s vision of doubling of farm incomes. It can also reap rich political and economic dividends through faster poverty alleviation, plug regional imbalance among and within regions, and bring about inclusive growth and development for all. Finally, such innovative interventions and structural changes are likely to save lives and take care of the problem of livelihoods, thus helping realise the dream of a trilliondollar economy and making UP truly an ‘Uttam Pradesh’.