71

Chapter: 3

Socio-Economic Challenges in Uttar Pradesh

Uttar Pradesh, the most populous state of India is well known for

its multi‐hued culture, religion and variety of geographical land. It is

endowed with natural wealth in abundance such as minerals, forests,

flora and fauna. The state has to its credit the magnificent architectures

and known for its rich arts and crafts.

Uttar Pradesh is located in the Northern part of India and is

surrounded by Bihar in the East, Madhya Pradesh in the South,

Rajasthan, Delhi, Himachal Pradesh and Haryana in the West and

Uttarakhand in the North and Nepal touch its Northern borders. The

state is witness to numerous golden chapters of Indian history and has

contributed to rich Indian mythology and tradition. It is garlanded by two

pious river of Indian mythologies ‐Ganga and Yamuna. Uttar Pradesh is

exquisite land of monuments of historic significance, renowned forts,

museums, and enchanting scenes of natural beauty, wildlife sanctuaries

and inspiring religious sites.

Uttar Pradesh is primarily an agrarian economy with more than 60

per cent of the population depends on agriculture for their livelihood.

The state is the largest producer of food grain in India and offers a

diverse agro climatic condition which is conducive for agricultural

production. Uttar Pradesh is known for its highest contribution to

nation‘s sugarcane basket. However, the state offers excellent

investment opportunities for industrial development.

Uttar Pradesh is often seen to represent the region described as

the ―Hindi–speaking heartland‖ of India. Presently, Uttar Pradesh covers

2.41 lakh sq. km. and accounts for 7.3 per cent of total area of the

country, while its share in country‘s population is 16.16 per cent

72

i.e.19.95 crore as per Census 2011. UP has attained 1st position in

terms of population according to Census 2011. Population residing in

rural Uttar Pradesh is 79.2 per cent (Census 2001) and 20.8 per cent of

total population is urban population. Uttar Pradesh is organized into 17

administrative divisions (Census 2001), 71 districts (Census 2011), 312

tehsils (Census 2011) and 820 development blocks (Census 2001).

There are 52002 (Census 2001) village Panchayats in the state

covering 1.06 lakh (Census 2011) inhabited villages. The majority of

villages in UP are small with an average population of around 2500 per

Panchayat (Census 2001). The state is situated in the Indo–Gangetic

plain and intersected by rivers. In economic terms, Uttar Pradesh is

divided into four regions viz. Western Region, Central Region, Eastern

Region and Bundelkhand.

The state, though gifted with fertile soil and rivers, is one of the

poorest states in India. Though endowed with ‗Unlimited Potential‘

(Government of UP, 2002), UP is often paradoxically called ‗Ulta

Pradesh‘. The state is well known for its success in the green revolution

and is the highest producer of food grains and sugarcane in the country,

yet the poverty level in the state are very high in comparison to other

states, and about 32 percent of its population lives below the poverty

line (Kozel and Parker, 2003).

The resource potential of the state is given in the Box 3.1 below.

Box: 3.1

Resource Potential of U.P.

Land Resources

Nearly 1.7million ha area is under cultivation.

Over three fourths of the cultivated area is irrigated.

The Gangetic plain is among the most fertile land in the world.

Most parts of the state receive good rainfall- over 1000cm annually.

The climate is suitable for growing a large variety of crops and fruits.

73

Water Resources

The state is rich in surface and ground water resources.

Over three- fourth of the sown area is irrigated.

Uttar Pradesh has fairly large canal network, which account for about 22 per cent of irrigated area.

Ground water is easily tap able and accounts for about 78 per cent of irrigated area.

Livestock Resources

Large number of livestock of various types.

U.P. is largest producer of milk in the country.

Fishery has a good scope in the state, particularly in the eastern region.

Human Resources

The biggest resource of U.P. is the large and cheap manpower.

Skilled and unskilled workers are available in large numbers.

Most of the population is in young age group constituting a demographic dividend.

A large number of educational institutions at a different level exist in the state producing a large number of educated youth.

Human Development:

The economic stagnation in Uttar Pradesh is manifested in terms

of infrastructural bottlenecks, fiscal imbalances and unfavorable social

sector parameters. The dismally low level of human development in

Uttar Pradesh calls for enhancing human capabilities and

competencies. It is worth mentioning that there was a meager

improvement in education and health indicators in UP over the years.

The value of HDI has also improved from 0.314 in 1991 to 0.388 in

2001, which is indicative of the improvement in health and education

indicators in the state. However, the scenario of human development in

UP is still quite dismal. Uttar Pradesh occupied the 13thposition in terms

of HDI. In fact, gap between the country as a whole and the state on

various development indicators was much less in the initial years of

planning than what it is today.

The state‘s economy, primarily being agricultural, is undergoing a

gradual change with a decline in the share of agriculture and an

increase in the share of the services sector. The present chapter

74

analyzes the pattern of development in terms of economic, social and

fiscal parameters. It also attempts at having overall assessment of the

demographic characteristics of the state like population, age, sex ratio,

literacy, and infant mortality rate. The economic structure is analyzed on

the basis of the indicators like GSDP, growth of GSDP, and pattern of

sectoral shares in NSDP, industrial and infrastructural scenario, poverty

and unemployment. Finally it presents the fiscal scenario of the state.

Demographic Structure:

Uttar Pradesh is the most populous state in India with an

estimated population of 199,581,477 people as per Census 2011 and a

land area of 2,40,928 sq. km. According to Census 2010 one sixth of

the world‘s population lives in India and one–sixth of India‘s population

lives in Uttar Pradesh. Uttar Pradesh has the population of 19.95 crore

according to Census 2011 of which 52.41 percent constitutes males and

47.59 percent females. Uttar Pradesh is the most populous state of

India and has 16.16 per cent (Census 2011) of the country‘s population.

In terms of percentage share in geographical area of the country, UP

with 7.4 per cent (Census 2001) share continues to be fifth largest state.

It is a well established fact that India‘s demographic parameters, future

fertility transition and population stabilization would primarily depend on

the changes that may occur in the eight large states viz. Uttar Pradesh,

Uttrakhand, Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Orissa

and Rajasthan accounting for about 45.87 percent (Census 2011) of the

country‘s population. These states according to the Census 2011 have

been described as Empowered Action Group (EAG). Among these

states, Uttar Pradesh is the biggest state in terms of the size of

population endowed with vast natural resources and manpower but it

remained at lower levels of development in almost all aspects.

75

The important demographic characteristics of UP and India have

shown that the average annual exponential growth rate in the state is at

1.85 per cent than that in the country (1.64 per cent) as a whole

(Census 2011); it continues to languish at lower level of Human

Development and performance. Thus it is imperative to bridge the

growing gap between the State and the national average. The

population density in the state according to Census 2011 was 828

persons per sq. km., which is much higher than figure of 382 persons

per sq. km for the country as a whole (Census 2011). Population growth

has also remained high in the past decades. During 1991-2001

population in U.P. increased at the rate of 2.33 per cent per annum

against the national average of 1.94 per cent per annum whereas

during 2001-11 the decadal growth rate of UP was 20.09 per cent

against the national average of 17.64 per cent (Census 2011). Both

fertility and birth rates in U.P. are much above the national level. Sex

ratio in the state is also adverse. Lowering down the population growth

rapidly is a major challenge before the state.

