Uttar Pradesh: Continuity in reforms imperative for new government

Measures such as single-window clearances, certain key judicial reforms along with growth in social spending could be areas of focus for the coming dispensation.

By: ENS Economic Bureau | New Delhi | Published: March 13, 2017 1:27:54 am
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Uttar Pradesh has been being categorised as an “aspiring leader” when it comes to reforms and ease of doing business, making it imperative for the new government to continue with the reforms momentum. The state has managed to introduce key tax reforms, including mandating of e-registration for value-added tax, central sales tax, professional tax, entry tax, etc, allowing online payment and return filing; providing e-filing support through service centers and risk-based tax-compliance inspections during the last three years. However, there are some areas where the state has lagged behind other states in the country. It is yet to have essential systems for ease of doing business, such as single-window clearances, online application for construction permits, and certain key judicial reforms. This is reflective in the rankings of the Department of Industrial Policy and Promotion, in which Uttar Pradesh slipped to the 14th rank in 2016, from the 10th rank in 2015.

At 6.02 per cent, the average gross state domestic product (GSDP) growth rate between 2012-13 and 2015-16 in Uttar Pradesh was lower not only than the national average of 6.76 per cent during the period but was also lower than its low-base peers such as Bihar, Jharkhand, and Madhya Pradesh. Furthermore, during the period, the percentage of social sector expenditure in the state’s total expenditure witnessed only a nominal growth. In 2012-13, the state spent 38.8 per cent of its total expenditure on social sector. In 2013-14, 2014-15 and 2015-16, the percentage was 38.1 per cent, 39 per cent, and 39.7 per cent, respectively.

This was reflective in the high crime rate in Uttar Pradesh, and the number of cases registered with the police department. In 2015, 27.91 lakh cases were registered by the police, higher by a third from 18.24 lakh in 2012. “UP (Uttar Pradesh) … faces all the challenges that go with large territories and low development such as high population, low level of urbanization, relatively lower levels of literacy and highest level of crime,” according to a CARE Ratings report on state performances.

Despite being a large state with huge consumption capabilities, industrialisation remains a concern for UP, especially taking into account its low per capita income. As of 2014-15, the state’s per capita income was Rs 48,520, and the share of industries in its NSDP stood at 26.2 per cent. However, lately, data from CARE Ratings show that industrialisation in the state has picked up. At 39,859 completed projects as of 2015-16, and 37,240 new investments, UP has scored better than its peers, and “and reflects the thrust that has been provided by the government especially in infrastructure”. This iterates the need for the incoming government to focus on growth of industries in the state by introducing more business reforms, and increasing expenditure on industrial development.

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