Uttarakhand: Economy better-placed, urbanisation needs a leg-up

The level of urbanisation in the state stands at a low of 30.2% and if the state has to grow faster, it will have to increase the level of urbanisation.

By: ENS Economic Bureau | New Delhi | Published: March 13, 2017 1:50:58 am
Uttarakhand, Uttarakhand health, Uttarakhand GDP, GSDP Uttarakhand, Uttarakhand elections, uttarakhand results, election results, Uttarakhand government, India news BJP workers dance as they celebrate the party’s victory in the Uttarakhand Assembly elections (PTI Photo)

In Uttarakhand, the new government will inherit a relatively better legacy in terms of economic health and performance on social parameters. The state, where industries account for over 50 per cent of its net state domestic product, also moved up 14 ranks on ease of doing business rankings in 2015-16.

The state has witnessed strong growth in the last few years. Its gross state domestic product (GSDP) stood at 8.7 per cent in FY16, higher than the all-India GDP growth of 7.56 per cent. Among the five states that went to polls, Uttarakhand had the lowest fiscal deficit at 2.23 per cent in FY16. Even on the debt-to-GSDP parameter, the state fares well with a ratio of 24.4 per cent, compared with Uttar Pradesh’s 30.1 per cent and Punjab’s 31.4 per cent.

The state has also fared well on the outlay for development in the period between 2013-14 and 2015-16. While it rose 49.4 per cent for all states between FY14 and FY16, in the case of Uttarakhand, it jumped 50.1 per cent. On the social sector front also, the state has made significant progress and in four years between FY12 and FY16, it increased its outlay by 106 per cent, higher than the 100 per cent rise by all states combined.

As a result of the implementation of the business reforms, the state climbed from 23rd rank in 2015 to 9th rank in 2016 and, thus, also got clubbed in the elite group of states that have been classified in the ‘leaders’ category by the DIPP.

While the state seems to be on a stable ground on the most economic parameters, there are some gaps that the new government will have to fill to make the development holistic and beneficial to all. If the rate of crime in Uttarakhand is a matter of concern, the state also needs to increase the level of urbanisation. According to a report by CARE Ratings, the crime rate (per million people) for Uttarakhand stood at 9,380. UP had a higher rate at 12,932 crimes per million people.

The level of urbanisation in the state stands at a low of 30.2 per cent and if the state has to grow faster, it will have to increase the level of urbanisation. Not only has the state witnessed a decline in new investments (Rs 2,235 crore in FY16), the credit-to-deposit ratio, which indicates the demand for loans as a per cent of deposits mobilised, stood at a low of 35 per cent and is much below the national average of 77.9 per cent in March 2016. This ratio was the highest for Tamil Nadu (112.9 per cent) followed by Andhra Pradesh (104.5 per cent).

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