'UP should improve governance to attract investors'

A sizeable population in the state is living below the poverty line and the state must crank up its economic growth engine if it seeks to uplift these people, argues Planning Commission member BK Chaturvedi 

Pradeep Kapoor Lucknow

The blame game between the Congress-led UPA government at the Centre and UP Chief Minister Mayawati over lack of development in the country's most populous state continues, as Planning Commission member BK Chaturvedi gives his own take on what the state can do on its own to achieve faster economic growth without having to depend on central financial assistance. In conversation with Hardnews, he says UP should focus on attracting private investment in key sectors such as education, healthcare and power and the state needs to improve governance to become a hot destination for investors.

The central government is concerned about UP falling behind in economic development. Therefore Prime Minister Manmohan Singh constituted a high-level committee to suggest measures to reverse this trend, says Chaturvedi. “A sizeable population in the state is living below the poverty line and the state must crank up its economic growth engine if it seeks to uplift these people.” Mayawati had earlier said that the Centre was discriminating against the state in allocation of development funds and projects. As an example, she cited the delay in providing a special package of Rs 80,000 crore requested by her for financing new and pending projects. For its part, the Centre is apprehensive that the state might not be able to handle such a big amount.

An expert committee headed by Chaturvedi, which evaluated Mayawati's demand for the special package, has found that the state does not have the capacity to absorb so much money. If allocated, the funds might get diverted into wasteful expenditure, the committee has warned. This might also make the state administrators complacent about fiscal discipline. The committee has instead suggested that the state must work harder to attract more private investment to meet its development fund requirements. And it can achieve that by improving its governance.

Chaturvedi expressed reservations about the Centre' decision to hike financial assistance to the state under the Eleventh Five-year Plan. He is of the view that the income gap between UP and other states is widening since 1990. The state's per capita income is now just half the national average. He said the committee was looking into how the central government could help the state to speed up its growth. Chaturvedi identifies power shortages as a key bottleneck hampering UP's economic growth and believes that the state should undertake more reforms to lure private investment in the power sector. New Delhi can support the state through allotment of coal blocks for power plants. Besides, it should also take similar policy initiatives to attract private investment in other key sectors such as education and healthcare.