North continues to excel in national growth

The northern region of the country continues to be the largest contributor to the national GDP at 27.5 per cent, in 2007-08. However, the economic growth in the region is below the national average. During 1999-2000 to 2007-08, the region clocked a compound annual growth rate (CAGR) of 6.2 per cent, against the 6.5 per cent national average, according to the analysis presented in the second edition of CII’s report on Gross State Domestic Product for states in the north India. Elaborating on the region’s performance at the sectoral and sub- sectoral level, Chairman CII northern region Harpal Singh said the underperformance had been witnessed across primary and tertiary sectors. One of the key reasons of underperformance in the primary sector had been slow growth rates witnessed by two of the largest agrarian states in the region – Uttar Pradesh and Punjab, which contributed 57.5 per cent to the region’s primary sector.

So on one hand the northern region has not been able to capitalise on its traditional stronghold –agriculture, on the other, it has also not been able to capitalise on the opportunities in the service sector as much as other regions, said Singh.

He said the performance of the northern region had been reasonably good in the secondary sector, driven to a large extent by growth in the construction sector. Construction in fact is also the fastest growing sub-sector for the region, with CAGR of 12.6 per cent over 1999-00 to 2007-08. The other fastest growing sub-sectors for the region are - transport, storage & communication; banking & insurance; real estate, ownership of dwellings & business services.

Two of these sub sectors– construction; transport, storage and communication – are amongst the top five contributors to the region’s GDP, indicating their importance in the regional economy. Over the period under consideration, the combined contribution of these sub- sectors to the regional GDP has increased significantly from 12.8 per cent to 20.4 per cent.

Singh said that Uttar Pradesh, Rajasthan and Delhi were the three largest economies in the region. Chandigarh, Uttarakhand and Haryana were the three fastest growing economies in the region. All northern region state economies have witnessed declining contribution from the primary sector. The greatest increase in percentage contribution of the secondary sector has been in Uttarakhand at 15 per cent points. Similarly the contribution of the tertiary sector has witnessed greatest increase in Haryana, 10 per cent points. State-wise best performing sectors include: Chandigarh – sub-sector trade, hotels and restaurants witnessed highest growth rate in the country; Delhi – sub-sector real estate witnessed third highest growth rate in the country; Haryana - sub-sector real estate witnessed second highest growth rate in the country; HP witnessed the third highest growth rate in agriculture amongst all states and UTs; Uttarakhand clocked the second highest growth rate in construction and third highest in manufacturing.