Economic Highlights

New Delhi, 13 February 2023

Pvt Trillions Pour In

POOR, JOBLESS DRAIN UP

By Shivaji Sarkar 

Investment is pouring in the largest state of Uttar Pradesh. The figures are mind boggling. In the run up to the Global Investors Summit, which began on February 10th, the state claims receiving Rs 1.68 lakh crore through Nivesh Sarathi portal. This is in addition to Rs 1.88 lakh supposed to have poured in between 2018 and 2021. MoUs worth Rs 1.25 lakh crore more are reported to have been signed by the Yogi Adityanath government in its bid to mop up Rs 10 lakh crore. 

Yes, Yogi is helping Prime Minister Narendra Modi in building up a $5 trillion economy by making UP itself a $1 trillion one. It will create 5.5 lakh jobs, claims UP. But kharif losses and high poverty cause are a drain on the state finances. Nevertheless, Yogi government is on a spree to show case its efforts. Moreso after the political Bharat Jodo Yatra show of Congress leader Rahul Gandhi which harped on jobs being are fewer, and the country needs to have more avenues for youth’s progress. 

The country’s largest State has most top industries reportedly making a beeline, but no details of investment by the Adani group are available. The group after rallying in its shares for two days has again been losing at the bourse. Last year, Adani had pledged over Rs 700 billion, but it’s not known whether it has been done. 

The mega shows have a pattern in UP since the mid-1990s. There are promises galore. Even at the summit’s inauguration, Reliance Chairman Mukesh Ambani promised Rs 75000 crore as part of his ongoing investments in the state. So did Kumar Mangalam Birla, who said the Birla Group had invested Rs 40,000 crore in the state and may put in another Rs 25,000 crore. However, actual figures may vary. 

In 2022-23, UP claims to have emerged as the third largest state with nominal GDP of Rs 20.48 lakh crore, but how much money is actually pouring in remains unclear. In 1990s, then chief minister Mulayam Singh Yadav announced figures of Rs 54000 to Rs 57000 crore a number of times being invested through the MoUs. The real figures were always far less. 

On the job scenario, UP has been trailing. Unemployment moved up from 2.1per cent in July 2017 to 21.5 per cent in April 2020, at the peak of Covid-19 pandemic, according to a survey conducted by the Centre for Monitoring Indian Economy (CMIE). Now it has come down to 4.33 per cent after fluctuating during January-December 2022. The figures show a gradual rise despite state government steps such as coming out with a new MSME policy after a large number suffered heavily since 2019. 

Small businesses have been hit disproportionately hard by the continuing power crisis, with several having to shut operations during outages, causing production losses, and others with power backup forced to bear increased costs during the second half of April, when cuts were more frequent and prolonged, say industry executives.“Power outages lead to loss of production opportunities and the usage of power backups nearly doubles the cost of power,” says Anil Bhardwaj, Secretary General of the Federation of Indian Micro and Small and Medium Enterprises (FISME). The cost of power, he says soars to Rs12–13 per unit in case of power backups from the Rs 8 per unit generally charged by distribution companies, one of the highest. The GST also hits them. The high fuel and power rates have adverse impact on the sustenance of the smaller units. As cost of production rises, they have to work on thin margins. It also affects employment potential as there is cut on manpower. Thus, job creation may well remain a problem. 

For this purpose, the state is trying to boost the real estate sector. Chief Minister Yogi Ayadityanth says that to promote the real estate sector, it has charted out plans to buy 43000 acres of land for Rs 7.3 trillion – robbing Peter to pay Paul. This deprives farmers of land and triggers new job seekers. The state is planning to build about 6.4 million new housing units. 

The state government, however, claims that 4.5 lakh jobs have been provided to youth in the last five years in the government sector, and many more in the private sector. It refutes the CMIE figures. 

In UP, the number of unemployed persons – those without jobs but willing to work – has risen from about 40 lakh in January-April 2017 to nearly 56 lakh in May-August 2021, as per CMIE. There is also pressure on the rural and agriculture sector as the post-Covid-19 situation has hit them hard. Kharif production has also suffered. The government is keen on bridging the gap and is showcasing projects such as rapid rail and metro, though in most UP cities the metro is running at a loss with poor ridership. Now a section in the government admits that instead of high-investment metro they could have gone for trams. 

The Jewar international airport project being built by the Tatas is yet another blockbuster. The massive takeover of land all over the state for toll roads, metro, airports is expected to yield political dividends in the run up to the 2024 elections. Though infra is draining the state’s finances. The state has acute poverty. Its 37.79 per cent of the population is extremely poor. Another 44.47 per cent is malnourished -- the highest in the country after Bihar and Jharkhand. 

This is being reflected in the growing demand of the people for MNREGA jobs. Due to lack of recovery in other states, they could not migrate. In many districts like Jhansi, Lalitpur in the arid Banda region, the demand has quadrupled, and more are flocking for jobs. The district officials say that till a few months back there were about 8000 job seekers and now it has swelled to around 31000. It is as per the countrywide trend of rise by 20.9 per cent. The demand has increased with the fall in farm and construction sector demand. This indicates a difficult economic scenario. 

Despite private sector investment promises it may not be easy for the most populous state to maintain its finances. The state has public debt of 32.5 per cent. With not much state enterprises left, depending on the private sector is its compulsion. Its police force lags in investigations due to lack of funds. Private investments may look good but can hardly support the functioning of the state.---INFA

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