Economic Highlights

New Delhi, 21 August 2015

UP Track Record

INDUSTRY IN SHAMBLES

By Shivaji Sarkar

Uttar Pradesh bogged down in family, caste and communal politics remains the laggard State in team India. With high potential of its people, skilled labour, forward-looking farmers and entrepreneurs keen on taking a plunge, UP remains sick euphemistically called BIMARU.

Family and domination of a particular caste hampers all progress in this largest State of the country. The industry, pestered by “rangdari”and demands of the clan, close to the ruling class, is in utter disgust, highly uncomfortable and keen to move away. In fact, many have moved away leaving only a skeleton of their establishments for technical reasons.

It is an irony that MoUs signed have no value. During the reign of Chief Minister Mulayam Singh Yadav, the Government had signed agreements worth Rs 53,000 twice over with industrial houses, but only a miniscule percentage turned into fruitful investment. However, on the other side, it served the electoral purpose of course.

Present Chief Minister and son Akhilesh Yadav seems to follow father’s footsteps and doesn’t lag behind. During the past few months, he has signed Rs 60,000 crore MoUs with many large business houses. If past records are any guide, again most of these would remain on paper. Indeed, UP’s MoUs have become the proverbial bad case. In reality if all those investments had come to the State, it could have the highest growth rate. Unfortunately, UP, at the bottom of development pyramid, is marked by poor law and order, poor roads, faltering power and water supply, high graft, and even losing on the agriculture front, once its pride.

The prized area of UP, Noida, Greater Noida and Ghaziabad have become the biggest blocks with about two lakh unfinished housing units. The unfinished towers built without consideration for basic civic needs such as water, power and transportation have symbolized the largest debts taken from banks and financial institutions.

During the rule of Mayawati one particular social segment is stated to have made progress and the State also had become a virtual monopoly of one company, Jaypee group. It remains so even today. It holds large chunks of prime land in Noida, Greater Noida, western and other parts of UP. Its prized Formula 1 car racing track today remains a showpiece with one of the largest empty housing towers all around, many unfinished.

This group, which has also the largest share in roads, expressways and power plants, remains one of the highest debt-ridden companies. As per published reports, the company has not paid Rs 95,272 crore debt – almost one-third of the total NPAs of public sector banks. Credit Suisse raised the alarm as far back as 2012 in a report titled House of Debt, which listed the top 10 most indebted corporate houses in India. Jaypee made it to that list and the one that the brokerage followed up with the next year.

There are many other companies of the State which are under serious debt burden. They have been barred from bidding for projects over Rs 25,000 crore by Government agencies in seven States.

Assocham in a study has found that the State remains at the lowest among the traditional BIMARU States. Even on the agriculture and allied sectors, UP has proved to be the slowest with 2.9 percent growth, well below the national growth rate of 3.7 per cent, it said. The share of agriculture and allied sector in UP’s gross state domestic product (GSDP) has dipped from 29.7 per cent in 2004-05 to 21.9 per cent in 2012-13.

Still according to official data, 72 per cent of the States’ people are dependent on agriculture. It is characterized by low growth, low employment, low crop, low income and high inputs. The largest population of agricultural workers – landless and small holders - is adversely affected. The policy discrimination with agriculture sector has widened the rural-urban, rich-poor divide, according to a study by Middle East Journal of Scientific Research.

The sugar industry is in a Rs 25,000-crore mess. It has hit the farmers of western UP hard. The sugar industry has not paid them their dues for years. It is developing into a major political problem in the state. According to R.K. Bansal, chairman of the corporate debt restructuring cell and executive director at IDBI Bank Ltd, while sugar mills in most States are facing difficulties, those in UP are worse off because the State Government has prescribed a particularly high state advised price to score politically.

The Moradabad brass industry is known all over the world for its fine handicraft. This is also losing sheen. In 2006-07 the total export turnover from this city was Rs. 3,200 crore, which came down drastically to Rs. 1,800 crore in 2011-12. However, the domestic business for Moradabad industries has grown to Rs. 1,800 crore in 2011-12 from Rs. 1,500 crore in 2006-07.

The story doesn’t end here. A number of institutions offering management, engineering and technical education have approached AICTE and UP government for permission to close down their institutions. These are not getting students because of their poor quality as well as slump in jobs in the industry.

And it remains all through an unfair system in the State. A proper inquiry may expose that situations are worse than VYAPAM of Madhya Pradesh. In UP, no youth gets a job on merit. It is a common saying and belief. The people have lost faith in State Public Service Commission. It selected 54 candidates for the job of sub-divisional magistrate of a total of 86. Recently, according to reports ophthalmologists were required for a government hospital in Allahabad. The candidates who are supposed to have done best were thrown out reportedly to favour those who had the backing of a politically powerful minister.

The State has also virtually declared a moratorium on recruitments including the coveted State civil services. Of the 20 Yash Bharati award for literature and arts, 15 belonged to one caste and five were from a minority group. Of the 75 district magistrates 63 are from the same caste, so are 62 basic shiksha adhikaris (teaching officers), 67 percent of police station SHOs, UP Public Service Commission chairman, subordinate services commission and secondary education selection committee.

Nothing in the State functions unless one is from a caste or is able to please the right quarters. No wonder the State remains in shambles and Prime Minister Narendra Modi may have to squirm as his dream gets shattered, at least in UP. ---INFA

(Copyright, India News and Feature Alliance)