The demographic indicators presented above reflect an explosive

situation in years to come for the state of Uttar Pradesh. The

Government of India appointed an expert group to make population

projection up to 2016 for different states and also to indicate the likely

period of attaining Net Reproductive Rate (NRR) of 1 for the states and

the country as a whole. The Committee projected Uttar Pradesh‘s

population at 17.4 crores, 21.7 crores and 24.3 crores in the years

2001, 2011 and 2016 respectively. The committee did not calculate

NRR and assumed that NRR would be 1 if Total Reproductive Rate

(TRR) becomes 2.1. However, we do not agree with the projection of

the expert committee because while estimating the death rates the

impact of IMR on death rate was not taken into consideration

(Table 3.1)

76

Table: 3.1

Demographic Scenario of Uttar Pradesh: Future Projections

1991 2001 2011 2021

Total population (in crores) 13.91 17.63 22.13 27.50

Birth rate 35.1 33.5 30.50 28.00

Death rate 11.1 8.5 7.5 7.0

Total fertility rate 5.2 4.6 3.9 3.1

Growth rate 2.3 2.4 2.3 2.2

Infant Mortality rate 93 75 65 60

National growth rate 24.0 25.0 23.0 21.0

Source: Office of the Registrar General of India, Ministry Of Home Affairs

Uttar Pradesh has been ranked 16th on the basis of various

socio‐economic parameters viz. agriculture, primary health and

education, law and order, infrastructure, investments, consumer

markets and macro economy.

Economic Structure:

Uttar Pradesh is one of the fastest developing states in India and

has shown a healthy growth path during the last decade. The average

real GSDP of the state has grown at around 6 per cent during

2002‐2011 and has augmented more than twofold fromRs.1, 82,885

crore in 2002 to Rs. 3, 91,952 crore in 2011. Tertiary sector contributes

a significant share of around 49 per cent in the GSDP followed by

primary and secondary sector at around 28 per cent and 24 per cent

respectively during 2011. It may be noted that the share of primary

sector has declined marginally from around 30 per centduring 2006 to

around 28 per cent in 2011, while share of secondary sector has

remained stagnant at around 24 per cent during the same period. The

Among major states, birth rate is higher in Uttar Pradesh.

IMR is not only higher than national average but also more than many major states.

Death rate, Natural Growth Rate and Total Fertility Rate of Uttar Pradesh are greater than the national average.

The crucial demographic problems of the state are: o High Birth Rate o Moderately high Death Rate o High IMR o High MMR

77

Economic structure of the state of Uttar Pradesh can be evaluated with

the help of State Domestic Product. Throughout the planning period, the

growth rate of UP has remained markedly below the growth rate of the

country as a whole. As a result, per capita income of UP economy has

remained markedly below that of the same of the country as a whole.

State Income:

It may be observed that UP‘s contribution in Net National Income

has declined both at current prices and constant prices (1993–94)

during 1997–98 to 2008–09 is 11.81 per cent. Again, it is evident that

while for India, the average growth rate of income at current prices with

a moderate degree of fluctuation (CV 24.84 per cent) during 1999–00 to

2008–09, the average growth rate of income for Uttar Pradesh is 9.74

per cent, which is much below the national average with a much higher

degree of fluctuation i.e. CV 41.33 per cent. Similarly, the average

growth rate of net income of U.P. at constant prices is 5.01 per cent,

which is below the national average (7 per cent) and indicates high

variations (CV 42.49 per cent) as against the same (CV 31.85 per cent)

for India. It may be noted here that the annual growth rate of the state

during Eighth, Ninth and Tenth plans were recorded at 3.2 per cent, 2

per cent and 5.4 per cent respectively. However, the state sustained its

annual growth rate at above 7.0 per cent since 2006-07 (Table 3.2).

Table: 3.2

Total Income of India and Uttar Pradesh

Year State Income (NSDP) current price

National Income (NNP)

current price

State’s contribution to National Income (per

cent)

State Income (NSDP)

constant price

National Income (NNP)

constant price

State's contribution to National Income (per

cent)

1999-2000 156809 1589673 9.9 156809 1589673 9.9

2000-2001 161769 1700466 9.5 160015 1648018 9.7

2001-2002 168370 1849361 9.1 162926 1743998 9.3

2002-2003 182652 1994217 9.2 168198 1806734 9.3

2003-2004 200463 2237414 9 177054 1961817 9.0

78

2004-2005 217577 2526285 8.6 185920 2105184 8.8

2005-2006 241922 2875958 8.4 195804 2308015 8.5

2006-2007 271532 3312568 8.2 209623 2533432 8.3

2007-2008* 310334 3787597 8.2 226223 2764795 8.2

2008-2009$ 359836 4326384 8.3 243035 2941971 8.3

Source: Annual Plan Uttar Pradesh 2010-2011

Similarly it is clear from Table 3.3 that the state‘s contribution to

national income 19both at current as well as constant price has

revealed a declining trend over period 1999-2000 to 2008-09.

Table: 3.3

Estimates of State GSDP and National Income (Rs In Crore)

Source: Annual plan Uttar Pradesh2010-11

The same pattern is also depicted in the growth of per–capita

income at current as well as at constant prices. At current prices, the

average growth rate of per–capita income for India is 10.06 per cent as

compared to 7.59 per cent for Uttar Pradesh. Again, the degree of

fluctuation is also low (CV 30.27 per cent) for India as compared to

Year State Income (GSDP) current Prices

National Income (GDP)

current Prices

State’s contribution to National Income (per cent) current

Prices

State income

(GSDP) constant

Price

National Income (GDP)

constant Price

State’s contribution to National Income (per cent) constant

Price

1999-2000 175159 1786526 9.8 175159 1786526 9.8

2000-2001 181512 1925017 9.4 178997 1864301 9.6

2001-2002 190269 2097726 9.1 182885 1972606 9.3

2002-2003 206855 2261415 9.1 189682 2048286 9.3

2003-2004 226972 2538170 8.9 199682 2222758 9.0

2004-2005 248851 2877701 8.6 210462 2388768 8.8

2005-2006 277068 3282385 8.4 222242 2616101 8.5

2006-2007 312627 3779384 8.3 239070 2871120 8.3

2007-2008* 357557 4320892 8.3 258067 3129717 8.2

2008-2009 $ 412151 4933183 8.4 276677 3339375 8.3

79

Uttar Pradesh (CV 54.1 per cent). Furthermore, at constant prices

(1993–94), the average growth rate of per capita income is 5.4 per cent

for India and the same is very low (2.95 per cent) for Uttar Pradesh.

Again, the degree of fluctuation is also quite high for Uttar Pradesh (CV

75.6) as compared to the same at the national level (CV 43). Per capita

income of U.P and India is evident that overall growth performance of

the state is very poor as compared to India because average growth

rate of per capita net income and total per–capita income are low and

the degrees of fluctuations are very high.

