An agenda for making Uttar Pradesh a $1tn economy

uttar pradesh economy gets a big push
Priests performing Ganga Aarti at Varanasi. Higher spending in education and healthcare is a surefire way to make Uttar Pradesh a growth engine for the Indian economy.

As he was seeking re-election as the Uttar Pradesh chief minister, Yogi Adityanath promised to make the state India’s largest economy. After retaining power, Yogi has set an ambitious target of making Uttar Pradesh a $1 trillion economy. The government is in the process of finalising a consultant to achieve this goal.

The state government admits that it is a herculean task. Uttar Pradesh has been one of the laggards among Indian states with slow economic growth and below par performance on social indicators. The size of the UP economy was Rs 17.2 trillion in 2020-21. According to the government’s advance estimates, this will grow to Rs 19.1 trillion in 2021-22. The state will need to expand five times to reach the $1 trillion goal.

The state’s population is 20 crore — only seven countries in the world have larger populations. How does the state’s economy compare with the country’s largest economies. Maharashtra is the largest Indian economy by far which is around 1.8 times the size of the UP economy. Andhra Pradesh along with Telangana, Karnataka, Gujarat, and Tamil Nadu have larger economies compared with UP.

READ I  FSSAI sides with industry on FoPL format, puts consumers at risk

EGROW Foundation, a Noida-based think tank, organized a webinar to discuss the strategies that can help India’s most populous state become a $1 trillion economy. Some of the country’s most respected academics and policy makers spoke at the event. Here’s an edited excerpt of their views:

Dr Arvind Virmani, Chairman, EGROW Foundation

Uttar Pradesh has immense potential to become an economic powerhouse. It has been underperforming in terms of economic and social indicators for some decades. It is at the last but one position, just above Bihar in terms of per capita income and needs to perform a turnaround to realise its potential.

A review of public health and public education by Planning Commission in 2006 had found that there aren’t enough doctors and teachers in rural areas. The problem persists in the state even today. The internet has been helpful in solving this problem through telemedicine and online education, wherein specialists and experts from urban areas can work towards bridging the gap in quality healthcare and education.

Quality education is the foundation of skill development. Quality is missing in UP’s education scene and imparting of relevant skills such as animal husbandry and fisheries is severely affected. Therefore, special efforts need to be made to ensure that the foundational education is imparted with quality.

The Covid-19 pandemic has shown that there are jobs that can be done remotely with the help of good connectivity. Hence, attention must be given to improve internet connectivity in the state, so that people with skills can benefit even when there is no demand in the state. With regards to farming, farmer producer organizations (FPOs) should be encouraged as viable alternatives as the corporative farming failed to take off in UP.

READ I  Can AI-designed super enzyme end plastic pollution crisis

Dr Charan Singh, CEO, EGROW Foundation

UP needs to reform its education system. A through study needs to be done to find ways to address this and to develop higher education and vocational education systems. In terms of tourism, UP has not been able to develop religious tourism despite having Ayodhya and Mathura in the state. Similarly, there has been a relatively inadequate development of natural tourism. Therefore, special attention must be given to improve tourism in the state to generate substantial number of jobs for the state’s unemployed youth.

As MSMEs contribute hugely in terms of employment generation, the need for enhancing their capabilities is vital for the growth of the state. Ideas like entrepreneurial universities and MSME universities to reskill people may be explored to achieve this.

Dr Ashok Vishandass, Director, EGROW Foundation

An experiment conducted in Gujarat revealed that when agricultural labour moved to the diamond industry, they upskilled themselves and raised their wages by 5-6 times. The point is that agriculture labour was greater in number and the productivity was low due to disguised unemployment. Improving labour productivity requires upskilling of workers.

There is a lot of demand of agriculture commodities especially of organic products where there is a great demand for exports. India exported agriculture commodities worth $15 billion last year which is a record. UP contributed a lot in terms of paddy and other crops. The one village one product model needs to be implemented. The production needs to be in sync with the demand. The farmers keep on producing traditional crops like wheat and paddy regardless of the demand hence they are not realising higher prices.

The shelf life of agricultural products is low. They are perishable and hence they must be transported quickly to where the demand is. A lot wastage takes place due to the inability to reach the market in time. PM Gati Shakti would provide a boost to agriculture in UP. The labour productivity in agriculture has to increase.

One panelist assessed farmer income taking into account the PM Kisan Samman Nidhi handout of Rs 6000. The concern regarding this methodology is that they have compared the size wise farmer incomes (small, marginal, medium and large farmers). This method is questionable as in each size class income per hectare is important as land is an important factor of production. It is important to consider parameters similar for marginal, small, medium and large farmers.

Dr Parmod Kumar, Director, Giri Institute of Development Studies

A closer look at the growth indicators of UP reveal the need for further growth. The gross value added (GVA) by economic activities at constant prices has gone down in the case of the primary sector and the secondary sector in 2020-21 compared with 2011-12. Only the tertiary sector showed an improvement of about 5% from 2011-12.

