The doldrums

The doldrums

To rid UP of economic woes, the Govt must revisit and redraw its strategy.

The recent report on Uttar Pradesh’s economy released by the State Planning Institute does not paint a rosy picture, particularly when Chief Minister Yogi Adityanath has set the target to take the State to $1 tn economy in the next five years. At present, the State’s nominal GDP for 2020-21 is Rs 17.05 lakh crore ($240 bn). There is no denying that the COVID-19 pandemic has impacted UP’s economy as its Gross State Domestic Product (GSDP) shrunk by 5.9 per cent in 2020-2021 but the worrying sign is that the economy grew at less than five per cent during Yogi’s tenure. The revised data released for 2018-19 (revised provisional), 2019-20 (revised quick) and 2020-21 (revised advance) also indicate that the economy grew at a slower rate than expected. The revised estimates of UP’s income show a systemic decline in the health of its economy. The GSDP growth in 2017-18 was 4.9 per cent. In 2018-19 and 2019-20, it remained at about 4.3 per cent only. As per these estimates, the rate of economy’s growth was less than five per cent during 2017-20 and (- 5.9 per cent) in 2020-21. The advance estimates for 2020-21 (released in March) had shown a contraction of about 6.4 per cent in the GSDP. The UP Government can take solace that the Indian economy too contracted by 7.3 per cent in the 2020-21 fiscal, as per the GDP statistics released by the National Statistical Office (NSO) on May 31.

These figures clearly signal that the UP Government will have to mobilise additional resources to push the economy. The worrisome fact is that sectors like manufacturing registered negative rates of growth over the last four years. Its share in GSDP is also declining and is less than 15 per cent. For a State yearning for industrialisation, it is not a good sign. On the contrary, the performance of the agricultural sector has been quite good. Even during the pandemic fiscal, this sector has shown a positive growth of 2.7 per cent. Services or the tertiary sector has done well except in 2020-21 when it contracted by 7.9 per cent. The data show that UP’s GSDP (at current prices) is estimated to have reached Rs 15,82,682 crore in 2018-19, Rs 17,25,860 crore in 2019-20, and Rs 17,39,114 crore in 2020-21. The State Government had recently claimed that the GSDP has increased from Rs 17,91,263 crore to Rs 19,40,527 crore (revised estimate) on March 31, 2021. These facts should be a sobering reminder to the UP Government that much needs to be done to put the State on the fast trajectory of growth. If it really wants to become a $1 tn economy, it has to come up with a clear road map. The poor GSDP does not instil confidence that the State will be able to achieve the target within the stipulated timeline. It would be better if the Government goes back to the drawing board and revises its strategy.