why uttar pradesh fares poorly on socio-economic parameters

5/6/2014 Election watch: Why Uttar Pradesh fares poorly on socio-economic parameters : Business Today

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Election watch: Why Uttar Pradesh farespoorly on socio-economic parametersShweta Punj April 22, 2014

A closed factory in Amethi. UP ranks 14 among 15 major states in terms of average number of factory workers. It had 301workers for every one lakh of population, compared with the national average of 780, in 2010/11. Photo: Shekhar Ghosh

"Factory tab khulegi jab kamal khilega (factories will open when the lotus blooms)," saysSmriti Irani, the Bharatiya Janata Party (BJP) candidate from Amethi in Uttar Pradesh, at asmall gathering in Atawa village. Irani is referring to the scores of factories in India's mosthigh-profile parliamentary constituency that lie abandoned and the lotus, the BJP's electionsymbol that she wants her audience to choose on May 7 when Amethi goes to polls. Most ofthese factories were set up when former prime minister Rajiv Gandhi represented Amethi inparliament and made a concerted effort to get businesses to invest in the constituency. Whatremains today are crumbling structures of iron, which local residents steal and sell as scrapto buy illicit drugs.

Amethi is a Gandhi family bastion. It has elected members of the Gandhi family since 1980 -first Sanjay Gandhi, then brother Rajiv, followed by Rajiv's widow, Sonia, and now sonRahul, the Congress party's vice president who is seeking re-election. Besides factories, theGandhis have managed to get several big-ticket educational projects sanctioned from thecentral government including institutes for information technology, hotel management andfootwear design. These projects also have not yielded the desired results. And, little haschanged on the ground. Roads are full of potholes, power cuts last up to 16 hours a day, andirrigation and health-care facilities remain abysmal.

Amethi, however, is not an exception and the situation is similar across India's mostpopulous state. But why does the state that elects the most number of lawmakers for theLok Sabha - 80 of 543 - and which produced eight of 13 prime ministers remains one of theworst in the country on socio-economic parameters?

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One of the main reasons is the dominance of caste, religion and identity-based politics in thestate. Muslims, for instance, have typically voted for Mulayam Singh Yadav's SamajwadiParty (SP) or the Congress while the backward castes have supported Mayawati's BahujanSamaj Party (BSP) and the BJP has traditionally relied on the upper castes. In other words,development agendas have never been the focus of debate. "There is still a very feudalmindset in the state," says Sharat Pradhan, a veteran journalist. Pradeep Kashyap, Founderand CEO of consultancy firm MART, says the state has failed to produce a visionary leaderwho could rise above caste and religion and focus on socio-economic progress. "You need aperson with a vision of a prime minister to govern UP. It is as big as a country. Businessesthere have grown because of their proximity to ruling parties," he says.

TOUGH BUSINESS ENVIRONMENT

A couple of hours' drive away from Amethi is Lucknow. The state capital is dotted withstatues of elephants, the BSP's election symbol. At the state secretariat, not too far awayfrom the modern wing that houses the chief minister's office, is the dusty industry affairsdepartment where a bureaucrat who is barely two days into his job offers a perspective thatcomes from years of experience. The bureaucrat, who wished not to be named, talks abouta company trying to obtain approval for a project. "This clearance shouldn't take more than afew hours but it's been three months," he says. "Decisions that can be and should be madeat much junior levels are being referred to the CM's office for approval."

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Aditya Trivedi

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A dirt road in Karchana village, near Allahabad. UP ranks ninth based on the average road length. It had 78.5 km ofsurfaced roads for every one lakh of population, compared with 82.3 km for the country, in 2007/08 Photo: ShekharGhosh

No wonder, industry leaders are disillusioned. "I have met the CM [Akhilesh Yadav, son ofMulayam Singh Yadav] multiple times. We meet him, discuss our issues and then there is nomovement," says a senior manager at a sugar company. A top industrialist, who wished toremain anonymous, says "it is next to impossible" to do business in the state. "Over the pasttwo decades the state has not focused on development. You go to Maharashtra or Gujaratand you will find a different picture since the governments there are development-oriented,"he says.

What exacerbates the problem is that successive governments discontinue policies madeby previous governments. For instance, the SP government in 2004 announced a policy toencourage sugar mills, promising them several fiscal incentives. The next government, ledby Mayawati, scrapped the policy even though sugar companies such as Balrampur ChiniMills, Bajaj Hindustan and Triveni Engineering had added capacities to take advantage of thesops.

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Aditya Trivedi

Aditya Trivedi

Aditya Trivedi

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Aditya Trivedi



In UP we don't have a Congressgovernment and this affects the ofthe state and that is the reality haveto accept: Rahul Gandhi, CongressVice President and sitting MP fromAmethi Photo: Sanjay Sonkar

A group of villagers in Bundelkhand. The state's per capita income was `26,355 in 2010/11, half the national average,placing it at the 14th spot among major states. Photo: Shekhar Ghosh

Abinash Verma, Director General of the Indian Sugar Mills Association, says cane pricing isa political issue in UP and does not take into account the returns mills make on sugar. Headds that other major sugar producers like Maharashtra and Karnataka have enacted lawsto link cane price with that of sugar. Kushagra Bajaj, Vice Chairman and Joint ManagingDirector of Bajaj Hindusthan, the biggest sugar maker in the state as also in India, says thestate government will have to take many proactive measures over the next 10 to 15 years toearn industry's trust and attract investments.

