Reviving businesses’ confidence in Uttar Pradesh

July 22, 2020 5:00 AM

The current govt got crime-control, infrastructure development, and power production right

Chief minister Yogi Adityanath and his ministers were faced with the question: Where to start the clean-up?Chief minister Yogi Adityanath and his ministers were faced with the question: Where to start the clean-up? (File image)

By Achal Sharma

The most populated state in the country also has been facing some of the gravest issues for years. Uttar Pradesh, since the last many years, has been dependent on primary industry. Secondary and tertiary industries were in bad shape. A poor law-and-order situation over decades led to businesses in UP bleeding profusely.

When the incumbent government came to power in March 2017, it inherited multiple socio-economic issues from the previous many governments. Chief minister Yogi Adityanath and his ministers were faced with the question: Where to start the clean-up? The government deduced that the biggest loss to the state had been due to crime and corrupt politics. There were no safe havens for businessmen and their businesses. This had wounded the state’s brand quite deeply. Corporate entities were reluctant to come to UP and establish business as they considered it unsafe. Investors also thought the same. Brain-drain was a long-existing phenomenon, as there were virtually no employment/growth opportunities in the state. Haryana, Rajasthan and Punjab were considered as happy grounds by corporates for their natural expansion from Delhi. To instil confidence in the investors and create safe havens for them, controlling crime was critical, along with other measures for the development of the state.

The state government took immediate steps to curb crime, with the CM kicking off a state-wide campaign to fight crime. To improve the state’s brand value, this was necessary. In the first year of the government, there was a sharp drop in crime figures. This iron-handed approach led to some positive results. A message that UP is becoming safer was sent to corporates and investors.

The effect of this has been: the GSDP grew at a CAGR of 7.49% from FY16 to FY20; per capita GSDP increased at a CAGR of 9.02% between FY16 and FY19; the tertiary sector contributed 48.79% to UP’s gross state value added (GSVA) at current prices in FY19, followed by the primary sector (26.94%) and secondary sector (24.27%).

The tertiary sector grew the fastest among the three sectors from FY12 to FY19 (14.10% CAGR). The growth was driven by trade, hotels, real estate, finance, insurance, transport, communications and other services. The primary sector expanded at a CAGR of 12.17% between FY12 and FY19. The growth was driven by agriculture and forestry. The secondary sector expanded at a CAGR of 11.03% between FY12 and FY19. This was driven by manufacturing, construction, and electricity, gas and water supply. According to the department for promotion of industry and internal trade (DPIIT), cumulative FDI inflow to UP stood at $942 million between April 2000 and March 2020. What is more heartening is that in February 2020, the state organised the Defence Expo-2020, and received investment proposals of Rs 5 lakh crore ($70.93 billion).

Government investment in infrastructure rose 3-5 times over what it was under previous governments. The Adityanath-led government released 100-150% of its accrued funds for infrastructure development since it took over. This shows the intent of the CM to develop infrastructure.

Another important resource for business development in the state is power. Power production and supplies were always a huge problem. This government has made sure power production and distribution is streamlined. As of March 2020, UP had an installed power generation capacity of 26,162 MW—6,218 MW under state utilities, 12,837 MW under private utilities, and 7,106 MW under central utilities.

These achievements are not normal for any government that inherited a bag full of worms from not one but many predecessors.

The author is founder, CorePeelers

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