Uttar Pradesh Chief Minister Yogi Adityanath set a time frame of five years in June for the state to become a one trillion-dollar economy. He told officials to promote manufacturing, information technology and information technology-enabled services, religious tourism, and agriculture to achieve this. He wanted special focus given to energy, urban development, food processing, and factors that improve people's capabilities.
UP's gross state domestic production at current prices was $250 billion in 2021–22.
The state economy has been growing, but not at the pace required for four-fold growth in six years. Total night-time radiance captured by satellites showed a 69% increase between 2015 and 2019, according to analysis by the Indian School of Business's (ISB) Mohali-based Bharti Institute of Public Policy (BIPP). Of the state's 403 assembly constituencies, 389 showed an increase in total radiance. Night time radiance is a good gauge of economic activity, especially in manufacturing and services. (Farmers do not generate night light when they pump water into fields.) Total radiance as a function of electricity consumption, BIPP says, indicates many things associated with prosperity: access to electricity, reliability of power supply, income levels, and industrial production.
According to BIPP's analysis, 17% of the constituencies showed a large increase in total radiance, 52% a moderate increase, and 27% a small increase.
Another measure that BIPP considered was ‘lit pixels,' which shows the spread of economic activity over time. There was a large increase in lit pixels in 17% of the constituencies. In 72.5%, there was a moderate to small increase. The largest increase in lit pixels was in central UP, comprising Shahjahanpur, Hardoi, Sitapur, Rae Bareli, Lakhimpur Kheri, and Farukkabad districts.
The electrification of homes in UP appears to be the main reason for the increase in total radiance and lit pixels.
Data available on the website of the Central Electricity Authority shows there was a 42% increase in UP's power consumption between 2014–15 and 2019–20, from 74,898 million units (MU) to 105,652 MU (a unit is one kilowatt of energy consumed for one hour). It declined by 602 MU the following year because of pandemic-related disruptions in commercial and industrial activity.
The share of homes in total consumption rose from 33% to 40% during the six years to 2019–20. Their consumption increased by 69% during this period to 42,249 MU. Commercial consumption rose by 55% to 6,698 MU.
Power use in the farm sector also rose by 55%, but this would not show up in night light.
Industrial consumption, on the other hand, was virtually flat. It inched up by just 2.5% from 26,375 MU in 2014–15 to 27,023 MU in 2019–20. The following year, it declined by 733 MU because of the pandemic.
Within industry, there were some sparkling pockets. The state's installed sugar production capacity more than doubled from 71 lakh tonnes in 2014–15 to 153 lakh tonnes in 2021–22. UP was the largest producer of sugarcane. It also became the largest producer of sugar after a sugarcane variety called Co 0238 or Karan was introduced in 2012–13. The state's sugar production increased from 71 lakh tonnes in 2014–15 to 120 lakh tonnes (before diversion for ethanol production).
Since sugar mills produce their own power and steam (from bagasse), their electricity consumption may not reflect entirely in the energy sales or consumption figures mentioned before.
The state's distillery sector also got a boost from the ethanol blending programme. According to a central government press release, UP had 58 molasses-based distillery projects as of December 2022 with an installed capacity of 205 crore litres, next only to Maharashtra, which had 116 projects capable of producing 225 crore litres of ethanol. The ethanol offtake of the oil marketing companies (for blending with petrol) has increased from 67 crore litres in 2014–15 to 158 crore litres in 2019–20. UP has a significant share in it. Improved profitability of sugar mills would reflect on sugarcane farmers. This might explain the rise in total radiance in central UP, whose sugarcane potential was underexploited when farmers depended on diesel pumps. With the better provision of electricity, they were able to grow more cane and earn more.
Some industries have suffered a setback. The carabeef or buffalo meat export industry is one of them. The country's carabeef exports declined from 1.79 million tonnes in 2017 to 1.44 million tonnes in 2022, according to the United States Department of Agriculture (USDA), which monitors the production and export of agricultural and livestock commodities of interest to its farmers. Vigilantes have made cattle trading and transport difficult. UP would have taken a substantial hit because it accounts for 30% of the country's buffalo population.
India's leather exports have also declined, dragging UP down. They fell from $6.50 billion in 2014–15 to $4.87 billion in 2021–22. This partly reflects the global trend towards non-leather footwear and accessories. The leather industry is labour-intensive. The 2016–17 Economic Survey made a case for promoting the garment and leather industries to boost employment in the country. For every Rs 1 lakh of investment, footwear-making produces 7.7 jobs and leather goods 9.9, the survey said. This is higher than food processing (2.4 jobs), steel (0.1), and autos (0.3).
UP was known for towns and cities that specialised in labour-intensive industries like locks (Aligarh), tanning (Kanpur and Unnao), footwear (Agra), brassware (Moradabad), and glass and pottery (Khurja). These have been in decline for several years, partly because of Chinese imports.
But in activities backed by the government, UP scores high. A study published in RBI's August bulletin finds that of 982 projects initiated in 2022–23 with a capital outlay of Rs 3.52 trillion (or lakh crore), UP had the highest share of 16.2%, followed by Gujarat (14%), Odisha (11.8%), Maharashtra (7.9%), and Karnataka (7.3%).
UP seems to score high because infrastructure accounted for 57% of these investments. Power and telecom projects, ports and airports, storage and water management structures, special economic zones, industrial, biotech, and IT parks, and roads and bridges that count as infrastructure are likely to be government contracts or concessions or may require its support for execution. Roads and bridges had a high 36.5 percentage point share in infrastructure investments because of the government's Bharatmala initiative. The share of power projects was 20.3 percentage points. That of metal and metal projects was 14.6%, construction 4.6%, textiles 2.8%, food products 2.5%, and chemicals and pesticides 2.3%.
If UP was attractive to investors, it should have scored highly on foreign direct investment (FDI) as well. It doesn't. According to the Department for Promotion of Industry and Internal Trade (DPIIT), UP got $1.38 billion in foreign equity between October 2019 and June 2023, or 0.63% of the total. It ranks 11th. Maharashtra got 29%, Karnataka 23%, Gujarat 16%, and Delhi 13.5%.
Much of the FDI flows into sectors where UP doesn't have an edge. Financial services and R&D got 16% of the foreign equity inflow during the April 2000 and June 2023 periods. Computer hardware and software attracted nearly 15%. Noida in UP would have gotten a slice of these inflows because of its proximity to Delhi. The rest of UP is unlikely to attract such investments because cities like Kanpur and Lucknow are not as vibrant as Bengaluru, Chennai, Hyderabad, Mumbai, and Delhi.
Noida sparkles, literally. Its total radiance in 2020 was 36,719 pixels. Adjoining Dadri, Jewar, and Ghaziabad followed by some distance, as did Gowardhan (near Mathura) and the two constituencies of Lucknow (15,577 and 18,274 pixels). In much of the state, total radiance is below 5,000 pixels. Those areas might catch on in the future if the slew of projects that the government has announced materialise. There is a lot of work yet for the Double Engine Sarkar.
Vivian Fernandes is a journalist with 35 years of practice.
The views expressed here are those of the author and do not necessarily represent the views of BQ Prime or its editorial team.
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