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Uttar Pradesh’s growth rate pangs

Uttar Pradesh chief minister Akhilesh Yadav has initiated a big interest amongst the development institutes of the state to work on the potential industrial revival programmes for the state. He has encouraged the NGOs also to contribute to the process of planning for Uttar Pradesh.

Giri Institute for Development Studies has recently organised a workshop for working out a vibrant development programme for the state. Most of the eminent economists of the state took part in this workshop and discussed the major challenges for reviving the economy of the state. The participants felt that efforts would have to be made to bring the growth rate of UP at par with the national average and measures would have to be taken to step up the investment level.

The workshop also expressed the view that the challenges to the new state government relate to sharp regional disparities, inadequate and low quality of infrastructure, low productivity, poor health indicators, poverty and malnutrition as also low female literacy. Simultaneously it was pointed out that the state has immense potential and resources for high growth and only a planned developmental programme can steer the course for speedy growth ensuring improving of the living conditions of the lower strata of the society.

The workshop expressed concern over the low investment in the industrial sector. It was pointed out that UP has not been able to attract large investment in industrial sector. There is general perception that the policy environment is not conducive to attract investment. Regulatory systems put hindrance in industrial development and increase the cost of setting up industry in the state. Instability and lack of transparency for industrial policy act as drawbacks for industrial development.

Uttar Pradesh has a large number of small and medium enterprises with as many as 30 lakh units existing in the state. It was revealed at the Great Indian Developer Summit (GIDS) workshop that only 1.2 lakh units have power connections. The credit marketing and other support to small and medium enterprise (SME) sector is deficient. The units are now exposed to global competition without adequate support. Due to high input cost, the cost of industrial output is high. In such a condition entrepreneurs are not able to compete in the market. This sector lacks support for credit, skill development, technological up gradation and marketing support. Industry is left to compete at the global level without required support from the state.

GIDS workshop evolved strategy for industrial development which includes the steps to create investor friendly climate. Efforts should be made for changing the prevailing negative perceptions by adopting a pro-active approach. Gap between policy announcement and their implementations should be minimised.

The strategy asked for reduction of burden of regulatory system. Time bound sanctions for various approvals should be given. Discretionary powers at various levels should be minimised. Open and transparent procedures should be laid down.

The strategy also asked for especial efforts for encouragement to micro, small and medium enterprises (MSME) sector by providing support for credit, skill development, technological up gradation and marketing exports. The strategy also mentions that the quality of infrastructure should be improved especially the problem of power shortage should be dealt at war footing.

GIDS workshop said that large private players should be allowed in procurement, processing and marketing of agriculture produce and by amending the Agriculture produce and marketing Act. Decontrol of sugar industry and sugarcane price are urgently required for fast growth of sugar industry.

The strategy for industrial growth also involves labour market reforms to attract more investment in the state. The important areas needing attention are: raising the minimum size of firms for purposes of retrenchment clearance from government, reform of contract labour law to allow flexible hiring of workers according to industry demand, rationalisation of minimum wages and keeping them competitive  easing the regulatory burden and reorienting implementation agencies, making self certification operational.
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