Uttar Pradesh under Yogi Adityanath: Deep dive into data tells a tale

I took my friend seriously and decided to do some digging because he was a journalist with a reputed US-based financial wire service and also an anchor with a couple of Hindi business news TV channels. His view had support of a study done by officials of Reserve Bank of India’s Department of Statistics and Information Management, published in RBI’s August bulletin, titled “Private Corporate Investment: Performance and Near-term Outlook.”

The authors, Shreya Bhan, Rajendra N Chavhan and Rajesh B Kavediya, based the study on projects costing Rs 10 crore and more, with majority private ownership. They analysed data on external commercial borrowings, project finance lending by banks and financial institutions (FIs) to private companies, and domestic issuances of equity.

Infra projects galore

According to them, 982 projects were initiated in 2022-23 with a capital outlay of Rs 3.52 trillion (or lakh-crore). UP had the highest share of 16.2 per cent, followed by Gujarat (14 per cent), Odisha (11.8 per cent), Maharashtra (7.9 per cent) and Karnataka (7.3 per cent).

UP seems to score high because infrastructure accounted for 57 per cent 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, which 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 per cent, construction 4.6 per cent, textiles 2.8 per cent, food products 2.5 per cent and chemical and pesticides 2.3 per cent.

Low on FDI

If UP was attractive to investors, it should have scored high 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 per cent of the total. It ranks 11th. Maharashtra got 29 per cent, Karnataka 23 per cent, Gujarat 16 per cent and Delhi 13.5 per cent.

This is because much of the FDI flows into sectors where UP doesn’t have an edge. Financial services and R&D got 16 per cent of the foreign equity inflow during the April 2000 and June 2023 periods. Computer hardware and software attracted nearly 15 per cent. Noida in UP would have got 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. They lack amenities and are not particularly safe for women. A government run as a one-man autocratic show also does little to bolster investor confidence.

In terms of declarations of intention to invest, UP received 12 between January 2021 and March 2023. These are denoted by Industrial Entrepreneur Memorandums (IEMs). Even though licensing has been practically abolished, promoters of projects, new or existing, with investment of Rs 50 crore or annual turnover of Rs 250 cr have to file applications known as IEMs furnishing details like incorporation certificate, Memorandum and Articles of Association and income tax permanent account number and obtain an acknowledgment of verification from the Secretariat of Industrial Approvals.

Maharashtra got the most IEMs at 68, Gujarat 49 and Karnataka and Tamil Nadu 25 each. But none of the 12 proposed projects in UP reported their implementation and commencement of operations as of March this year.

Trails in GSDP, too

Adityanath was first sworn in as chief minister in March 2017. How did the state fare during his first five-year term? Its gross state domestic product (GSDP) in 2021-22 was 6 per cent higher than in 2017-18. Other states have done much better. Bihar’s GSDP grew 24 per cent, Rajasthan’s 17 per cent, Madhya Pradesh’s 25 per cent, Himachal’s 14 per cent and Jharkhand’s 12 per cent. Richer states like Andhra Pradesh had a GSDP which was nearly 26 per cent larger than in 2017-18. Karnataka’s grew by 23 per cent and Telangana’s 21 per cent.

UP’s per capita net state domestic product (NSDP) shrank by 3 per cent during this period. It was Rs 40,432 in 2021-22 – lower by Rs 1,339 from the year when Adityanath became CM. It had risen to Rs 43,053 in 2019-20. The COVID pandemic seems to have hit the state hard. Another state that saw a decline in per capita NSDP was West Bengal – by 1 per cent. But other North Indian states have done better. Rajasthan’s grew by 10 per cent, MP’s by 15.5 per cent and Himachal’s by 10 per cent. Even Bihar, which has a large migrant population, saw its per capita NSDP grow by 15 per cent.

Yet Uttar Pradesh is said to have pulled out 14.75 per cent of its population out of poverty between 2015-16 and 2019-22 as per NITI Aayog’s Multidimensional Poverty Index (MPI) published in July. The share of population that is multidimensionally poor, as per the index, was 22.93 per cent in 2019-22 compared to 37.68 per cent in 2015-16. This index measures poverty along 12 parameters, unlike previous estimates which were based on daily per person consumption expenditure.

But experts say the index may be underestimating poverty because of the inclusion of parameters like ownership of bank accounts (which may be dormant). According to the index, 36.43 per cent of UP’s population is undernourished. How can people who do not have enough to be eat be considered to be not poor?

Lower crime rate?

Has Chief Minister Adityanath’s strictness on crime reflected in a lower crime rate? According to the National Crime Records Bureau, the number of cognisable crimes (under the Indian Penal Code or IPC) in UP per lakh of population during 2019-21 was 154.5. It was little changed from the previous 2016-18 period, when it was 153.5.

UP’s crime rate before Adityanath took over was 139.3 during 2015-17 and 128.7 during 2014-16. These figures need be qualified. They may be underestimates as not all crimes may be registered. Kerala for example, had a crime rate of 401 and Tamil Nadu 422 during 2019-21. Even Maharashtra’s rate at 294 was nearly double that of UP. It’s difficult to believe these states are less safe than UP.