Why Yogi’s $1 Trillion Economy Target Is A Step In The Right Direction And How UP Might Pull It Off

Last month the Chief Minister Yogi announced that the state of Uttar Pradesh shall be the first to attain the tag of $1 trillion economy in India. The announcement itself is a sort of revolution in the politics of Uttar Pradesh and the northern belt.

For decades the politics of Uttar Pradesh has been dominated by the promise of patronage, re-distributive justice and samajwad. In a state dominated by the agrarian discourse with imaginations shaped by the village-level societal concerns, the talk of becoming a $1 trillion economy signals the rise of new aspirational politics.

Just like PM Modi has fired the imagination of India by setting a concrete goal of becoming a $5 trillion economy, this announcement has given a new vantage point, a new prism to the people of Uttar Pradesh to imagine their future. And that in itself is a victory for CM Yogi.

But the task he faces now is monumental. While the economic performance of the state has been respectable for years, it is not enough.

The state has sharp regional variations, from the industrial & service hubs of the Noida, Ghaziabad & other cities of the western Uttar Pradesh, to the agrarian belts of eastern Uttar Pradesh.

From the poverty-stricken Bundelkhand to the socio-economic disasters of the Terai belt. Worse is that even the condition of the once-prosperous Awadh region has deteriorated over the past two decades with poverty actually increasing in the region.

The fundamental challenge Yogi faces is threefold: first, to accelerate the transition of the state from a largely agrarian economy to an industrial one; second, to reduce the regional variations by implementing region-specific policies; and third, to ensure that the growth is broad-based and benefits all social groups.

These are tough goals to achieve simultaneously and will require working on the basics of the economy.

Agriculture

The vast and diverse geography and different regional needs of UP means that a single policy cannot be formulated for the whole state. There is a need for specific plans for each of the sub-regions, which are unified by a common vision of promoting growth and supporting farmers.

Agriculture in UP is in distress with meager growth due to paucity of investment in the sector. Policy-makers should work towards a new green revolution, which skipped UP except for its western parts. But the mistakes of the heavy dependence on chemical fertilizers, pesticides and unsustainable water and power usages must be avoided.

Traditional techniques must be revived and modernized using the latest knowledge with focus on sustainability. Massive investment in R & D in both traditional and frontier areas is required.

However, this technocratic approach has its limitations defined by the prevailing socio-economic structure in agriculture. A major problem is the weak property rights in the countryside.

The rights of farmers are not secure and land is susceptible to be taken over by either the government in an arbitrary manner or by powerful local families, resulting in endless litigations, social disruption and loss of productivity.

Better land management, rationalization and consolidation of land holdings, enforcement of legal mechanisms to ensure property rights are a must to create a solid foundation for agricultural growth.

Then, better access to credit and markets forms the next important step. Proper institutions to ensure agricultural credit must be created to revitalize the sector. Market access needs to be expanded and the monopoly of state companies must be repealed.

Modernization and expansion of sale and procurement facilities, both public and private, is required. Better linkages between industry and agriculture to ensure higher returns to agriculture must be cultivated. It will not only ensure better remuneration to the farmers but also give impetus to the industrial sector.

Infrastructural development in the field of transportation, storage, etc., is required to cut down wastage and to ensure better integration with the regional, national and international markets.

It should not be forgotten that agriculture forms the basis of the economic pyramid and that it has a direct impact on poverty reduction in the state. Agricultural growth directly reduces poverty in the countryside.

Industry

Uttar Pradesh already has a sound industrial and manufacturing base. Every city of the state is a mini-economy in its own right and several of them are important manufacturing and export hubs.

But the misplaced government policies in the past have resulted in isolated factories having weak linkages with its surroundings or a few capital- and technology-intensive complexes providing employment only to few highly-educated people.

What UP needs is rapid growth in the mass-manufacturing sector, which is rooted in the local resource base and provides employment to the locals. Industrialization is not limited to big industries with which it is often hyphenated.

Apart from promoting big industries, UP needs to focus on low capital, traditional and new industries that can absorb the ever-growing legions of the unemployed.

However, the old polices of restrictive policies based on a rigid distinction between small & medium and large-scale industries must be avoided. Small & medium industries are not competitors of large-scale industries but are its auxiliaries, with very strong backward and forward linkages.

We must see them in holistic terms and there must be opportunities for small enterprises to grow into medium enterprises and medium enterprises into large enterprises.

UP also has ample potential for the growth of agro-based industries, which should be promoted, especially in the agricultural belts.

