A Huge climb-the UP story.

The recent developments in Uttar Pradesh on the economic front have brought the state under the limelight. Uttar Pradesh, which was infamous for figuring at the bottom of almost all development indicators among the Indian states, has shown considerable progress on the economic front in the past two years.

The state has grabbed the 2nd spot in the GSDP (Gross state domestic product), only after Maharashtra. It has surpassed relatively industrialized states such as Tamil Nadu, Karnataka, and Gujarat. The state has achieved a massive stride of climbing the ladder of ease of doing business index from 12th position in 2017-18 to 2nd in 2020-21 (only second to Andhra Pradesh). It was also adjudged to be the best-performing state by the Kisan Samman Nidhi distribution. The states’ exports have experienced a boom in the past two years, registering a growth of 32%. However, the GDP per capita of the state was the 2nd worst (only after Bihar) in 2018-19, although it is predicted that the recent developments will push the states’ ranking upwards.

So how did Uttar Pradesh achieve this remarkable feat? 

MSMEs AS THE ENGINE FOR GROWTH

The state’s economy showed a solid recovery after experiencing a contraction in the first two quarters of 2020. As per the economic experts, the upsurge in GSDP is an indicator of the resilience being shown by non-agriculture activities in the state, which usually banks upon agriculture to sustain its economy. The MSME (Medium, small and micro enterprises) sector has provided the backbone to the recent developments. This sector has been at the centre of all policies relating to providing employment, enhancing production, and promoting innovation. According to econometrics, each MSME can generate employment for nearly 10-100 people; hence it is critical in dealing with unemployment.

INCREASED INVESTMENTS – EASE OF DOING BUSINESS

The state’s improvement in ease of doing business also reflects increasing investments being experienced by the state. A minor example is the tech giant Samsung leaving China to set up its plants in the state. The state government will be providing financial incentives to the South Korean giant to set up a display factory in the region, which is expected to cost about $655 million and help boost the Make in India initiative. It’s noteworthy that Samsung already has the world’s largest mobile phone manufacturing plant in Uttar Pradesh.

INFRASTRUCTURE PUSH

One commendable feature of the Uttar Pradesh government has been shifting the focus from freebies to infrastructure. A slew of reforms has been announced to let the state shed the tag of “backward,” such as subsidies to investors, creation of land banks for industrial development, development of infrastructure including the extensive network of expressways, heavy investments in the construction of defence corridor and bringing up Jewar and Kushinagar airports at its western and eastern ends.

MISSION ROZGAR

Mission Rozgar is an additional step to provide employment to the youth. Although India deals with the problem of unemployment, on the one hand, it deals with an acute shortage of skilled workforce on the other. This means that there is a wide disparity between the requirements of a firm and the skills of the youth. It is in this context that this scheme assumes significance as it focuses on imparting practical knowledge to the youth in line with the industrial requirement and self-employment. Once the scheme attains maturity, it would set up an example.

ONE DISTRICT ONE PRODUCT INITIATIVE

The one district one product initiative has been an essential pillar in boosting exports. This initiative is aimed at training and supporting the artisans and traditional handicraft workers in every district of Uttar Pradesh to become competitive in the international market. This also creates rural employment, thus discouraging migration to cities.

The features of this scheme are: – 

1. Market development assistance: financial assistance to display products at national and international fairs. 
2. Margin Money Scheme: Financial aid to fund a part of setting up of a project
3. Tie-ups: Key tie-ups with Amazon, Flipkart, and other such companies, to fill the crediting, marketing, technological gaps. 

For example, the artisans’ of the old wood carving industry of Saharanpur needed training. Under the ODOP initiative, they are being provided to improve the quality and efficacy of their products.

CHALLENGES

Despite the above achievements, the state still lags in other development indicators such as health and education. The state still suffers from sectarianism and communal violence. The law and order system in the state is believed to be insufficient, although several initiatives have been taken in this respect. This hurts the investment climate of the state.
Also, the GDP per capita of the state is still much lower when compared to other states such as Maharashtra or Tamil Nadu. Also, disparities both economic and social between as well as regional differences, pose a challenge to the equity considerations of the state.