Apex industry body, ASSOCHAM has urged Uttarakhand government to urgently set up a special ‘investment monitoring task force,’ to ensure timely and effective implementation of live investment projects worth over Rs two lakh crore attracted by the state from global and domestic private and public sources as of FY17 to create around 30,000 direct jobs in next five years.
“Speeding up implementation of projects through target setting must be the mandate and chief minister should immediately constitute committee of senior ministers and bureaucrats to oversee pace of projects’ implementation and address environmental, land acquisition and other related issues proactively to balance interests of all stakeholders,” said ASSOCHAM’s secretary general, Mr D.S. Rawat while addressing a press conference in Dehradun today.
“State should accord more importance to implementing investment intentions as even if about half of these get implemented it would help create thousands of direct and indirect jobs across the state during the course of next five years,” said Mr Rawat while releasing the just-concluded ASSOCHAM study titled, ‘Uttarakhand: Economic Growth & Investment Performance Analysis.’
“The Uttarakhand government must focus on upskilling its people thereby making them more employable as that would help deal with challenges of growing migration of people to greener pastures in search of jobs and will also help in attracting investors by portraying abundant skilled workforce availability,” he added.
He further stated that state’s future success also lies in unlocking potential of abundant natural resources but going ahead it will have to deal with factors like land scarcity, growing man-animal conflicts, physical connectivity and others.
Live investments attracted by Uttarakhand grew at a compounded annual growth rate (CAGR) of 14.5 per cent between FY12 and FY17 which is almost three times of the national average CAGR of 4.8 per cent clocked during this period, according to the study prepared by ASSOCHAM’s Economic Research Bureau (AERB).
Non-financial services accounts for over half of the total live investments attracted by Uttarakhand as of FY17 with electricity sector acquiring over 46 per cent share in this regard, it noted.
As of FY17, 151 projects worth over Rs one lakh crore are under different stages of implementation in Uttarakhand. “While under implementation rate of projects has been declining sharply since FY14 and touched lowest level of 32 per cent in FY16, which is a positive sign, it however again crossed 58 per cent mark in FY17 probably due to it being an election year.”
Whereas all-India average under implementation rate of projects has remained constant at about 54 per cent since FY12. Sector-wise, non-financial services account for over 72 per cent share in projects that are under-implementation followed by electricity (26 per cent share).
“A higher under-implementation rate implies that most of the projects or outstanding investments are under process and are yet not completed. Therefore a higher under implementation rate does not augur well as actual benefits of an investment are only derived upon completion,” said Mr Rawat.
“Projects with huge investments that are under different stages of implementation have been a major concern for policymakers across India as governments both at the centre and the states have been taking various initiatives to reduce such investment projects both in terms of numbers and values,” he added.
Uttarakhand’s economic scenario:
So far as economic performance of Uttarakhand is concerned, its economy had recorded a CAGR of 7.1 per cent between FY12 and FY17 and remained ahead of national economic average CAGR of 6.9 per cent clocked during the same period.
Though agriculture and allied activities is the mainstay of over 51 per cent of state’s total workforce as per Census 2011, the sector’s contribution to state’s economy recorded a decline of about three per cent i.e. from 12.3 per cent in FY12 to 8.9 per cent in FY17.
There is also not much difference in terms of agriculture sector’s growth pattern in past five years as it remained at about two per cent.
As such, the chamber has time and again suggested the government authorities to float a state-specific separate hill farming policy. “Low level of land holdings together with poor crop productivity are the grave twin challenges being faced by agriculture sector in Uttarakhand thus priority must be given to further developing irrigation infrastructure besides, production of local and traditional hill crops must be promoted and farmers must also be given adequate cover in terms of welfare schemes.”
Apart from this, adequate technical and financial support for water conservation should also be extended to farmers and steps should be taken to encourage improved agronomic practices for higher farm productivity, better soil treatment, increased water holding capacity, judicious use of chemicals and enhanced soil carbon storage.
Though the contribution of industrial sector in Uttarakhand’s economy has not improved much as it remained at about 52 per cent during both FY12 and FY17, the state has topped in terms industrial sector growth thereby clocking a CAGR of 7.3 per cent during aforementioned period. It also surpassed all-India industrial sector growth of 5.9 per cent registered during this period.
Promotion of food processing industries, bolstering sector-specific infrastructure like warehouses, cold storages and others to avoid spoilage of perishable products will further strengthen the industrial scenario of Uttarakhand, suggested the ASSOCHAM paper.
The contribution of services sector to Uttarakhand’s economy has improved significantly from 33.9 per cent in FY12 to 36.5 per cent in FY17. Besides, it has also grown at a CAGR of 8.6 per cent between FY12 and FY17 which is equivalent to the national average CAGR in this regard.
Terming the state’s performance in services sector as ‘encouraging,’ ASSOCHAM study has suggested the policymakers to aim for expanding the sector be it tourism, information technology both hold massive potential to generate additional economic activity and employment opportunities in Uttarakhand.