The new UP government is to be reconstituted on the 25th of March 2022 by the BJP led NDA claiming victory on account of a strong pro-incumbency vote. Recent economic woes exacerbated by the once in a 100-year viral pandemic has been the proverbial Achilles heel for the NDA. The government has so far not been successful in providing opportunities for a very young and restless population of the state.
In this context the goal of growing the economy from the current Rs 19.05 trillion ($250 billion) gross state domestic product to $ 1 trillion is comparable with climbing the Everest in a snowstorm of pandemics, war like conflicts, natural disasters, and climate change. American author and strategist Jim Collins would call this a “Big, Hairy Audacious Goal” (BHAG).
It is a laudable goal perhaps one that may mobilize resources and the economic engine in the heartland of Bharat. It must however be peppered with realism and objectivity. Quadrupling of the economic output as measured from today till March 2027 will require very intense alignment of capacity and tremendous economic activity. All the pistons of the economic engine must move with nothing less than missionary zeal.
Based on the broad breakdown of 2018-’19 figures, Agriculture contributes to about 24%, Industry 26% and Services 50% of the state GDP. A realistic breakdown of this would mean the sector output would effectively double in 30 months. This requires very significant private and public investment. Limited State execution capacity implies the need for a very robust framework to monitoring and regulation to ensure each of the primary growth engines are to perform as required to reach the goal.
A reforms-based approach is needed to unleash the pent-up performance capacity of the state population. A calibrated pathway must be designed with what the economist Joseph Schumpeter would call “Creative Destruction” measures. This requires careful reevaluation of the state laws and colonial rules from pre-independent India that hold us back. Decriminalization of penalties and arbitrary rent seeking must be stopped by design for the larger population to perform and the state to prosper.
According to the multidimensional poverty index of the Niti Ayog, 37.8% of the state population is poor. While the central and state government schemes of “Antyodaya” inspired by ideals of Pt. Deen Dayal Upadhyay, have been instrumental in providing for the poor during a devastating pandemic, we require structural measures for ensuring long term prosperity of the state population. These schemes were instrumental in casting of the pro-incumbency vote.
Any structural prosperity pathway that is chosen by the state government for growth must consider the following dimensions for the policy formulation:
1. About 77% of the population still lives in rural Uttar Pradesh in over 1,00,000 plus villages. Any economic progress for the state must have our villages at the very center of the chosen strategy.
2. A vast majority of the working population falls within the ambit of the unorganized sectors. This is estimated at over 90% of the working population.
3. Agriculture with 24% of the state output contribution provides for vast population of the state and remains the sustenance backbone. While the agriculture law reforms were retracted, effort must be made to address the infirmities and challenges of fragmented land holdings leading to non-remunerative outcomes.
4. Systematic and limited migration of labor towards construction, manufacturing and services must be planned to expand the output from all the sectors.
5. 21st century jobs for the young and educated population. This cannot be achieved without large scale expansion of technological sectors such as information technology, biotechnology, and other advanced domains.
6. Manufacturing resurgence is essential for ensuring the growth of jobs in the heartland especially in the MSME sectors. It is well documented that every manufacturing job indirectly creates four services jobs.
7. Strategy for widespread distribution of services jobs to TIER III and IV towns must be thought through. Intermediate infrastructure for supporting such jobs must be proliferated involving construction capacity of the private sector.
8. Decentralization as an economic mantra must be considered for enabling production and services that are widespread as opposed to only a cluster-based approach.
9. Strategic sectors such as Security and Defense could provide the backbone for the industrial development in the state through the development of the military industrial complex. MSMEs and technology start-ups in the state should become an essential part of this industrial complex.
10. Improving the relevance of education and training at the primary and secondary levels of schooling for the modern economy is needed. Technology enablement of the schools is essential for preparing the work force for the digital economy.
11. Dramatic increase in the healthcare footprint especially primary healthcare in providing better health outcomes must be considered. 70% of the health infrastructure must be centered and built around primary care reaching the last village of the state.
12. Some of the World’s most polluted cities are in the state. A new environmental deal is required to drastically reduce the air and water pollution in cities. Changes in municipal government in the state is required to improve our quality of life through this new environmental deal.
13. An expanding economy creates a self-perpetuating cycle. Complex, large scale and varied financial instruments must be used to deploy capital at the earliest to pump prime the state economy.
14. We cannot blindly import practices from developed economies and multilateral institutions. We must therefore consciously design instruments and outcomes based on our unique circumstances, demographics, economic and ecological conditions. This requires a fresh approach.
15. Any chosen pathway must take into consideration all stakeholders without any bias. Thus, wide public consultation is required so that end outcomes are widely spread, and prosperity is collectively shared.
“Peace, easy taxes and tolerable administration of justice are preconditions for prosperity,” wrote Adam Smith, the Scottish professor of philosophy and logic in his treatise Wealth of Nations. The timeless words of wisdom translated for 21st century Uttar Pradesh imply the state must ensure peace and security for all its citizens, a fair and equitable system of taxation and swift delivery of justice by the administration. Achieving and exceeding the goal of $1 trillion output for the economy in five years would then be more than possible. The transformational effect would truly be Antyodaya for all the citizens left behind on the prosperity curve.
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