Infrastructure

Infrastructural development is the most crucial factor in tapping the potential for industrialisation.

UP is situated far off from the coastline and international export nodes; therefore, the development of state-of-the-art railway and road links to ports in Bengal & Orissa should be undertaken on a priority basis.

While road connection to the nearest metropolitan centre at NCR has undergone tremendous improvement over the past decade, rail connectivity leaves much to be desired. It makes no sense for trains to run at a measly speed of 40-50 km in the northern plains.

The state government should collaborate with the centre and the railways to create a network of semi-high-speed and high-speed trains with special focus on freight trains, to ensure better economic integration with neighbouring states by cutting down on fuel and time cost of transportation.

Besides this, better integration with neighbouring Nepal is crucial, especially in the border areas of the state that fall in the same geographical zone as the neighbouring districts in Nepal.

The state also needs to resolve the electricity issue. It is difficult for UP to rely on wind and solar energy due to geographical challenges. The only source that can provide a solution is nuclear energy and the state should aim at building nuclear reactors for future demands. UP must embrace nuclear energy.

Services

The service sector contributes about 45 per cent of the total GDP of UP. The state is the 'IT-Hub' of North India. Sadly, despite a large pool of educated and skilled workforce, the state lags behind other big states in industries like Biotech, Mass Media, Banking and Finance, etc.

The main reason is the lack of proper institutional and legal framework and administrative apathy. The law and order condition, lack of proper infrastructure — especially electricity — are some of the major bottlenecks in this regard.

The archaic laws, regulations, and weak property rights deter entrepreneurs from entering into this sector. UP needs a comprehensive vision and a detailed policy to create an enabling environment for our entrepreneurs to launch their ventures in the state rather than shifting to other states.

For instance, with proper planning, UP can leverage lower rent and living costs in its major cities as compared to already established IT hubs of the country. But for this to happen, CM Yogi needs to give priority to the development of urban centres that are in chaos currently and suffer from squalor due to lack of investment in infrastructure, proper planning and basic amenities.

Urbanisation

Cities suffer from excessive density, pollution, low living standards and shortage of electricity and water. Unlivable cities don’t attract outside talent and new ideas. And this lack of influx does take a toll because economically vibrant cities are those that are most cosmopolitan too.

These areas must be addressed to improve the quality of life and enable a welcoming environment for migrants who often find themselves moving from rural poverty to urban poverty. Urban planning needs to become a major focus area.

The state needs to change its policy outlook towards cities, which should see them as engines of economic growth and not just as a real-estate problem. City planning must include flexibility with a long-term view.

The revitalizing and rejuvenation of the municipal bodies by creating a technical and professional bureaucracy and ensuring an efficient financial system is a long-term task that should be among the first priorities.

Besides this, we need to ensure the sustainability of the urbanization process. Most of our cities are battling pollution, lack of freshwater and problems of resource flow. These lessons need to be incorporated into the urbanization drive in UP along with the new experimental policies and technologies being evolved and encouraged.

Health And Education

Ultimately it all boils down to the ‘people’. We need to remember that economic growth, productivity, technological advancement and modernisation are all about the people and not the machines.

It is the investment in human beings that leads to technological advancement, industrialisation, increased productivity and higher living standards. And so, health and education are the two fundamental areas where the Yogi government must act on a war footing.

All the efforts of promoting economic growth and industrialisation can’t succeed without a well-educated, skilled and healthy workforce. But education and health surprisingly remain the most neglected areas of public policy in the state.

And the main reason for this has been the decay of the public sector. It is often forgotten that the private sector is not the substitute but rather a complement to the public sector in the crucial areas of health and education.

It is expected that the Yogi government will pick up the threads and work on the basic problems facing UP’s economy rather than just announcing fancy, isolated projects like “industrial parks”, “unemployment benefits” etc.

And it seems that the Yogi government has its eyes set on the right path. It’s not just the improved general law and order situation but the fact that CM Yogi has already announced plans for Universal Healthcare by 2021 and work is underway in 13 new medical colleges and 500 new diagnostic centres.

UP was the first state to roll-out the ‘One District, One Product’ scheme to launch the district-level industrialisation policy with the ultimate aim of manufacturing high-quality export products.

Under his watch UP has already become a prominent centre for electronics and mobile phone manufacturers. One of the first decisions of the Yogi government was a mandate to teach English from the nursery level itself, and 5,000 state-government-run English-medium primary schools are coming up in the state.

But these massive reforms and investments still escape the education sector. And it is there, at the primary, secondary and tertiary level, that the future of the state of Uttar Pradesh shall be decided.