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HindustanTimes Wed,24 Sep 2014

In west UP, economy suffers as streets bleed

Umesh Raghuvanshi , Hindustan Times  Lucknow, August 31, 2014
First Published: 01:36 IST(31/8/2014) | Last Updated: 09:37 IST(31/8/2014)

The darkness of violence refuses to go away — much after the streets are cleaned up and the traces of destruction and death are no longer detectable on the surface. It keeps on influencing life in Uttar Pradesh.

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Since 1980s, when the bloodiest riots in recent history hit Moradabad, a bustling business town in western UP — leading to five-month-long curfew — the state has been on a steady decline, with entrepreneurs getting the jitters and investment plans going cold.

"Many well-established artisans had to resort to pulling rickshaws while a number of small industrial units had to close down. The brassware industry is yet to recover from that shock," said Mukhtar Aslam, a Moradabad-based Haj trainer.

Besides the immediate effect on the economy in terms of loss of property and employment, the riots over the years have had a long-term impact on the industrial investment scenario.

The state’s fundamentals during the past 10 years shows its fiscal burden has almost doubled from Rs. 1,21,126.55 crore in 2004-2005 to Rs. 2,65,901.93 crore in 2014-2015.

"In western UP, Hindus and Muslims have been close partners in business and industry. Now, people are suspicious of each other. In such an atmosphere, doing business becomes difficult," says Professor Yashvir Tyagi, former head of Lucknow University’s economics department.

Now, especially after the Samajwadi Party came to power in 2012, communal flare-ups kept on surfacing at a regular interval of every two months. This, obviously, has had a negative impact on the state’s image.

Tyagi said, "UP has suffered from infrastructure deficit, governance deficit and perception deficit. Communal strife has added to these deficits to drive investors away or discount the state as a potential destination."

The fear among entrepreneurs is so intense that some of the government’s key public-private partnership projects got nixed as they failed to attract developers. Even CM Akhilesh Yadav’s ambitious Agra-Lucknow access-controlled Greenfield expressway project couldn’t find a partner. Now, the government has to fund it.

Trade and industry bodies are counting losses due to the communal riots. Assocham’s ‘Impact Analysis of Saharanpur Riots’ conducted this month estimated a fiscal damage of Rs. 244 crore. What’s more, the revival of industry in Saharanpur, the report says, has become uncertain.

Various medium and small-scale enterprises suffered an estimated turnover loss of Rs. 23 crore, while marginal workers lost wages worth `18 crore.

The worst affected across the riot zone are the daily wage earners and about 60,000 below-poverty-line households.

After more than three decades of communal violence and tension since the Moradabad riots, there have been consistent reports about major industrial units contemplating shifting out of the state.

"The industry looks for a safe and secure place to set up its units. If UP wants to attract investments, it has to take care of law and order issues," says Professor Himanshu Rai of IIM-Lucknow.

But India’s youngest CM, Akhilesh Yadav’s government hardly looks ready to lead UP out of the darkness.


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