Boom Boom Bust

Despite tall promises, UP’s economy continues to sink

Pradeep Kapoor Lucknow 

Applying lessons learnt from the 2009 parliamentary and recent assembly polls, political parties in Uttar Pradesh are tweaking their focus on economic policies to woo their constituents in the run-up to the 2014
general election.

UP Chief Minister Akhilesh Yadav’s budget has been described as populist and an attempt to win over a spectrum of people across the caste and class divide. The sops that he has announced since the Samajwadi Party (SP) came to power, like the Kanya Vidya Dhan (girls’ education allowance), allowance for the marriage of Muslim girls, distribution of cycles, laptops and electronic tablets are expected to put a great burden on the depleted finances of the state. 

Yadav announced a growth target of 8.5 per cent that is higher than what is projected by the Centre. Planning Commission Deputy Chairman Montek Singh Ahluwalia exuded confidence that UP would be able to reach its target, but independent economists are not very sanguine about its prospects since UP is no longer an attractive destination. All the phobias beginning with abysmal law and order conditions, crumbling infrastructure, and rampant corruption, have returned to scare away investment. The recent violence during the Bharat bandh, whereby factory establishments were ransacked and looted, can scare away investors.

In many sectors, goons have taken over the state. There are examples of goons claiming to be supporters of the SP oiling extortion machines and extracting huge sums from businessmen. While many of these reports are anecdotal, they damage the credibility of SP. Despite this, the government is optimistic that it will achieve a high growth rate in excess of 8 per cent. Industries Development Commissioner Anil Gupta had earlier claimed that UP had received an investment of Rs 10, 000 crore. It is difficult to say, though, whether these funds are enough to kick-start the state’s promised growth economy.

SP says that its promise to build 259 bridges and expansion of roads will hold. Prof AK Singh of the Giri Institute of Development Studies, Lucknow, feels that the government has failed to focus on the energy sector which is in a very poor state. He feels that, in the Budget, the government should have announced a programme to improve generation capacity and transmission. He said that the government should have tried to meet growth targets instead of squandering funds in non-productive areas.

Opposition leader Mayawati understands the importance of sound economic fundamentals for winning elections. She may have lost the assembly elections by a whisker, but her strong performance was linked to the state’s robust growth during the years that she was in power. During her five-year rule, the state received investment worth Rs 1 lakh crore.

During Mayawati’s regime, 13 new industries, 200 new degree colleges and 300 engineering colleges were set up. The Yamuna Expressway was built, which, though, became operational during the Akhilesh regime. Extensive work had also been done for the Ganga Expressway, which was later cancelled by the new government. The power front also showed 5000MW production; it increased during the BSP regime. But for her fetish for statues, corruption stories and scams, UP could have posted a much higher growth rate.

The Congress, which has been out of power since 1990, is hoping for a repeat of the extraordinary results of 2009 when the party got 21 seats in the Lok Sabha. These results have been a subject matter of intense analysis and the conclusions display a unanimity that the Congress benefited from the economic policies of the Centre like the farmers’ loan waiver and MNREGA. Congressmen like Surendra Rajput are banking on the food security bill and cash transfer scheme to target beneficiaries so as to transform their plummetting fortunes.

Unfortunately, a depleted BJP is in a fix, despite strongman Rajnath Singh being at the helm in Delhi. It hopes to upset all electoral calculations while unpacking its only trump card — Narendra Modi — as a possible candidate from a UP seat. Indeed, cynical poll observers predict that this card too might boomerang in a highly polarised state like UP.

This story is from the print issue of Hardnews: MARCH 2013