UP Global Investors’ Summit 2023: The hype and the reality

The three-day high-profile Uttar Pradesh Global Investors’ Summit 2023 (UP GIS 2023) that concluded on February 12 in Lucknow surprised many.

Quite unbelievably, UP Chief Minister Yogi Adityanath shifted somewhat from his usual preoccupation with changing Islamic names of towns and streets, renovating temples, and painting the public walls saffron with pictures of Hindu saints on them. He started talking, perhaps for the first time since he took over as Chief Minister in March 2017, about attracting investment to the state. It is a real wonder that industrial development has come to dominate the official discourse in UP in 2023.

The new drive to attract investments

The Lucknow jamboree, however, was not like any other routine investors’ meet. Yogi formed teams of four to six members, each comprising a cabinet minister, a couple of senior IAS officials, and consultants from Ernst & Young, CII and FICCI. These teams visited the US, Canada, UK, Germany, France, Netherlands, Belgium, Sweden, Australia, Singapore, Japan, Korea, Mexico, Brazil, Argentina, and the UAE and reportedly conducted “road shows” highlighting the investment potential of Uttar Pradesh.

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The Yogi government has not bothered to share with the public how exactly these “road shows” were organised. No footage or even a photo was available. Nevertheless, there was no doubt they did some hectic lobbying. They came back with 149 MoUs from these 16 countries.

These teams also reportedly visited Mumbai, Ahmedabad, Bengaluru, Delhi, Hyderabad, Chennai, and Kolkata to canvass for investment. These teams claimed that they came back with proposals for investment to the tune of ₹7 lakh crore. But just on the eve of the Summit, Yogi claimed that the state had attracted ₹32 lakh worth of investment proposals. This was really an astounding claim which increased further to ₹33.5 lakh crore on the concluding day of the Summit.

Highly exaggerated bogus claims

Gross fixed capital formation (GFCF) is usually taken as a proxy for total private capital investment in actual terms. As per NSO data, the GFCF in private sector in India in 2021–22 was ₹48.50 lakh crore. Yogi Adityanath would have the nation believe that he attracted private capital to Uttar Pradesh to the tune of 66 per cent of the GFCF of the whole of India in 2021–22 in the very next fiscal through a single investors’ meet spread over three days in February 2023.

If this is true, industrial revolution, which spanned over 150 years in Europe, can be achieved in the key state of the Hindi belt at the most within a year and a half. Only a few such investment jamborees are needed. But then the question in the minds of the observers remained: If industrial investment is such child’s play, why does Uttar Pradesh still remain at par with the countries of Sub-Saharan Africa and does not catch up with the countries of Northern Europe in terms of per capita industrial product?

The answer is simple. These kinds of investment summits are known for their “MoU industrialisation”. That only produces worthless MoUs which are promptly dumped into the dustbin by the parties entering into these MoUs once the signing ceremony is over. They know very well that except for the expenses incurred in the ritual of formal signing of the MoU and for the associated photo opportunity, they don’t have to shell out a single extra rupee for any investment. This is true in the case of UP too.

In recent times, while the UP GIS 2023 in Lucknow proclaimed an investment commitment of ₹33.5 lakh crore, the two-day Madhya Pradesh Global Investors’ Summit in Indore on January 11-12, 2023 claimed an investment of ₹4 lakh crore, the three-day GIS Karnataka which concluded on November 5, 2022 declared an investment flow of ₹9.82 lakh crore, and not to be outdone in this race of rhetoric, even the Congress-ruled Rajasthan claimed that ₹10.44 lakh crore of investments were in the pipeline after an investment summit in 2022 based simply on Letters of Intent, which have no binding on the parties under the Contract Act.

Reality check

Contrary to these claims, how much real investment these states have attracted in 2022 in real terms? The Department for Promotion of Industry and Internal Trade (DPIIT) under the Union Ministry of Commerce provides data on Industrial Entrepreneurs Memorandums (IEMs). Any investor proposing to make an investment should first file Part A of an IEM, setting out the details of the proposed investment, and after he/she commences production, he/she should file Part B confirming that. A precise count of these Part B IEMs would eliminate all the useless MoUs.

As per the DPIIT data on filing of Part B returns, in real terms, in 2022, upto November, only ₹6,137 crore was invested in Madhya Pradesh in 46 projects, in Karnataka ₹7,873 crore was invested in 53 projects, and in Rajasthan ₹16,712 crore was invested in 41 projects. This brings out the contrast between the hype and the reality of “MoU industrialization”!