Economic Growth During Plans:

During first 25 years of economic planning UP‘s economic growth

was extremely low at around 2 to 2.5 per cent p.a., which was hardly

above the states per capita income (Singh 2000) However growth rate

U.P picked up in 5th plan period and arrived at par with National growth

rate in 6th and 7th Plans. Unfortunately, since beginning of 1990‘s growth

rate in U.P decelerated markedly and remained hardly around 3 per

cent p.a. during 8th and 9th Plans. Arguably constant rate of growth of

population of Uttar Pradesh along with the deceleration in the SDP

growth rate since the 8th Plan period has led to a fairly low growth rate

of state‘s per capita income of almost 1.7 per cent per annum as

compared to the national per capita income growth rate of 4.2 per cent

per annum. The per‐capita income of Uttar Pradesh stands at a modest

level of Rs. 23132 (2010) which is much below the national average of

Rs. 44345. However, the state has posted significant growth in terms of

raising its per capita income level. It has augmented from Rs. 14115 in

2006 to Rs. 23132 in 2011 with a growth of more than 60 per cent. Uttar

Pradesh has one of the lowest per capita income amongst the Indian

states. The per capita income of the states like Goa, Delhi, Haryana,

Maharashtra, Punjab, Tamil Nadu are comparatively better then Uttar

80

Pradesh, however it is higher than Bihar. It is also evident that since the

completions of VII Plan onwards the disparities between In addition to

this the population growth rate of U P is above the national average and

the gap between the two has tended to widen on account of a slow but

gradual decline in the national population growth rate and constant

population growth rate at the state level during the last three decades

starting from 1971.

Growth Scenario: Looking into the Future:

The growth performance of the state of Uttar Pradesh may be

analyzed in terms of sector-wise estimated domestic products and per

capita distribution at factor cost by industry of origin. With a view to

have comparability of estimates, income deflated data at one constant

price, viz., 1993-94, Table 3.5 below depicts the Compound Annual

growth Rates of Net State Domestic Product and Per Capita NSDP of

Uttar Pradesh. It can be inferred from the Table 3.4 that compound

growth of NSDP has increased from 1999 to 2008-2009. But per capita

income growth shows a decline since 1971-72. It has again increased to

2.63 per cent over period of 1999 to 2008- 2009.

Table: 3.4

Compound Annual Growth Rates of Net Domestic Product and per NSDP of Uttar Pradesh

Period 1960-61 to

1970-71

1971-72 to

1980-81

1981-82 to

1990-91

1991-92 to

2002-03

1960-61 to

2002-03

1999 to

2008-2009

NSDP 2.1 3.53 5.1 3.86 3.79 4.48

Per Capita NSDP 1.8 3.17 2.73 1.64 2.54 2.63

Source: Paper on ‘Economy of Uttar Pradesh: An Overview’ by D.M. Diwakar

SDP and Its Sectoral Contribution:

It may be observed from the Table 3.5 given below that during

2008-09 while the primary sector contribute 31.7 per cent, secondary

sector almost stagnated at 21 per cent level and the tertiary sector has

81

witnessed a moderate income in its share to GSDP with a view of

providing insight into the dynamics of growth into the state, for this,

analysis of sectoral pattern of growth is called for. Thus, acceleration in

growth rates which was visible since the mid of 1970‘s largely was the

agriculture led growth in the wake of green revolution (Singh 1987 and

2002). In other words the agriculture sector played a crucial role in

development of the state because of its large size in state economy and

its links both on demand and supply side. In the year 2008-09 the

contribution of the primary sector was 31.7 per cent including

agricultural and animal husbandry (29.5 per cent). There was a decline

in the share of primary sector contribution from the year 1999-00 to

2008-09. Secondary sectors are almost stagnant at 1999-00 levels.

There is a moderate increase in the share of tertiary sector when

compared with 1999-00 levels.

Table: 3.5

Percentage Distribution of GSDP in UP

Year Primary Secondary Tertiary Total

Agriculture and A.H.

Primary Manufacturing Secondary

1999-00 33.2 35.5 13.1 21.8 42.8 100

2000-01 32.7 35.2 12.8 21.1 43.7 100

2001-02 32.6 34.7 12.4 20.1 45.2 100

2002-03 31.4 33.9 12.5 20.4 45.8 100

2003-04 31 33.3 12.6 20.3 46.5 100

2004-05 29.5 31.8 12.9 21.6 46.6 100

2005-06 28.6 31.2 12.8 23 45.8 100

2006-07 27.6 30.1 12.8 23.6 46.3 100

2007-08(P) 27.6 30.2 12.9 24.2 45.6 100

2008-09(Q) 29.5 31.7 9.6 21.2 47.1 100

Source: ‘Economy of UP: Issues and Challenges’ by Dr. AmarendraSahoo

Agriculture:

Agriculture is one of the most significant sectors of the economy

of Uttar Pradesh with2/3rd of the workforce of the state dependent on

82

agriculture for their livelihood. The state is the largest producer of food

grain in India and offers diverse agro climatic conditions which are

conducive for agricultural production. The major crops grown in the

state are paddy, wheat, sugarcane, potato, mustard, groundnut, gram,

pea and lentil. The state is well established for the export of rice,

mangoes, vegetables and potatoes. The state has set up as many 485

fruits and vegetable processing units. Uttar Pradesh has implemented

―e‐Choupal‖ model to tackle the challenges faced by the sector through

delivering of valued service to the customers. The state has allocated

an amount of Rs. 4496 crore for agriculture and allied activities in the

annual budget of 2012, which is 8.9 per cent more than the allocation

made in 2011. Uttar Pradesh is also one of the major agri‐exporting

states in the country. In Eleventh Five-Year Plan the higher dependence

of the state economy on the agricultural sector puts cap on its ability to

share fully in the gains from the rapid growth of services and the

manufacturing sector. Today the most rapidly growing sectors of the

national economy are services and manufacturing, which have a lower

share in state income. Moreover, even in these sectors the growth rate

of the state economy is lower than that of the country as a whole. On

the other hand, the slower pace of structural shift in favour of the non-

agricultural sector implies that the agricultural sector remains over-

crowded due to declining size of holdings and low agricultural income

per worker. As a result, the incidence of rural poverty remains high. UP

has to, therefore, re-orient its strategy of development to promote faster

growth of non-agricultural activities both in the rural and the urban areas

and help improve the rate of urbanization.

Performance of Agricultural Sector in UP:

Uttar Pradesh stands at first position at all India level in terms of

food grain production. The state‘s food grain production has increased

83

from around 43 million tonnes in 2001 to around 47 million tonnes in

2011.The following Table 3.6 highlights the performance of agriculture

and allied sector in UP as against national economy from 1st five year

plan to 10th Five Year Plan.

