 "India's fifth-largest industrial state eyes growth")
With a 6.9 per cent share of India's industrial sector, Uttar Pradesh in 2013-14 was the country's fifth-largest industrial powerhouse.
This was after a decline in the state's contribution to India's industrial sector in the previous 10 years - a relatively stable period in the past three years, though, was a silver lining. According to a recent Assocham report, 'UP: Inching towards double digit growth', the state's manufacturing sector has in recent years expanded at a 2.5 per cent compound annual rate, higher than the national average of 2.1 per cent. Industrial growth recorded by UP, as well as India, meanwhile, have remained at 0.5 per cent.
The services sector accounts for the bulk of Uttar Pradesh's gross state domestic product (GSDP); it had a 57 per cent share in 2014, and was followed by agriculture and allied activities (22 per cent) and industry (21 per cent).
The fact that services and agriculture still contribute more to the GSDP than industry reflect the large untapped potential of the industrial sector. The industrial sector's contribution to the state's economy had declined since 2004-05, when it was 22.3 per cent. But in terms of workforce, the sector appeared to have expanded during the period.
According to the 2011 census, 5.9 per cent of UP's workforce was dependent on industry, compared with 5.6 per cent in 2001. By comparison, the pan-Indian workforce employed by the industrial sector saw a decline from 4.2 per cent in 2001 to 3.8 per cent in 2011.
According to the Annual Survey of Industries (ASI) 2012-13, the number of registered manufacturing factories operating out of UP was 14,440, the fifth-most in a state - after Maharashtra, Gujarat, Tamil Nadu and Karnataka.
The employee count of the registered units in UP stood at about 826,000 in 2012-13. ASI is the primary survey conducted by Central Statistics Office's (CSO's) industrial statistics (IS) wing.
An analysis suggested manufacturing of food products was a leading industrial segment in the state, accounting for 14.1 per cent of all registered units.
Besides, non-metallic mineral products (nine per cent), fabricated metal products (eight per cent), and textiles (6.2 per cent) were other big manufacturing segments - the second, third and fourth -biggest, respectively.
Other major registered manufacturing industries in UP were rubber and plastic products, apparel, basic metals, chemicals, equipment and leather ones.
The worrying part, though, is that net value addition of registered manufacturing in the state shows a fluctuating pattern. This, when compared with the overall country, suggests an unsustainable growth pattern of net value addition over the years.
However, in 2012-13, UP's 14 per cent value-added growth was higher than India's 2.8 per cent.
On average, the value-added growth rate for the registered manufacturing industry in UP is slightly lower than in India. The state recorded a CAGR of 14.5 per cent between 2004-05 and 2012-13, against 16.1 per cent for India.
Value-added growth refers to the increase/decrease in difference between the values of output and input. It is the total sum of contribution through the process of production and manufacturing. While depreciation is discounted, net value added is computed. At a macroeconomic level, this component helps calculate/aggregate domestic product of an economy.
Output per worker is an important measure to gauge productivity of the industrial sector. In this regard, UP's labour productivity development was higher than India's in 2012-13. Higher productivity development indicates a higher competitive strength.
The state's labour productivity improved from Rs 18.6 lakh in 2004-05 to Rs 43.9 lakh in 2012-13. Another encouraging factor is that growth has been better in recent years.
UP is India's largest state in terms of micro, small and medium enterprises (MSMEs), and third-largest in terms of unregistered and registered ones. The unregistered units account for over 11 per cent of India's unregistered MSMEs, while registered ones account for 12 per cent of India's MSME sector.
MSMEs generate significant employment opportunities in the state; the unregistered and registered units provide jobs to about 5.2 million and 760,000 people, respectively.
However, industry in UP has been facing problems of power deficit and bad infrastructure facilities, besides law-and-order constraints. Other areas of concern are lack of functional single-window system, non-availability of skilled manpower, problems of raw materials, warehousing, etc.
MSMEs, the real backbone of the state's industrial sector, are facing problems on the front of exports, marketing assistance, challenges from e-commerce, finance, scare land bank, cumbersome processes, etc.