In the case of UP itself, under the same Yogi government, a previous investors’ meet was organized in 2018. During that meet, Yogi claimed that his government had signed 1045 MoUs for ₹4.28 lakh crore of investment. Subsequently, as per the DPIIT data, only ₹12,934 crore was invested in 48 projects in 2018, ₹6162 crore in 38 projects in 2019, ₹14,177 crore in 51 projects in 2020, ₹11,333 crore in 60 projects in 2021, and ₹8,384 crore in 2022 (upto November). In other words, 842 MoUs out of 1,045 were fake propaganda MoUs which did not generate even a single rupee of investment.

Anyway, such investors’ summits have become an unavoidable part of contemporary industrial promotion. No investor or economist takes these preposterous claims seriously. The media too merely reports the inflated figures journalistically but nobody of consequence in the media ever takes these claims seriously. Even if we set aside all these bogus claims, some money still does flow in and some momentum is generated to attract some investment, and UP is no exception to this. But the UP Summit had an added serious element this time.

Industrial transformation of UP

The Lucknow Global Investors’ Summit 2023 doesn’t seem to be Adityanath’s personal brainwave. It carries Prime Minister Narendra Modi’s imprint all over. As guided by an experienced hand who personally steered Gujarat’s industrial progress for more than a decade, the UP GIS 2023 was more of a Modi show. Though he was formally the chief guest, he gave the inaugural address, not only welcoming the participating investors but even outlining the agenda for further industrial progress of the state. His focus was on food processing, textiles, and defence production.

However, some sources in the Sangh Parivar told The Federal that this was not just a personal venture of Modi. Rather, it was a broader Parivar agenda which has been outlined in an article in the January 2 2023 issue of Organiser. Though the return of Modi as prime minister in 2024 is a foregone conclusion for the saffron outfits, the Sangh Parivar leadership is concerned about consolidating the BJP’s hold over the longer term, beyond immediate electoral victories.

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After Maharashtra, Gujarat, Tamil Nadu, and Karnataka, states like Odisha, Andhra Pradesh, and Telangana are making fast progress on the industrial map of the country. But the BJP is nowhere closer to establishing total political sway over these states. This is bound to alter the relative balance of political forces. In the next 10 years, the ruling dispensation is keen on making UP the hub of industrial turnaround for the whole of North India where its political grip is relatively stronger. This alone, they think, would be the key for a future national-level consolidation.

Whatever it is, dreams are one thing. Reality might turn out to be quite different. Industrial summits can only generate an initial fillip which can be sustained only by a series of follow-up measures. As Modi pointed out in his inaugural address, Yogi’s thinking might have changed and he might be sharing all the enthusiasm for the needed turnaround. But he might well become the victim of “bureaucrat’s revenge” in UP.

Though the Summit was preceded by the formulation of about nine detailed industrial policies in 2022, it failed to come up with specific incentives for the priority areas outlined by Modi in his inaugural speech.

Dharmraj Singh Patel, a former member of Parliament from Samajwadi Party from Phulpur, told The Federal: “Just short of giving them investment quotas, all district magistrates in UP came under tremendous pressure from CM Yogi to bring in investment at a very short notice. The resenting shrewd bureaucrats managed to manufacture MoUs on a large-scale and showered them on Yogi, who is obviously quite happy, little realizing that these MoUs are worthless pieces of paper that won’t bring in money even equivalent to the cost of the paper on which they have been signed.”

Will it bear fruit?

Richa Singh, a youth leader in Samajwadi Party (SP), however, thinks that Yogi’s investment summit has really had a favourable impact on the common people. “The people think that something important has started happening,” she told The Federal.

Will it really make a difference in the run-up to 2024? On this question, Hakim Lal Bind, a sitting MLA from the SP from Handia constituency, strikes a different chord. He feels as the move to attract investment is a concerted one, thanks to BJP’s political muscle, some investment is bound to flow in. But it cannot make a dent on the gravity of the unemployment crisis within the short period of a year before the next Lok Sabha polls. In the last assembly polls itself the BJP started eroding and the SP started gaining and that trend would not be reversed by such summits, he told The Federal.

He, too, seems to be making a point.