Table: 3.6

Agriculture and Allied Sectors Growth Rate in Plan Periods

Plan Agriculture and Allied Sector (per cent)

Overall Economy (per cent)

U.P India U.P India

First Plan (1951-56) 1.86 2.71 2.12 3.60

Second Plan (1956-61 1.48 3.15 1.75 3.95

Third Plan (1961-1966) (-) 0.09 (-) 0.73 1.58 2.32

Three Annual Plan (1966-69) 0.62 4.16 0.32 3.69

Fourth Plan (1969-74) 0.94 2.57 2.23 3.25

Fifth Plan (1974-79) 5.23 3.28 5.70 5.30

Sixth Plan (1981-85) 2.54 2.52 4.11 4.10

Seventh Plan (1985-90) 2.69 3.47 5.70 5.80

Two Annual Plan (1990-92) 5.42 1.01 3.14 2.47

Eighth Plan (1992-97) 2.70 3.90 3.20 6.80

Ninth Plan (1997-02) 0.80 1.90 2.00 5.60

Tenth Plan (2002-07) 2.10 1.10 5.30 7.70

Source: Planning Commission UP

Agriculture and allied sectors happen to be the key sector in UP

and engages more than 65 per cent of work force, most of whom are

below poverty line. However, the performance of agricultural sector was

far from satisfactory. It may be observed here that agricultural growth

rate of the State economy from 6th Plan onwards continuously declined

under various Five Year Plans and the same was less than the national

average during 8th and 9th Plans. Thus, the pressure of population and

abysmal poverty has exerted pressure on the State, ultimately resulting

fragmentation of land holding (less than 0.9 hectare).

84

U P is undoubtedly one of the major food grains producing state

with rice, wheat, chickpea, and pigeon pea as the major food grain

crops. Sugar cane is another important crop whose cultivation has

increased with the expansion of irrigated area (90 per cent). It may be

noted here that the contribution of UP in food basket of the country is

highest for lentil (47.25 per cent) followed by potato (46.39 per cent),

sugarcane (37.68 per cent) and wheat (33.02 per cent) during 2006-07.

However, U P occupies an average position in terms of per capita

production and yield per hectare notwithstanding the fact that the state

has the tremendous potential enhancing growth and productivity. With a

large livestock population characterized by low productivity, this sector

has vast potential, which can be optimally harnessed so as to increase

its growth rate from present 4.5 per cent to the projected 10 per cent.

The following Table 3.7 shows status of food grain production in UP as

compared to India. It is important to note that agricultural productivity in

Uttar Pradesh is higher than all India average.

Table: 3.7

Agricultural Development of Uttar Pradesh as Compared to India

1951 Status Current status (year as mentioned in the bracket)

U P India U P India

Agriculture

Total Food grain Production (lakh m

tone)

117.75 508.25 399 1984

(2004-05) (2004-05)

Average Production of Food grain

(kg/hect.)

689 522 2200 18.6

(2007-08) (2007-08)

Percent of Forest area of total

reported area

10.9 14.2 7 22.9

(2005-06) (2005-06)

Source: Overview of Uttar Pradesh, Annual Plan Document

85

Industry:

Industrial sector is the second largest sector of UP‘s economy. Its

contribution to SDP currently stands at 20 per cent with 5.67 per cent of

the labour force employed therein. Sugar, Vanaspati and Cement are

the three most important industries in the state. Despite the fact that UP

has witnessed significant increase in industrial production during the

planned process of development, the state still lacks the requisite level

of industrialization. The following Table 3.8 represents the industrial

growth rates during various Five-Year Plans. It is evident that the

industrial growth rate of the State was highest in the Sixth Five Year

Plan and lowest in the Fifth Five Year Plan. Eighth and Ninth Five Year

Plan have witnessed better performance as compared to IVth and Vth

Five Year Plans. It may be noted here that the rate of growth of industry

in recent past has varied between 2 per cent to 6 per cent per annum.

Significantly, industrial growth rate which was recorded at 8.6 per cent

during the late eighties declined to 3 per cent during the early nineties.

While the growth rate of this sector in the Ninth Plan was negative, it

has grown by 6.5 per cent per annum during the Tenth Plan. Recently,

UP has witnessed significant growth and structural changes in the

factory sector of industries. The modern sector of industries, such as

chemicals and engineering has experienced relatively faster growth

than the traditional industries such as sugar and textiles. The

diversification of UP‘s rural economy becomes imperative from the

standpoint of employment, distribution and long–term growth. If the rate

of growth of trade et al, manufacturing (registered) and construction in

UP was raised to the mean rate of 6.9 per cent, 6.4 per cent and 8.7 per

cent respectively, UP‘s (divided) GSDP would have gone at 6.4 per cent

p.a. (Virmani, 2008).

86

Table: 3.8

Industrial Growth in Historical Perspective

Plan Period Growth Percent

First Five Year Plan 1951-56 2.3

Second Five Year Plan 1956-61 1.7

Third Five Year Plan 1961-66 5.7

Three Annual Plans 1966-69 1.2

Fourth Five Year Plan 1969-74 1.4

Fifth Five Year Plan 1974-79 0.4

Sixth Five Plan 1980-85 11.8

Seventh Five Year Plan 1985-90 10.9

Eighth Five Year Plan 1992-97 4.2

Ninth Five Year Plan 1997-02 4.3

Source: UP Eleventh Five-Year Plan, 2007-12

The state has had an abundance of herbs used for ayurvedic

medicines etc. given below in box, is the special structure of agro-based

industries (Box: 3.9).

Box: 3.9

Agro-Based Industries in UP

Particulars Locations

Fruits and vegetable processing compels Ghaziabad

Frozen fruits and vegetable Project Ghaziabad and Bulandshahar

Vacuum freeze dried fruits and vegetable Ghaziabad

Potato-based Alcohol Project Farrukhabad

Potato Flakes/granules Project Ghaziabad

Onion/ Garlic Powder Project Mainpuri and Etawah

Integrated fruits and vegetables grading , Packaging and cooling centre

Saharanpur

Source: Study of the problems of sick SSIs in UP and suggested strategies for their revival, IDS

87

The government of UP has identified six corridors for industrial

development, as given below in the Table 3.10.

Table: 3.10

Industrial Corridors

Noida Greater Noida, Ghaziabad, Gautama Buddha Nagar

Meerut Moradabad, Bareilly

Agra Aligarh, Firozabad, Khurja, Kosi (Mathura)

Lucknow Unnao, Kanpur

Allahabad Bhadohi, Varanasi, Mirjapur

Jhansi Lalitpur, Jalaun

Source: Study of The Problems Of Sick SSIS In UP And Suggested Strategies for Their Revival, IDS, Lucknow University

However, poor production efficiency levels in UP continues to

drag down industrial performance. As evident from the data in 2001–02

the number of LOIs issued was 1695 but in 2006–07 it came down to

360. The capital investments have also come down from Rs.43386

crores in 2001–02 to Rs.9782 crores in 2006–07. The working days

have also come down from 425125 in 2001–02 to 101152 in 2006–07.

The given data reveals the status of Industrial Entrepreneur

Memorandum (IEMs).

Small Scale Industries:

The small scale industries constitute an important segment of the

state economy in terms of employment generation, source of foreign

exchange earnings and exports. The favorable government policies

coupled with availability of large pool of human resource makes the

state one of the best location for setting up SSI units within the state.

