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Uttar Pradesh: In a state of decline

Vijay Chawla in Lucknow

During the initial Five-Year Plans, the difference between the national per capita income and that of Uttar Pradesh was a mere 3 per cent. After 50 years, the difference has increased to 41 per cent.

So far, the state has spent around Rs 463.40 billion during the Ninth-Plan period (1997-2002). This is 5.4 per cent of Rs 8,592 billion spent at all-India level during the Plan period.

Lack of investment, an increasing population and mis-governance over the years have brought Uttar Pradesh to dire straits. So in many ways, the Tenth Five-Year Plan will be crucial for the state's future.

The Planning Commission has set an annual growth target of 8 per cent for the country. Although, the Commission had set a lower growth target of 7.6 per cent for Uttar Pradesh, the state government opted for an 8 per cent target.

Correspondingly, it raised growth target for the farm sector to 5.2 per cent against the Plan body's suggestion of 4.7 per cent. For the manufacturing sector, the growth target was raised to 12.3 per cent against the 11.1 per cent recommended by the Plan body, and for the services sector, it was raised to 8.1 per cent from the 7.9 per cent suggested.

To achieve this growth rate during the Tenth-Plan period, an investment of Rs 3,646.45 billion will be required at 2001-2002 prices.

Of this, the private sector is supposed to contribute 65 per cent, or Rs 2,370.19 billion, and the public sector 35 per cent, or Rs 1,276.26 billion.

Of the total public sector investment required, the state government is supposed to contribute 55 per cent and the Centre 45 per cent.

So, the total Plan outlay for the state stands at Rs 842.33 billion. Is Uttar Pradesh capable of mobilising resources or attracting investment of this order? Even if it is, will it be able to invest these resources gainfully?

To answer this, let us examine some facts and figures. Uttar Pradesh' credit-deposit ratio has been deteriorating over the years. The nationalised banks operating in the state have a credit-deposit ratio of 28.2 per cent against the national average of 58.5 per cent.

If this ratio is brought on a par with the national average, the state will get an annual credit of Rs 50 billion. But, bridging this gap is a big challenge.

Similarly, financial institutions like the Industrial Development Bank of India, the Industrial Finance Corporation of India, ICICI and the Life Insurance Corporation of India have not been forthcoming in extending loans to Uttar Pradesh.

The state got only 6.3 per cent of the total sum these institutions lent to the rest of the country during?

This certainly is a cause for concern. The Reserve Bank of India appointed several committees to look into the matter, but nothing has changed. The banks are flush with funds, but they are not willing to lend much to Uttar Pradesh.

Besides, the state has also not been able to attract significant private investment. Between 1991 and 2001, the private sector invested only around Rs 160 billion in large and medium industries.

To attract more of private investment, the state will have to pursue pro-active policies. The new investment will also depend on how the state treats its sugar and textiles industries. These industries are facing a plethora of problems that need an urgent redress.

Besides, the state will have to take conscious steps to give its image an uplift.

Uttar Pradesh is, at present, infamous for its poor state of governance. State planning secretary Subodh Nath Jha admits that this is an important issue and to a good extent is responsible for the current state of affairs.

Corruption is rampant in the state. As the Tenth Plan document shows, during the Ninth-Plan period, an investment of Rs 32.09 billion was envisaged for various irrigation projects. Though, the government spent Rs 38.32 billion, only half the projects could be completed.

If the state's economy has not failed during the past 50 years, it is only because it was able to increase the agricultural production.

Only the agricultural growth has allowed the state to cater to its growing population and provide surplus foodgrain for other parts of the country.

But, the productivity and the area under cultivation for pulses, oilseeds and sugarcane has tumbled between 1996 and 2001. The productivity has marginally risen in case of wheat only.

So, the Tenth Plan is crucial for the development of the state. So the Tenth Plan is crucial for the development of the state. Yet non-economic issues have come to the fore. Demands to further divide the state have surfaced. A fierce battle is on for the division of existing resources among various caste groups.

In sum, UP is in a state of decline -- and hope seems to be receding for it.

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