Much remains to be done to revive UP’s economy
A recent report on the economy of Uttar Pradesh released by the State Planning Institute (Economic and Statistical Division) does not paint a rosy picture of the state and asserts that the state economy has increased to less than 5% of the state’s gross domestic product (PDSG) in the last four and a half years of Yogi Raj. The investigation report does not bode well as Chief Minister Yogi Adityanath previously set the goal of bringing Uttar Pradesh to a trillion dollar economy over the next five years. At present, the nominal state GDP for the year 2020-21 is Rs 17.05 lakh crore (US $ 240 billion).
There is no denying that the COVID-19 pandemic has had an impact on the state’s economy, as UP’s state gross domestic product (GSDP) declined 5.9% in 2020-2021. But the worrying sign is that the state’s economy has grown by less than 5% in the last four and a half years of Yogi Adityanath’s regime. Revised data released for 2018-19 (provisional revised), 2019-20 (rapid revised) and 2020-21 (revised lead) also indicate that Uttar Pradesh’s economy has grown at a slower pace than expected.
Revised estimates of state revenues that the State Planning Institute (Economics and Statistics Division) released last week show a systemic decline in the health of the economy. The growth of the GSDP in 2017-2018 was 4.9%. However, for fiscal years 2018-19 and 2019-2020, it remained at only about 4.3%. According to these estimates, the economic growth rate was less than 5% in 2017-20 and -5.9% in 2020-2021 affected by COVID-19.
The anticipated estimates for 2020-2021 (released in March 2021) indicated a contraction of around 6.4% of the GSDP. The UP government can take comfort as the national economy also contracted by 7.3% in fiscal year 2020-2021, according to GDP statistics released by the National Statistics Office (NSO) of the Government of Union on May 31, 2021.
The worrying fact is that sectors like manufacturing have experienced negative growth rates over the past four years, and its share in GDPD is also declining and is less than 15 percent. For a state that aspires to industrialization, this is not a good sign. On the contrary, the performance of the agricultural sector has been encouraging as even during the 2020-21 pandemic, the sector posted positive growth of 2.7%. The service sector, or tertiary, performed well, except in 2020-2021 when it fell to 7.9%.
Data shows that UP’s GSDP (at current prices) would have reached Rs 15.82 lakh crore in 2018-19, Rs 17.25 lakh crore in 2019-20 and Rs 17.39 lakh crore in 2020-21. The state government recently claimed that the GSDP peaked at Rs 17.91 lakh crore to Rs 19.40 lakh crore (revised estimates) on March 31, 2021.
The above facts should be a sobering reminder to the state government that much remains to be done to put Uttar Pradesh on the rapid growth path. If it really wants to become a trillion dollar economy, the state must come up with a clear roadmap. Poor GSDP is not convinced that the state will be able to meet the target on time and it would be better for the state government to come back to the drawing board and revise its strategy.