The state has set up 679703 units, which has generated employment

for 2742766 persons and has attracted investment of more than

Rs. 12000 crore6. The state has proposed to set up 33000 units in the

annual budget of 2011‐12 which would create employment opportunities

88

for 1.3 lakhs persons of the state. Uttar Pradesh has initiated several

schemes for the development of SSIs, such as Transport Assistance

Scheme, Technology Up‐gradation Scheme and has introduced Single

Table System for providing prompt and quick solutions to the

entrepreneurs in the state. In addition to this, the state has also

implemented Market Development Assistance Scheme to facilitate

marketing of products of Khadi and Village industries (Table 3.11).

Table: 3.11

Number of SSIs in the State

Name of Region Small Scale Industries

No. of Units Employment (No. of persons)

Investment (Rs. Crore)

Bundelkhand 40455 121738 366.38

Central Region 109756 421120 2309.47

Eastern Region 188442 683811 2078.74

Western Region 347050 1516097 7938.36

Total 679703 2742766 12692.95

Source: PHD Research Bureau, compiled from Planning Department, Government of Uttar Pradesh

It may be observed here that even though the number of

industrial areas per lakh population in UP has declined from 0.08 in

2001 to 0.07 in 2007-08 and the number of small-scale industries per

lakh population has decreased from 17.4 in 2001 to 16.8 in the year

2007-08, The comparative growth rates of production for both the

sectors during 2002-03 to 2005-06 are shown in Table 3.12.

Table: 3.12

Growth Rates of Production

Year Growth Rate of SSI Sector Overall industrial Sector

2002-03 8.68 5.70

2003-04 9.64 6.90

2004-05 10.88 8.40

2005-06 12.32 8.10

Source: Statistical Abstract of Uttar Pradesh 2008

89

Table 3.13 presents the overall small-scale industries scenario in

Uttar Pradesh. According to the Directorate of Industries there were

177859 registered units in UP in 2001–02 which increased significantly

in 2005–06 and 2006–07 to 552117 and 580604 respectively. The

capital investment has also increased from Rs.1793 crores in 2001–02

to Rs.5901 crores in 2006–07. There has been a drastic improvement in

employment regeneration also i.e. it has increased from 863 thousand

in 2006–07. Estimated Production has also gone up from Rs.347 crores

in 2001–02 to Rs.944 crores in 2006–07.Uttar Pradesh has immense

potential to emerge as one of the most economically developed state in

India. The state offers a wide range of subsidies, fiscal and policy

incentives, industry friendly policy framework to provide conducive

milieu to foster investments and industrial growth coupled with

availability of skilled and semiskilled workforce, attractive incentives and

a responsive and prompt public delivery system. The state is keen to

improve the industrial infrastructure and has emerged as a hub for IT

and ITES industries including software, captive business process

outsourcing, and electronics.

Table: 3.13

Development of Small Scale Industries in Uttar Pradesh

2001-02 2005-06 2006-07

Industrial units registered under Directorate of Industries (numbers)

177859 552117 580604

Capital Investment (Crore) 1793 5394 5901

Employment Regeneration (thousand) 863 2126 2247

Estimated Production @ (crores) 347 373 944

Value of products from small industrial units under store purchase programme (lakhs)

− − −

Source: - Statistical Diary, Uttar Pradesh 2007.

90

Investment Flows to the State:

The most important reason of slow rate of growth in U.P. is the

low level of public and private investment in the state. During the first

four years of the Tenth Plan, the average private investment in Uttar

Pradesh was about 25000 crores annually that was only half of what

was expected during the Tenth Five Year Plan. Although large number

of projects are likely to come in UP but all this requires liberal fiscal

concessions and creating business friendly conducive socioeconomic-

political environment, so that entrepreneurs could be attracted to

implement the improved level of investment. Therefore, in order to

achieve the target growth rate, Uttar Pradesh must strive to improve the

rate of actual implementation of private investment in the Eleventh Plan.

Table 3.14 depicts the project investment scenario in U.P.

Table: 3.14

Project Investment in Uttar Pradesh during the Ninth and Tenth Plan Period

(Rs. Crore)

Pro

jec

t

inv

es

tme

nt

19

97

–9

8

19

98

–9

9

19

99

–0

0

20

00

–0

1

20

01

–0

2

20

02

–0

3

20

03

–0

4

20

04

–0

5

20

05

–0

6

Total outstanding investment

50680 48473 54614 53314 59589 69115 72541 82524 92211

Of which under implementation

19808 15257 23525 23691 27900 24125 26584 28579 26529

Rate of implementation

39.08 31.48 43.08 44.44 46.82 34.91 36.65 34.63 28.77

Source: UP HDR 2006

It seems quite clear that high growth rate of domestic product and

of per capita income at the All–India level is especially due to the fact

that private investment has exceeded the stipulated target since 1997–

98. However, for Uttar Pradesh, there is an imperative need of

91

channelizing private investment with a view to accelerating the growth

rate of the state.

Poverty Scenario:

Poverty reduction and employment generation has been the

major goals of the development policy in the state of Uttar Pradesh.

This primary goal was sought to be achieved by taking the state at a

high growth trajectory with a view to enhancing the purchasing power of

the poor with endowment of land and non–land asset and generating

employment opportunities. Uttar Pradesh has been making serious

efforts in improving its poverty level; however the poverty level of the

state stands at around 33 per cent, which is comparatively high as

against national level of 27.5 per cent. However, the state has posted

reasonably better performance amongst the eight states covered under

Empowered Action Group (EAG) scheme. The state has implemented a

large number of programmes and schemes to improve the

socio‐economic conditions of the poor. Uttar Pradesh has introduced

Poverty and Social Monitoring System (PSMS) in 1999, to measure and

monitor the progress in key areas related to poverty and living

standards of the people of the state. In addition to this, Mukhya Mantri

Mahamaya Garib Aarthik Yojna scheme has also been introduced by

the state to provide cash assistance to the families living below BPL. To

identify the people below poverty line most common measure is head-

count ratio defined as percentage of population below poverty time.

Interestingly within the state, poverty has been more pronounced in

rural areas (43 per cent) than in urban areas. In other words, not only

poor people were more concentrated in rural areas, they were also

relatively far below the poverty line, as reflected by poverty gap of 10

per cent than their urban counterparts (9 per cent).

92

Employment Scenario:

Employment generation and income expansion is key to the

development process of an economy. The unemployment rate in the

state stands at around 8.2 per cent (2010) which is better in comparison

to the national average of 9.4 per cent. The state has performed better

in comparison to other big states like Rajasthan, Punjab, Haryana at 18

per cent, 10.5and 8.7 per cent respectively. The performance of the

state on the front of employment generation is described as (1) As per

NSS 61st round 2004-05 proportion of casual workers declined during

1999-00 and 2004-05. (2) Share of self employed increased

significantly. (3) Share of public sector employees in the organized

sector declined from 80 per cent in 1991 to 76 per cent in 2008. Table

3.15 reveals that the employment opportunities were continuously

declining in public as well as private sectors in the state. However, there

has been a marginal increase in private sector employment since 2007,

but the organized sector revealed a declining trend.