Industry contributes about a fifth to the state economy. But, between 1991 and 2010 thestate received investment proposals from industrial projects that accounted for barely six toseven per cent of the total proposed industrial investment in the country. Moreover, only athird of the total proposed investment of Rs 2,25,552 crore materialised, official data show.The investment pattern has also been highly skewed, with the western region attracting morethan half the total funds and the central and eastern regions lagging far behind.

A case in point is the decline of Kanpur. Once known asManchester of the East, Kanpur has lost its status as oneof the most industrialised cities in the country. Of thehundreds of textile mills that made Kanpur an industrialtown, barely a few are still functional. "Mill owners did notinvest in upgradation of their machinery and slowly becameobsolete. Moreover, trade unions resisted modernisation,"says A.K. Singh, Professor at Lucknow's Giri Institute ofDevelopment Studies. Another example is Noida, nearDelhi, which is often cited as a success story by the UttarPradesh government. In 2010/11, 319 factories shut

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A dry hand pump in Chandauli village, near Varanasi. Getting a hand pump installed can be a very difficult task forpeople in a state where nearly a third of the population is below the poverty line. Photo: Shekhar Ghosh

operations in the city where poor law and order and powersupply are the main issues. "Roads are much better inNoida than Gurgaon in Haryana. Yet, companies still preferGurgaon because of the law and order situation," saysKashyap of MART.

The state administration insists industry is high on itspriority. Alok Ranjan, Infrastructure and IndustrialDevelopment Com-missioner, says the state is reachingout to businesses who want to invest more than Rs 100crore. "We are asking businesses what they want. We are

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happy to discuss and resolve issues on a case to case basis," he says. Ranjan adds thatthe state has received Rs 8,250 crore of investment proposals in the last one month. Ranjansays the state government is planning to set up a single-window clearance system forindustry. The government is also working to improve power supply, attract global investors



Amethi is one of the top 10 backwarddistricts in Uttar Pradesh. Samepromises have been madegeneration after generation: SmritiIrani, BJP candidate from AmethiPhoto: Sanjay Sonkar

and formulate policies to encourage electronics and food processing sectors, he adds.

A broken irrigation canal in Bundelkhand. The state is a major producer of food grains. But in the case of the moreremunerative commercial crops, it ranked 13 in 2009/10. About a fourth of the cultivable area is under commercial crops,compared with more than a third for India. Photo: Shekhar Ghosh

The efforts have yet to bear fruit. State government data show that, of the 50-odd projectspromised and cleared in 2014, work hasn't begun on nearly 40 projects. Also, largecompanies such as Reliance Industries, PepsiCo and Indo Gulf Fertilizers, which signedpacts last year to set up projects in the state, have either yet to begin work or have shelvedtheir plans. In contrast, Bihar - a relatively poor state that has 40 Lok Sabha seats - set up asingle-window clearance system in 2006, and a June 2009 World Bank report rated Patna asthe second-best city in India to start business after Delhi.

{blurb}Meanwhile, in Amethi, BJP's Irani and Kumar Vishwas, the Arvind Kejriwal-led AamAadmi Party's candidate, are exhorting people to throw out the Gandhi dynasty and vote fordevelopment. "Amethi is one of the top 10 backward districts in Uttar Pradesh. Samepromises have been made generation after generation," says Irani. Vishwas promises tocreate jobs. "We will revive sick units and open businesses which can employ the localyouth? There are no jobs in this area. There is a class of beneficiaries the Congress hasbuilt," he says. {blurb}

In his defence, Rahul Gandhi blames the state governmentfor the lack of development. "The responsibility of roads,electricity and schools lies with the state government. Thecentral government has built national highways and wehave done a good job? In UP we don't have a Congress

Aditya Trivedi

Aditya Trivedi

Aditya Trivedi



We will revive sick units and openbusinesses which can employ thelocal youthâ€¦ There are no jobs inthis area: Kumar Vishwas, AAPcandidate from Amethi Photo:Sanjay Sonkar

government and this affects the people of the state and thatis the reality we have to accept," he said in a TV interviewwith Headlines Today, part of the India Today Group thatpublishes Business Today.

Is the electorate preparedto ignore narrowconsiderations ofdynasty, caste, andreligion, and instead putdevelopment issues at theforefront? Perhaps not.

Renu Singh, 35, a resident of Attawa village, says herfourteen-year-old son tells her to vote for BJP, which haspromised development as its main agenda. Veerganj farmerand Congress supporter Ram Prasad, 55, says he will votefor a party that waives his Rs 6,000 farm loan. ArjunYadav, 39, moved to Lucknow from Amethi about threeyears ago for better opportunities and education for hischildren, but remains a Gandhi family loyalist. Sonia Gandhi

is Amethi's daughter-in-law and he would again vote for Rahul, he says and talks about ahand pump that the Gandhis gave his family in 2002.

"The aura of the Gandhis will take time to fade away," sums up Pradhan, the journalist. "Igive it two more elections for development to take precedence over everything else in UttarPradesh." That's bad news for the state.

With inputs from Ajay Modi

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why uttar pradesh fares poorly on socio-economic parameters

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