Despite its size and population, UP’s per capita GSDP is 41% of India’s per capita GDP. UP GSDP growth rate was lower than national average in most years from 2012 to 2020. In normal years, the state average was 5.84% while national growth rate was 6.64%. Even though the capital outlay was higher than other states from 2011 to 2021, spending on sectors like health and education was lesser.

A survey was conducted by Giri Institute of Development Studies to estimate farmers’ income in UP from 2015. UP was divided into nine agro-climatic zones and the monthly average income of a farm household in 2017-18 was Rs 8,903 with variations across agroclimatic zones. Farm households diversified their income sources with income from cultivation accounting for 51% of the total income and non-farm income accounting for 37%. Animal farming accounted for 6.5% of total income.

The survey found that agriculture development and doubling of farmers income mainly depended on improvement in crop productivity, livestock productivity, resource use efficiency, increasing cropping intensity, diversification towards high-value crops, improvement in real prices and shift from farm to nonfarm occupations. The study showed that to boost productivity, policy regimes that address specific needs of a particular group of farmers is better than implementing a uniform policy for all farmers.

Dr Santosh Mehrotra, Centre for Development Studies, Bath University, UK

A study published in EPW titled ‘Why Human Development should proceed Economic Growth in the states’ using several months of data for various states concluded that the divergence between the southern / western states and the northern states happened after the economic reforms. The study showed that a considerable share of GSDP on both health and education dimensions was spent by the southern states. This resulted not only in a consistent performance in terms of growth of HDI for these states.

Their relatively high rankings in HDI enabled them to maintain a consistent, non-volatile growth rate of GSDP above 7% per annum over this entire 28-year period. A very strong causal relationship is demonstrated between high human development and sustained economic growth. The conceptual model developed in the EPW paper six months ago makes the case for greater investment in human development without which we can’t expect sustained economic growth.

Skills consists of three components which are foundational skills that consist of cognitive skills, literacy skills and numeracy skills; transversal skills that are skills which are transferable; and technical and vocational skills. The problem in UP and the other northern states is low levels of learning as brought out by the ASER reports. It will not be possible to impart vocational skills to people lacking foundational skills such as literacy and numeracy.

Skill development model in India in last 10 years has remained supply driven, thereby government driven, government financed and government managed. The countries of the world that have successful skill development ecosystems have a system which is demand driven and hence employer and industry driven.

It is important to understand this to solve the problem of skill development. If students are not diverted after secondary education into vocational education, you would get a massification as the case of higher education leading to the creation of a large number of unemployables.

Alok Ranjan, former Chief Secretary, Uttar Pradesh

UP has a large population. If it were a country, it would be the eighth largest in the world in terms of population. Despite having a large population, UP has been slipping in most development indicator rankings. The goal of a $1 trillion economy is an aspirational goal and would require a growth rate of 30% per annum. UP could improve the growth rates from 5-6% per annum to 8% per annum in the short term. This can be further improved to 10-15% in subsequent stages.

As 65% of the state’s population is dependent on agriculture that accounts for just 25% of the GSDP, there is a clear need to improve productivity. There is a need to shift employment to productive sectors. In terms of agriculture, aggregation of the farmland must be sought by encouraging FPOs and other forms of farming organisations.

Improvements such as increase in the number of cold storage facilities, adequate thrust to animal husbandry and dairy sectors, and developing food processing centers can bring in additional growth. UP has immense potential in terms of industrialisation. Development of electronics and semiconductor industries can come up in cities like Noida, Lucknow, Allahabad, and Kanpur.

In terms of education, special attention must be given to foundational literacy. There is also a need to improve the quality of education at all levels ranging from primary to higher education. In order to have balanced development, rural development should take place vis-à-vis urban development. Urban development should take place in such a way that urban centers act as growth engines, whereas rural infrastructural needs such as better healthcare infrastructure, connectivity and educational infrastructure must be addressed at the earliest.

Ranjan Dwivedi, National Advisory Committee, National Disaster Management Authority

It is important to make the administrative unit smaller than what it is today. UP could be divided into four or five administrative units that are empowered to take decisions instead of dividing the state itself which could have political implications. Quality of education could be improved because in UP, the syllabus, teaching and pedagogy are all antiquated and need to be revised and improved.

There is no emphasis on project work or group work which is required to create a culture of entrepreneurship. In UP, there is a lot of migration to other states. There is a need to develop ways to channelise benefits of this migration such that the remittances turn into good investments or create an investment surplus in the state. A structured safety net for migrants and bonds for investment by migrants can leverage migration for development. Like medical colleges in every district, UP should also have software technology parks at each district.

The Covid 19 pandemic has popularized the concept of remote work. This can be leveraged to keep the skilled population within the state and raise income levels from tertiary or services sector. Healthcare and employment should be delivered in the language of the people which is Hindi as it leads to improved health and greater freedom. This is possible because of digitalisation of delivery of services.