Table: 3.15

Employment in Uttar Pradesh

Year Public Private Sector Total

1991 21.41 5.36 26.77

2001 17.58 4.66 22.24

2002 17.18 4.56 21.74

2003 16.92 4.51 21.43

2004 16.8 4.45 21.35

2005 16.5 4.38 20.88

2006 16.36 4.54 20.9

2007 16.3 4.83 21.13

2008 16.19 4.95 21.14

2009 16.15 5.06 21.21

Source: Annual Plan 2010-2011

93

The backlog of unemployment at the beginning of the Annual

Plan 2010-11 is about 31.50 lakh persons. Besides, persons who are

engaged in agricultural activities but are not getting full time

employment during the period would be about 112 lakh. MGNREGA

(Mahatma Gandhi National Rural Employment Generation Scheme)

was initially implemented in 22 districts of the State in the first phase

during 2006-07 and it was extended to 39 districts of the State during

2007-08 in the second phase. During the third phase starting from 1

April 2008, MGNREGA was expanded to cover all the 71 districts of the

State.

Infrastructure:

Infrastructure is generally defined to encompass the physical

framework of facilities through which goods and services are provided

to the people. The genesis of the expansion of physical and social

infrastructure is financial infrastructure. A study sponsored by the

Twelfth Finance Commission has prepared a composite index of

infrastructure at the state level using variables related to transport index

in which UP‘s rank is 11th and in terms of communication its rank is 12th,

but in terms of power its rank is 15th. The gap in value of index is,

however large in case of communication and power. In UP not only the

availability of infrastructure is inadequate, its quality is poor and

management deficient.

Economic Infrastructure:

Infrastructure plays a vital role in driving industrial, economic and

social growth. To develop a strong economy, Uttar Pradesh has been

making serious and conscious efforts in the development of

infrastructure and inviting private participation on a large scale. Noida

offers excellent infrastructural facilities for setting up industrial,

educational and residential projects and has been ranked one of cities,

94

where it takes minimum time to start a business. The proximity to

national capital is an additional advantage for the state. Various PPP

projects have been undertaken in the sectors like expressways, roads,

energy, transportation, education, urban rejuvenation etc.

The state offers an extensive road network which plays a

significant role in the economic development and helps in encouraging

trade thereby promoting wide markets of various products and enable

exploitation of economies of scale. Uttar Pradesh is a land locked

territory and road connectivity to all major commercial centers is first

class. The state has set up Uttar Pradesh State Road Transport

Corporation (UPSRT) to provide an economical, reliable and

comfortable transport in the state. The state has implemented various

mega road projects under PPP such as 1047 Kms long 8‐lane Ganga

Expressway along the course of great river Ganga, joining far east with

national capital, a 165km long 6 lane Yamuna expressway to provide

fast access to the city of Taj Mahal and a network of expressways are in

the pipeline. An amount of Rs.6775 crore has been earmarked in the

state budget of 2011‐12, to be spent on construction and maintenance

of roads and bridges which is around 17 per cent higher than previous

year (Table 3.16).

Table: 3.16

Road Infrastructure

Item Achievements

National Highways 6681

State Highways 7957

Major district roads 7307

Other district roads and village roads 329215

Total 351160

Source: PHD Research Bureau

95

U.P has a fairly large network of roads running into 2,76,782 km.

including rural roads. The road density in the state is relatively low in

terms of areas as well as population as compared to more developed

states of the country. Presently, the state has 169.8 km. road per lakh of

population with road density of 100 sq. km. area. Thus, among 26

states, of the country U.P ranks 11th in terms of road density and 23rd in

terms of road density per lakh of population. UP‘s coverage (30.8 km.)

is better than the national level (23.7 km.) but poorer than best

performing states like Punjab (92.2 km.) and hence on this count the

UP‘s rank is 6th among major states.

Significantly, the quality of roads in the state is generally below

laid down standards and it has been observed that 541 sq. km. of the

total road length is surfaced or pucca road. The following are the major

project under implementation and project announced by the

government:

Major projects under implementation: Ganga Expressway,

Yamuna Six Lane Expressway project, Bareilly – Sitapur four lane

Highway, Ghaziabad -Aligarh Highway, Moradabad –Bareilly

(NH-24)

Major Projects announced: Barabanki-Ballia Expressway, Hapur-

Khurja Highway, Delhi-Sultanpur Expressway, Allahabad Outer

Ring Road, Lucknow Outer Ring Road.

U.P has good railway connectivity except in the district on the on

the northern tarai. A number of bridges are however very old and need

improvement. Construction of over bridges on important routes is also

needed.

According to 2006 data, it has the largest railway network in the

country; total length of 8,546 Km. and also the sixth largest railway

density.

96

Almost all the major as well as small cities in Uttar Pradesh are

linked through the railways.

Lucknow is the main junction for the northern and north-eastern

railway.

Cargo carried within the northern and north-eastern zone is

approximately 133 million tones per annum.

UP, being a strategically important place of eco-tourism and with

nearly one-fourth domestic tourist visiting the state there exists a

tremendous scope for expanding civil aviation facilities in the state and

linking the major city by small aircraft. The telecom sector has

expanded at a very fast rate in recent years in the country as well as in

the state. In UP, 2519 thousand telephone connections were

operational in 2007-08, while in India as a whole 39410 thousand

telephone connections were functional. The number of post offices in

2007-08 in UP and India were 17662 and 155035 respectively. The

State needs to harness full growth potential of this sector for overall

growth. Irrigation is an important sector in economic infrastructure with a

difference that while power is critical both for development of agriculture

and industries, apart from improving the quality of life, the role of

irrigation is confined to the development of agriculture. The ground

water irrigation, surface irrigation including major, medium and minor

irrigation covered 69 per cent and 31 per cent respectively of the total

irrigated area during the Ninth Plan. The respective shares during the

Tenth Plan were 70.87 per cent and 29.13 per cent. In 2002–03, the

coverage of ground and surface irrigation including major and medium

irrigation were 69.75 per cent and 32.26 per cent respectively. During

2003–04 and 2004–05 it hovered around 70 per cent for ground water

irrigation and 30 per cent for surface irrigation. The projected value of

the share of ground water irrigation and surface irrigation was to the

97

tune of 70 per cent and 30 per cent respectively in 2005–06

(Table 3.17).

