Monday, March 12, 2012

[ZESTCaste] Can Akhilesh Singh Yadav make UP find economic dynamism like Bihar?

11 Mar, 2012, 09.08PM IST, Avinash Celestine,ET Bureau
Can Akhilesh Singh Yadav make UP find economic dynamism like Bihar?

Soon after the Samajwadi Party swept to its stunning victory in Uttar
Pradesh, ET on Sunday spoke to an industry leader in the state. What
were his thoughts about the new Samajwadi Party government? His
outlook was wary, bordering on cynical. "Someone I spoke to summed it
up like this," he said. "Lootere gaye, goonde aa gaye [The thieves
have gone and the goons have come in]."

The Samajwadi Party may have battled Mayawati for the political space
in Uttar Pradesh, but when it comes to the realm of the economy, the
biggest battle may be internal. Mulayam Raj between 2002 and 2007 was
widely seen as a 'goonda raj' and events on counting day, attacks by
SP workers on journalists, and the death of a child when another SP
worker fired his gun in celebration, bought many of those fears back.
Mayawati did little for industry, but it is widely acknowledged that
law and order was far less of a problem for industry under her. Will
SP 2.0 be different?

Lopsided Economy

UP's growth since atleast 2003-04, has been nothing to sneeze at.
Between 2006 and 2010, state GDP growth was an average of 7%.
Manufacturing growth was around 8.6%, though construction was a major
driver of the state economy, growing at around 10%. But it is the
pattern of this growth, with income generation being concentrated
regionally and sectorally, that are worrying.

Six of a total of 71 districts in UP accounted for a quarter of the
state's growth between 2000 and 2009. In terms of employment growth,
manufacturing employed one of four urban workers in 2009-10, but
that's actually a fall of three percentage points from 2004-05. The
only sectors which have expanded their share of employment in these
years has been construction and public administration.

In rural areas again, it is construction which has been the biggest
driver in employment growth, seeing its share rise from 5.3% to 12.3%
of the rural workforce in five years. It is this lopsidedness which
the SP government has to fix and which is a symptom of the more common
complaints in UP's industry circles, crumbling infrastructure and
frequent power cuts being the biggest.

SP's Bad Politics

Apart from its dubious track record on law and order, the SPs
reputation is helped little by its stance on other aspects of policy
reform. "The SP has been largely conservative in approach to economic
policy reform," points out AK Singh, of the Giri Institute of
Development Studies in Lucknow. The SP for instance had opposed
investment in organised retail, a stance echoed by Mayawati. What will
SPs approach be this time around?

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