The state government is now proactively working to address these domains to create an investment-friendly environment. It has already announced fresh policies in all key sectors and held several government-industry conclaves over the past months.
This was after a decline in the state's contribution to India's industrial sector in the previous 10 years - a relatively stable period in the past three years, though, was a silver lining. According to a recent Assocham report, 'UP: Inching towards double digit growth', the state's manufacturing sector has in recent years expanded at a 2.5 per cent compound annual rate, higher than the national average of 2.1 per cent. Industrial growth recorded by UP, as well as India, meanwhile, have remained at 0.5 per cent.
The services sector accounts for the bulk of Uttar Pradesh's gross state domestic product (GSDP); it had a 57 per cent share in 2014, and was followed by agriculture and allied activities (22 per cent) and industry (21 per cent).
The fact that services and agriculture still contribute more to the GSDP than industry reflect the large untapped potential of the industrial sector. The industrial sector's contribution to the state's economy had declined since 2004-05, when it was 22.3 per cent. But in terms of workforce, the sector appeared to have expanded during the period.
According to the 2011 census, 5.9 per cent of UP's workforce was dependent on industry, compared with 5.6 per cent in 2001. By comparison, the pan-Indian workforce employed by the industrial sector saw a decline from 4.2 per cent in 2001 to 3.8 per cent in 2011.
According to the Annual Survey of Industries (ASI) 2012-13, the number of registered manufacturing factories operating out of UP was 14,440, the fifth-most in a state - after Maharashtra, Gujarat, Tamil Nadu and Karnataka.
The employee count of the registered units in UP stood at about 826,000 in 2012-13. ASI is the primary survey conducted by Central Statistics Office's (CSO's) industrial statistics (IS) wing.
An analysis suggested manufacturing of food products was a leading industrial segment in the state, accounting for 14.1 per cent of all registered units.
Besides, non-metallic mineral products (nine per cent), fabricated metal products (eight per cent), and textiles (6.2 per cent) were other big manufacturing segments - the second, third and fourth -biggest, respectively.
Other major registered manufacturing industries in UP were rubber and plastic products, apparel, basic metals, chemicals, equipment and leather ones.
The worrying part, though, is that net value addition of registered manufacturing in the state shows a fluctuating pattern. This, when compared with the overall country, suggests an unsustainable growth pattern of net value addition over the years.
However, in 2012-13, UP's 14 per cent value-added growth was higher than India's 2.8 per cent.
On average, the value-added growth rate for the registered manufacturing industry in UP is slightly lower than in India. The state recorded a CAGR of 14.5 per cent between 2004-05 and 2012-13, against 16.1 per cent for India.
Value-added growth refers to the increase/decrease in difference between the values of output and input. It is the total sum of contribution through the process of production and manufacturing. While depreciation is discounted, net value added is computed. At a macroeconomic level, this component helps calculate/aggregate domestic product of an economy.
Output per worker is an important measure to gauge productivity of the industrial sector. In this regard, UP's labour productivity development was higher than India's in 2012-13. Higher productivity development indicates a higher competitive strength.
The state's labour productivity improved from Rs 18.6 lakh in 2004-05 to Rs 43.9 lakh in 2012-13. Another encouraging factor is that growth has been better in recent years.
UP is India's largest state in terms of micro, small and medium enterprises (MSMEs), and third-largest in terms of unregistered and registered ones. The unregistered units account for over 11 per cent of India's unregistered MSMEs, while registered ones account for 12 per cent of India's MSME sector.
MSMEs generate significant employment opportunities in the state; the unregistered and registered units provide jobs to about 5.2 million and 760,000 people, respectively.
However, industry in UP has been facing problems of power deficit and bad infrastructure facilities, besides law-and-order constraints. Other areas of concern are lack of functional single-window system, non-availability of skilled manpower, problems of raw materials, warehousing, etc.
MSMEs, the real backbone of the state's industrial sector, are facing problems on the front of exports, marketing assistance, challenges from e-commerce, finance, scare land bank, cumbersome processes, etc.
The state government is now proactively working to address these domains to create an investment-friendly environment. It has already announced fresh policies in all key sectors and held several government-industry conclaves over the past months.