Table: 3.17

Source–wise Irrigation during Ninth and Tenth Five Year Plan in Uttar Pradesh

(‘000 Hectares)

Year Ground water Surface irrigation

Major and medium irrigation

Total

Ninth Plan 15215.88

(69.40)

480.94

(2.19)

6229

(28.01)

21925.82

(100.00)

Tenth Plan

(2002–07:

Target)

18808.38

(70.87)

501.14

(1.89)

7229

(27.24)

26538.52

(100.00)

2002–03 15626.38

(69.75)

487.44

(2.18)

6290.66

(28.08)

22404.48

(100.00)

2003–04 15913.38

(69.67)

492.26

(2.16)

6434.66

(28.17)

22842.30

(100.00)

2004–05 16183.29

(69.87)

500.79

(2.16)

6477.27

(27.97)

23161.35

(100.00)

2005–06

(Anticipated)

16500.47

(70.03)

505.17

(2.13)

6602.27

(28.02)

23560.29

(100.00)

2006–07

(Proposed)

16556.08

(69.07)

506.08

(2.11)

6666.55

(27.82)

23968.55

(100.00)

Source: Annual Plan 2006–07, Vol. – II, Government of Uttar Pradesh

Power is one of the most important infrastructure ingredients for

the development of an economy. The state has introduced its energy

policy, 2009 which focuses on providing reliable, quality and affordable

power to the dwellers of the state. Uttar Pradesh has a power deficit of

15 per cent, which is significantly higher than the national power deficit

11 of 8.5 per cent during 2010. Whereas the per capita power

consumption stands at around 348 KWh, which is lower than the

98

national level of around 779 KWh (2010). On the other hand,

transmission and distribution loss posted by the state stands around 31

per cent, which is comparatively higher than the national level of around

25 per cent during 2009.The state has introduced Input Based

Franchisee system in some selected cities to improve the power

distribution system, which has already been implemented in Agra.

Availability of power is of critical importance for economic

development. The shortage of power has wide ranging implications for

industrialization as well as overall development of UP. The power

generation capacity in the state has not expanded earlier to keep pace

with the rising demand. State government has projected the demand

for power in 11th plan at 14000 MW based on the assumption that per

capita consumption is expected to rise from present level of 312 units to

450 units at the end of 11th plan.

The operational efficiency of the power system including

generation, transmission distribution and revenue collection continues

to be low. The plant load factor of thermal owned by the UPRVNL

decreased from 57.7 per cent in 2003-04 to 54.04 percent in 2005-06.

This compares with a PLF of 80 top 90 bureaucratic and political

pressures and thus these public utilities have been found to incur huge

financial losses and ultimately resorting to short term borrowing.

Interestingly, the net cash gap has increased from Rs.2760 crore in

2004-05 to Rs.5309 crore in 2006-07. This scenario clearly indicates an

unsustainable power sector situation in the state that requires serious

consideration and policy intervention. per cent in some southern states.

Due to poor maintenance and low investment in the range system,

distribution transformer failure is high at 20 per cent. The T&D losses

have remained in the range of 34 per cent during the last three years,

there is widespread theft of power AT and C losses are very high and

stood at 40.68 per cent in 2006-07 against the all India average of 36

99

per cent. The relative position of electricity generation through various

sources has been represented in Table 3.18 given below.

Table: 3.18

Power Position of UP

End- March

Thermal Electricity

Hydro Electricity

Nuclear Electricity

Gross Generation

2004 0.5 47.5 -15.4 0.7

2005 21.4 -37.1 8.7 0.5

2006 3.2 9.7 -22.5 2.4

2007 11.5 10.2 -52.1 9.7

2008 3.2 -34.8 -34.2 2.1

2009 0.7 18.9 9.9 1.0

2010 3.3 -13.7 10.4 3.2

2011@ 10.0 18.0 22.4 10.1

Source: Amerendra Sahoo, RBI

Social Infrastructure:

Provision of social infrastructure strives to achieve the twin

objectives of economic equality and social development, to create

supportive environment for a higher rate of growth for development

contributing not only to human resource development but also to holistic

and harmonious socio–economic development. Education is a critical

input in human resource development and in country‘s economic

growth. Education is the basic block of human development and

contributes directly to the development of nation. The state government

is progressing towards making provision of education to all. Literacy

rates differ widely between rural and urban areas and between males

and females. Thus, literacy rate in rural areas in 2001 accounted for

only 53.6 per cent as compared to the literacy rate of 70.8 per cent in

urban areas. The male literacy and female literacy rates in UP were

100

recorded at 68.8 percent and 42.2 percent in 2001. However the

corresponding figures at the national level are 75.3 per cent and 53.7

per cent respectively. Whereas, according to Census 2011 total literacy

rate in U P is 69.72 per cent which accounted for 79.24 per cent literacy

in males and only 59.26 per cent of female are literate, with the decadal

difference rate of 13.45 percent. In 2001 UP‘s rank was 31st in 35 states

and union territories that has improved to 29th rank in 2011 (Table 3.19).

At the National level, the male-female gap for Census 2001 stood

at 21.59 per cent whereas for Census 2011 it is only 16.68 percentage

points, in U P the gap is 19.98 percentage points in 2011, which was

26.60 percentage points in 2001.The States which have contributed

significantly in decreasing the number of female illiterates are Uttar

Pradesh (21.81 per cent), Bihar (12.63 per cent), West Bengal (11.61

per cent), Maharashtra (8.21 per cent),), Gujarat (7.77 per cent), Tamil

Nadu (7.31 per cent), Karnataka (6.79 per cent), Orissa (6.76 per cent)

and Andhra Pradesh (5.41 per cent).

Table: 3.19

Educational Infrastructure in Uttar Pradesh

Content FYP 2010

No. of Junior Basic Schools 107135

No. of Senior Basic Schools 44375

No. of Schools/Colleges 17872

No. of Degree Colleges 2789

No. of universities 30

Source: PHD Research Bureau,

The state has made considerable progress in terms of literacy

level and has posted a remarkable improvement in its literacy status

from around 12 per cent in 1951 to around 70 per centin 2011.

However, the state‘s literacy level lies below the national literacy level of

101

around 74 per cent in 2011. Free and compulsory education to all

children up to the age of fourteen years is our constitutional

commitment. The Government of India has initiated a number of

programmes to achieve the goal of Universalization of Elementary

Education (UEE) among which Sarva Shiksha Abhiyan (SSA) and Mid

Day Meal (MDM) are the most recent one.

In 2001, life expectancy in Uttar Pradesh was 63.8 years while

the average for the country was 65.4 years. Infrastructure for health

care in UP, however, remains inadequate in view of its large population.

In UP, for each lakh of population 2.5 hospitals and dispensaries on

average are available, while at the all India level it is 3.8. The number of

beds available per lakh of population in UP and India are 33.1 and 69.0

respectively. Some important data about health infrastructure in the

State can be viewed in Table 3.20 given below. Evidently, the

availability of doctors per thousand patients has increased from 40161

in 2002 to 51543 in 2008 in the state.

