Can Akhilesh Singh Yadav make UP find economic dynamism like Bihar?
The SP may have battled Mayawati for the political space in Uttar Pradesh, but when it comes to the realm of the economy, the biggest battle may be internal.
By Avinash Celestine, ET Bureau |
Soon after the Samajwadi Party swept to its stunning victory in Uttar Pradesh, ET on Sunday spoke to an industry leader in the state. What were his thoughts about the new Samajwadi Party government? His outlook was wary, bordering on cynical. “Someone I spoke to summed it up like this,” he said. “Lootere gaye, goonde aa gaye [The thieves have gone and the goons have come in].”
The Samajwadi Party may have battled Mayawati for the political space in Uttar Pradesh, but when it comes to the realm of the economy, the biggest battle may be internal. Mulayam Raj between 2002 and 2007 was widely seen as a ‘goonda raj’ and events on counting day, attacks by SP workers on journalists, and the death of a child when another SP worker fired his gun in celebration, bought many of those fears back. Mayawati did little for industry, but it is widely acknowledged that law and order was far less of a problem for industry under her. Will SP 2.0 be different?
Lopsided Economy
UP’s growth since atleast 2003-04, has been nothing to sneeze at. Between 2006 and 2010, state GDP growth was an average of 7%. Manufacturing growth was around 8.6%, though construction was a major driver of the state economy, growing at around 10%. But it is the pattern of this growth, with income generation being concentrated regionally and sectorally, that are worrying.
Six of a total of 71 districts in UP accounted for a quarter of the state’s growth between 2000 and 2009. In terms of employment growth, manufacturing employed one of four urban workers in 2009-10, but that’s actually a fall of three percentage points from 2004-05. The only sectors which have expanded their share of employment in these years has been construction and public administration.
In rural areas again, it is construction which has been the biggest driver in employment growth, seeing its share rise from 5.3% to 12.3% of the rural workforce in five years. It is this lopsidedness which the SP government has to fix and which is a symptom of the more common complaints in UP’s industry circles, crumbling infrastructure and frequent power cuts being the biggest.
SP’s Bad Politics
Apart from its dubious track record on law and order, the SPs reputation is helped little by its stance on other aspects of policy reform. “The SP has been largely conservative in approach to economic policy reform,” points out AK Singh, of the Giri Institute of Development Studies in Lucknow. The SP for instance had opposed investment in organised retail, a stance echoed by Mayawati. What will SPs approach be this time around?
The Samajwadi Party may have battled Mayawati for the political space in Uttar Pradesh, but when it comes to the realm of the economy, the biggest battle may be internal. Mulayam Raj between 2002 and 2007 was widely seen as a ‘goonda raj’ and events on counting day, attacks by SP workers on journalists, and the death of a child when another SP worker fired his gun in celebration, bought many of those fears back. Mayawati did little for industry, but it is widely acknowledged that law and order was far less of a problem for industry under her. Will SP 2.0 be different?
Lopsided Economy
UP’s growth since atleast 2003-04, has been nothing to sneeze at. Between 2006 and 2010, state GDP growth was an average of 7%. Manufacturing growth was around 8.6%, though construction was a major driver of the state economy, growing at around 10%. But it is the pattern of this growth, with income generation being concentrated regionally and sectorally, that are worrying.
Six of a total of 71 districts in UP accounted for a quarter of the state’s growth between 2000 and 2009. In terms of employment growth, manufacturing employed one of four urban workers in 2009-10, but that’s actually a fall of three percentage points from 2004-05. The only sectors which have expanded their share of employment in these years has been construction and public administration.
In rural areas again, it is construction which has been the biggest driver in employment growth, seeing its share rise from 5.3% to 12.3% of the rural workforce in five years. It is this lopsidedness which the SP government has to fix and which is a symptom of the more common complaints in UP’s industry circles, crumbling infrastructure and frequent power cuts being the biggest.
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SP’s Bad Politics
Apart from its dubious track record on law and order, the SPs reputation is helped little by its stance on other aspects of policy reform. “The SP has been largely conservative in approach to economic policy reform,” points out AK Singh, of the Giri Institute of Development Studies in Lucknow. The SP for instance had opposed investment in organised retail, a stance echoed by Mayawati. What will SPs approach be this time around?
Then there are the SP’s political compulsions. Till about a year ago, land acquisition from farmers under the Mayawati government proceeded at such a brisk pace that it led to riots such as that in Bhatta Persaul near Noida, on the outskirts of Delhi. She eventually had to end the land acquisition process in large parts of the state because the opposition became far too intense, and also because the courts put a stop to the process.
But unlike Mayawati whose social base comprised rural labour, a substantial chunk of the SPs support base has been medium and large farmers, builders and home owners in Noida are already wondering what the party’s stance would be towards the stalled land procurement process in western UP.
A New SP?
This mixed reputation is tempered by the fact that the party during Mulayam raj was more open to listening to industry than Mayawati was. “It was Mulayam who had formulated an industrial policy, Mayawati did not bother,” says DS Verma, executive director of the Indian Industries Association, which represents lakhs of small industries across the state.
This view is echoed by another IIA member and Kanpur-based industrialist Manmohan Rajpal. “Mulayam was certainly more approachable,” he says. “It was impossible for industrialists to meet Mayawati at all. Under the SP, it was at least possible to meet ministers and senior bureaucrats to explain our problems.”
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The internal power struggle in the SP, between the Akhilesh camp on one side, and the old guard on the other was closely watched. Akhilesh has bought a new face to the SP, and the party, through him, may have mobilised new constituencies even in urban areas. But concerns remain. “It may be difficult, even for Akhilesh to control these elements. The party has partly relied on them to come to power,” says the industry leader, referring to criminal and goonda elements within the party’s base.At the moment, it’s wait and watch. “Mayawati too came to power and promised a lot of reform, but in the end she did little,” says Rajpal. “We hope the SP will be different.”
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