Economy

One Year In, Adityanath Has Struggled to Articulate an Economic Vision for Uttar Pradesh

The state government is yet to unveil a strategy to address issues such as infrastructural bottlenecks, chronic power shortages, broken healthcare and education systems, and unemployment.

Economic policy-making in Bharatiya Janata Party (BJP)-ruled Uttar Pradesh is getting short shrift. The Adityanath government is about to complete one year in office. However, perhaps as a result of his disproportionate preoccupation with law and order issues, the state government is yet to unveil a strategy to address issues plaguing Uttar Pradesh such as infrastructural bottlenecks, chronic power shortages, broken healthcare and education systems, and unemployment.

Nor has the Adityanath government outlined a solid roadmap to bring down the state’s high debt, which stands at a staggering nearly 30% of state GDP.

The state went to town recently while hosting an investors’ summit in Lucknow. Investment commitments worth Rs 4.28 lakh crore were made by investors who attended the summit. But given the dismal track record of such pledges translating into investment elsewhere, it is difficult to say if the summit will bear fruit. Media reports have already noted how one investment proposal worth Rs 90,000 crore was an apparent hoax, while the Adityanath government is currently carrying out a debt profile check of companies that promised investments to check their seriousness.

In the budget 2018-19, the state government has allocated Rs 27,5750 crore for the energy sector. However, out of the proposed allocation, nearly 62% will go towards meeting interest and subsidy liabilities. Only 38% will be available for capital expenditure. As The Wire has reported, his government’s farm loan waiver – which in turn suffered from serious flaws – has crimped capital expenditure for police services, public construction and, ironically, various agriculture-associated sectors.

The latest UP budget has not envisaged any big project in the power sector despite the state continuing to face electricity shortages. Uttar Pradesh’s erratic power supply is unlikely to attract investors.

The state budget has allocated Rs 17,615.29 crore – 22% more than the previous year – to construct new roads and improve connectivity. However, fund allocation alone may not help expedite the implementation of road projects in the state, many of which are stuck due to problems of land acquisition and other issues.

The state has hiked allocation for education by nearly 11% to Rs 63,213 crore.

Of this, Rs 50,142 crore has to be spent on primary education, Rs 9,387 crore on secondary education and the balance Rs 2,656 crore on higher education. However, if past experience is anything to go by, a hike in fund allocation alone cannot improve the quality of primary education in the state.


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For example, state expenditure on primary education increased by 47% between 2011 and 2015, according to the state government’s Economic Survey 2014-15. In 2014-15, Uttar Pradesh spent Rs 13,102 per elementary school student, including both primary school students (grade I to V) and upper primary school students (grade VI to VIII), a figure that is higher than the all-India spending of Rs 11,252 per student. But learning and transition levels remain among the lowest in the country.

Anyway, there is no guarantee that allocated funds will be fully utilised. The state’s spending on education in 2017-18 is projected to fall short of the budget estimate by 8%.

Similar is the case with the state’s public healthcare system, which remains in a pathetic state because of rampant corruption. It was little surprise that Uttar Pradesh was the worst performer in the NITI Aayog’s latest health index.

The Aayog report, titled ‘Healthy States, Progressive India‘, measured the health index through various indicators like child mortality rates, sex ratios at birth, immunisation rates, proportion of people living with HIV/AIDS and notification of tuberculosis. The reference years for most indicators is 2015 or 2016 and the base years to gauge improvement are between one and three years before the reference year.

The death of 30 children in BRD Medical College of Gorakhpur in a span of two days last September, due to a reported lack of oxygen, served a grim reminder that all is not well in Uttar Pradesh’s public healthcare system.

The state is facing massive joblessness. “The national average is 5.8%; in rural areas it is 3.4% and in urban areas, 4.4%. In UP, it is 5.6% in rural areas and 6.5% in urban areas, and now it has increased to 5.8%,” labour minister Bandaru Dattatreya told parliament last April. However, the state’s latest budget showed little vision for creating jobs.

UP is a predominantly agricultural state and farming provides livelihood to a significant chunk of the rural population. But the BJP government has slashed allocation for the sector by nearly 60% in the 2018-19 budget.

The state’s tax revenues are projected to fall short of the budget estimate by 15%. Collections from stamp duty were 28% lower than the budget estimates. The state’s borrowings for 2018-19 are budgeted at 20% higher than the current fiscal.

In 2018-19, UP is expected to spend Rs 62,980 crore on servicing its debt (Rs 30,547 crore on repaying loans and Rs 32,434 crore on interest payments). This is 20.4% higher than the revised estimates of 2017-18. UP’s outstanding liabilities to GSDP ratio, which stood at 29.9% in 2016-17, are projected to stay at almost the same level till 2020-21.

UP can leverage tourism to create jobs. The state has several historical monuments, which attract tourists in hordes. However, rather than promote these monuments as destinations for tourists, the UP chief minister and other BJP leaders have targeted them through hate speech.

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