Table: 3.20

Health Infrastructure in Uttar Pradesh

Indicators 2002 2005 (P) 2006 (P) 2007 (P) 2008 (P)

Government Allopathic hospitals (General)

3876 4112 4071 4085 4167

Government Allopathic hospitals (Specialist)

360 1302 292 325 325

Government Hospitals and Clinics

4236 5414 4548 4595 4687

Beds 55684 55786 57452 48283 49546

Doctor Patient Ratio(000) 40161 40706 40507 47500 51543

Source: Statistical Diary 2006 and -2007 and 2008

Presently state has 24,650 medical centres, 2,108 Ayurvedic

Centers, 204 Unani Centers and 1,483 homeopathic centres. India, in

102

general, and Uttar Pradesh in particular, has varying levels of

malnutrition despite large stocks of food grains resulting from increased

agricultural productivity. Housing is a basic human requirement in any

civilized society. There is undoubtedly an increasing recognition of close

relationship between housing, health and well–being of the people. The

house listing operations of Census 2001 revealed the following profile of

Uttar Pradesh: In Uttar Pradesh, as per the 2001, there were 34301455

census houses of which 79.2 per cent were in the rural areas. The use

of census house is important as it provides a valuable insight into the

level and pattern of development. The state of Uttar Pradesh, 96.2 per

cent houses were occupied and remaining 3.8 per cent houses were

recorded to be vacant (Table 3.21).

Table: 3.21

Status of Census Houses

Total Percentage Rural Percentage Urban Percentage

No. of census houses

34301455 100.0 27178983 79.2 7122472 20.8

Vacant census houses

1308420 3.8 760997 2.8 547423 7.7

Occupied census houses

32993035 96.2 26417986 97.2 6575049 92.3

Source: Census 2001

Financial Infrastructure:

In the era of liberalization, banks have become the spine for the

development of the economy on all parameters in any state. The health

of the economy is closely related to the soundness of its banking

system. The banking sector of Uttar Pradesh is predominated by

nationalized banks with more than 5000 branches of which SBI and its

associates have 1712 branches, followed by regional rural banks with

3092 branches, private sector banks with 526 branches and foreign

103

banks with 17 branches. An attempt has been made to portray the

current status of banking development in UP. A well-developed financial

infrastructure is an essential requirement for promoting economic

activities in any economy. The operations of scheduled commercial

banks in the state are an indicator of its financial development. Uttar

Pradesh had 8983 scheduled commercial banks branches (2007-08)

whereas at the all India level the number was 74326. In the year 2008-

09 the branches increased to 9595 and 79056 in UP and at All India

level respectively. The credit deposit ratio (CDR) for the State in 2008-

09 was only 42.06 as against the national average of 72.58. However

the CDR in the state increased to 49.83 percent by the end of March

2010 as against the national average of 72.6 percent. The credit off-

take is lowest in the eastern part of the State. This low CDR is a

reflection of low industrial and commercial activity in the state. The

state‘s credit deposit ratio stands at 43.6 per cent (March 2011), which

is significantly lower than the national level of 75.1 per cent during the

same period, since high credit deposit ratio represents the effective

functioning of the banking sector. The credit deposit ratio of all

scheduled commercial bank stands at 46.4 per cent in rural areas, 40.1

per cent in semi‐urban areas, 43.5 per cent in urban areas and 45.5 per

cent in metropolitan (Table 3.22).

Table: 3.22

Banking Scenario in Uttar Pradesh

Banks in Uttar Pradesh No. of Offices in Uttar Pradesh

No. of Offices in

India

Offices in Uttar Pradesh as per

cent of India

Nationalized Banks 5420 43908 12.3

Regional Rural Banks 3092 15658 19.74

SBI and its Associates 1712 17899 9.56

Private sector Banks 526 11347 4.63

Foreign Banks 17 298 5.70

Source: PHD Research Bureau Banks in Uttar

104

Financial Inclusion:

Status of Financial inclusion in UP:

Of the total 71 districts, 64 have been declared 100per cent

financially inclusive.

RBI adopted 8 unbanked villages during 2009-10 and one so far

in the current year.

In UP, 28 Rural Self-Employment Training Institutes (RSETIs)

and 14 Financial Literacy and Credit Counselling Centers have

been established.

2,00,09,714 new saving bank and no- frill accounts in UP have

been opened between 1st October , 2007 to 31st March , 2009.

Only 10per cent of no-frill accounts are active.

Less than 1per cent of the total no-frill account is provided with

overdraft facility.

A large number of no –frill accounts are either dormant or the

number of transaction is very small.

ICT based financial services are yet to reach in many villages.

Fiscal Scenario:

The perpetual economic backwardness of Uttar Pradesh is

attributable, inter-alia the dismally low level of investment per head. In

the Eleventh Plan, UP‘s plan outlay was 8.5 per cent of the National

Plan size, which has increased to an estimated 10.1 per cent for the

Tenth Plan. For increasing per capita plan outlay, Uttar Pradesh needs

a large financial resource base. However, the resource raising capacity

and efforts of the state are heavily constrained by fiscal challenges. It is

surely a matter of serious concern that Uttar Pradesh is facing severe

105

fiscal crisis. The fiscal crisis is well evident from the enormous increase

in fiscal imbalances in terms of revenue and fiscal deficits.

Table 3.23 shows deficit indicators, viz. RD/GSDP ratio,

GFD/GSDP ratio and PD/GSDP ratio.

Table: 3.23

Deficit Indicators of U P

2005-08 (Avg.) 2008-09(RE)

RD/GSDP -0.7 RD/GSDP -1.1

GFD/GSDP 3.6 GFD/GSDP 5.3

PD/GSDP 0.3 PD/GSDP 2.4

Source: State Finances 2009-10

Plan Outlay and Investment:

It is widely acknowledged that development is a function of

investment. This includes the quantum of investment, efficiency in the

use of investment, both past and new, and the pattern of investment.

Investment is made in a state from various sources. The two major

sources of such investment are public sector and private sector. The

public sector investment includes the plan outlay of the state and the

investment in central government undertakings. In recent plans, plan

expenditure has increased noticeably from Rs.1,582 in the Eighth Plan

(1992-97) to Rs.1704 in the Ninth Plan and further to Rs.2528 in the

Tenth Plan (Table 3.23). The levels of per capita plan expenditure in UP

have lagged behind the average plan expenditure of all states. In fact,

the gap has increased in the recent plans. The following Table 3.24

shows the relative position of UP and all states in terms of per capita

plan expenditure and per capita plan assistance.

106

Table: 3.24

Per Capita Plan Expenditure in Uttar Pradesh

(In Rs.)

Plan Period Per Capita Plan Assistance

U.P. All States U.P. All States

Seventh Plan 1985-90 1077 1270 372 451

Annual Plans 1991-92 470 565 — —

Eighth Plan 1992-97 1559 2206 711 948

Ninth Plan 1997-02 1704 3421 1569 1808

Tenth Plan 2002-07 2528 5134 2409 2470

Source: Statistical Diary, Uttar Pradesh, 2007.

The state government has made a determined effort to increase

its plan expenditure in recent years. Thus, annual plan outlay, which

was only Rs.7250 crores in 2002-03 at the beginning of the Tenth Plan,

went up to Rs.25000 crores in 2007-08. At the beginning of the

Eleventh Plan i.e. for 2008-09 the plan outlay was Rs.35000 crores.

Along with this the state government has also made a massive effort to

ensure that plan outlays are fully utilized.

The profile of the state shows enormous potential for growth and

prosperity, however, remarkable regional disparities are emerging which

demand for policy interventions. The balanced economic growth will

also ensure inclusive growth and development of the state.