Industry facing ‘hostile’ conditions in UP: Study

Pioneer News Service, Lucknow

Even as the government is trying to create an investor-friendly atmosphere, jobs in the private sector are shrinking fast owing to the “hostile” conditions prevailing in the state.

“The industry in the state is facing a far greater hostile condition than previous years,” a nationwide study carried out by the Federation of Indian Micro and Small and Medium Enterprises (FISME) in collaboration with FNF (Germany) and Rajiv Gandhi Institute for Contemporary Studies (RGICS) said.

The study was discussed threadbare at a seminar ‘Economic Freedom: Relevance for Economic Development’ on Monday where speakers discussed how the state was lagging behind in the industrial sector.

“Indifference of the leadership towards the industry is responsible for the continuous decline in the sector and is driving out business from the state,” senior vice-president of FISME VK Agarwal said.

“Residents of Uttar Pradesh are fast replacing the workers from Bihar as major migratory labour force in the country,” he added.

Dr PD Kaushik, one of the chief researchers, said while Uttar Pradesh was finding itself among the states having potential for reforms, it was continuously going down on key parameters which were critical for industrial growth.

To gauge the investment-friendly atmosphere in India, a study ‘Economic Freedom Index for States of India’ was carried out in 2008.

The Economic Freedom Index (EFI) figure measures the degree in which policies and institutions of state support economic freedom. Twenty-six variables were used to chalk out a composite index for the states in India.

The study showed that though Uttar Pradesh held seventh position in Composite Economic Freedom Index, better than Haryana and Punjab, it failed to induce optimism among the investors.

Dr Kaushik, also Director of RGICS, said that in crime control, Uttar Pradesh continued to be a laggard. “There is only 28 per cent chance that stolen goods will be recovered in the state while the national percentage is 53. The rate of recovery in Tamil Nadu and Haryana is 75 per cent,” he said.

Recovery of stolen property is globally considered as a benchmark in effective administration.

The study further revealed that the degeneration in law and order situation was adversely affecting the business environment and the state was finding itself in league with West Bengal, Jammu and Kashmir, Bihar, Assam and Jharkhand in terms of industrial investment.

Similarly, the state figures last in terms of power scenario and number of SEZs.

“If there are a few parameters where Uttar Pradesh has done well, there are others where the state has lagged behind,” Dr Kaushik said.

The speakers said that there was no freedom when it came to speaking regarding development. “We wanted the officials from the state to put forth their stand as to why the state is trailing in all the indices. But no one came forward,” he said.

According to FISME, the problem in the state emanated from weak dialogue between political leadership and business community, particularly micro, small and medium enterprises.

Courtesy: The Pioneer (July 14, 2009)