Monday, January 30, 2012

Will Uttarakhand be able to become an economic powerhouse?

Will Uttarakhand be able to become an economic powerhouse?

In the heat of the election campaign in Uttarakhandahead of the January 30 poll, politicians blame each other for the state's poverty, which is far more stark than its prosperity, especially in the hills. 

While the ruling BJP blames successive Congressgovernments of Uttar Pradesh, of which the region was part of until 2000, for "neglecting" the region, the Congress asks, "What have the BJP done now that it is in power?" 

The Congress claims credit for promoting industry by setting up the state industrial development corporation of Uttarakhand Ltd (SIDCUL) in 2002 which attracted companies like Ashok Leyland, Vedanta, RSB Transmission and Bajaj Motors to set up manufacturing units. The Tatas followed them. 

"I have used all my influence and friendship to promote the state's industry and agriculture when I was chief minister," former chief minister ND Tiwari told ET on Sunday. He was chief minister of Uttar Pradesh thrice and of Uttarakhand once (2002-2007). 

Initial Push 

"There is no denying that the package (the 2003 industrial policy with generous tax benefits for investors) has had a phenomenal impact on the state. Lakhs of jobs have been created thanks to the setting up of industrial estates (set up by SIDCUL), small enterprises, etc.," says Vibha Malhotra, director and head of CII in Uttarakhand. The initiative led to an investment in the state of nearly Rs 25,000 crore. Most companies that flocked in were from "high excise duty" segments, automobile, FMCG etc, and tax incentives were a big lure. 

By rough estimates, the so-called integrated industrial estates at Hardwar, Sitarganj and at Pantnagar, IT Park and Pharma City in Dehradun, and the Sigaddi Growth Centre at Kotdwar Pauri in Garhwal district, all thanks to the "package" that Malhotra is talking about, have created nearly 1.5 lakh jobs in the state where the government is the biggest employer, with as many as 2-2.5 lakh people in its fold. 

The region is much better off than it was before the creation of Uttarakhand. Per capita income in the state is 12th highest in the country and is higher than the all-India average. Income disparity, too, is comparatively less skewed than that of the entire country. 

Malhotra says an examination of human development indices shows the sharpest rise on many such indicators. The overall literacy rate in Uttarakhand is 79.6% which is higher than the national average of 74.0%. Male literacy stands at 88.3% while female literacy is 70.7%. All-India male and female literacy are 82.1% and 65.5%, respectively. 

Major Gains, Challenges 

That is a big departure indeed from what the state once was. But, warns Malhotra and a government official who asked not to be quoted, manufacturing can't be the mainstay of the state where environment concerns and civil society pressures are high. 
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