Economic Development of Uttarakhand
Economic Development of Uttarakhand
Economic Development of Uttarakhand
Economic Development of Uttarakhand : Uttarakhand was formed on 9th November 2000 as the 27th state of India, carved out of northern Uttar Pradesh. Located at the foothills of the Himalayas, it is largely a hilly state with international boundaries with China and Nepal.
The economy of Uttarakhand has seen decent growth over the years, but lags behind the national average. The state GDP grew at a CAGR of 11.16% between 2011-12 and 2020-21. But the per capita income of Rs 2,44,002 (2020-21) is below the national average of Rs 1,49,848 (2020-21).
Key Aspects of Uttarakhand’s Economy
Strong Growth But Below National Average
- The Gross State Domestic Product (GSDP) of Uttarakhand at current prices increased from Rs 95,417 crore in 2011-12 to Rs 3,09,298 crore in 2020-21. This translates to a Compound Annual Growth Rate (CAGR) of 11.16%.
- However, this growth rate is below the national GDP growth rate of 12.02% over the same period.
Low Per Capita Income
- The per capita income of Uttarakhand stood at Rs 2,44,002 in 2020-21.
- This is significantly below the national per capita income of Rs 1,49,848 in 2020-21.
- It indicates that the state’s economic growth has not adequately translated into income growth for citizens.
Dominance of Services Sector
- The services sector accounted for 49.71% of Uttarakhand’s GSDP in 2020-21. This was followed by industry (27.86%) and agriculture (22.43%).
- The share of services has increased from 45.15% in 2011-12, indicating the growing importance of trade, hotels, transport and communications.
- However, agriculture still employs over 60% of the workforce in the state.
Hill-Plain Disparities
- There are stark developmental disparities between the hill and plain districts of Uttarakhand across indicators like per capita income, consumption, poverty, employment and wages.
- The plain districts are more prosperous than the hill districts, with better infrastructure, resources, connectivity and economic opportunities.
- Bridging this gap is crucial for balanced economic development of Uttarakhand.
Sectoral Performance
Agriculture
Agriculture is an integral part of Uttarakhand’s economy, employing over 60% of the workforce. However, the contribution of agriculture to the state’s GSDP has declined from 26.71% in 2011-12 to 22.43% in 2020-21.
Some key aspects:
- Declining share: Share of agriculture (including livestock, forestry & logging) in GSDP down from 26.71% to 22.43% between 2011-12 and 2020-21
- Low productivity: Productivity of almost all crops lower than national average
- Small and fragmented landholdings: 86% farmers are small and marginal
- Challenging hilly terrain: Over 65% cultivable area in hills with small, scattered fields, poor irrigation
- Extensive migration: 40% of hill villages reported over 50% out-migration of working population
Key Government Initiatives
- Organic farming promotion
- Horticulture development through flowers, fruits, herbs, spices etc
- Food processing industries
- Dairy development
- Fisheries in reservoirs
- Beekeeping
- Medicinal & aromatic plants
Industry
The industry sector has seen relatively higher growth, with its share in GSDP rising from 25.80% in 2011-12 to 27.86% in 2020-21.
Some observations regarding Uttarakhand’s industry:
- Dominated by manufacturing and construction: Contribute approx. 90% of industrial GVA
- Small-scale industries prevalent: Food products, wood products, paper products, basic metals dominate
- Poor spread of industries: Heavily concentrated in plain districts like Dehradun, Udham Singh Nagar, Haridwar
Government Efforts to Boost Industries
- Integrated Industrial Estate (IIE) at Sitarganj, Pantnagar, Haridwar, Rudrapur
- Plastic Park at Sitarganj
- Pharma Park at Selaqui
- IT Park at Dehradun
- Electronic Manufacturing Clusters
- Food parks
- Export promotion industrial parks
- Tool rooms
- Testing labs
Services
The services sector has outpaced agriculture and manufacturing to emerge as the largest contributor to Uttarakhand’s economy.
Key takeaways regarding services sector:
- Largest sector: Accounts for 49.71% of GSDP in 2020-21, up from 45.15% in 2011-12
- Trade, hotels & restaurants dominate: Contribute nearly one-third of services GVA
- Transport, storage, communication growing: Share increased from 9.41% to 11.67%
- Tourism centric: Tourism related trade, hotels, transport play vital role
Government Support for Service Sector Growth
- Boosting tourism through infrastructure building, online systems, branding & promotions
- Improving connectivity via all-weather roads, highways, railways, airports
- Promoting wellness & healthcare services given natural bounty
- Strengthening education infrastructure to serve local and migrant students
- Building smart cities and urban amenities to foster growth of trade & real estate
- Improving mobile & internet connectivity through towers, fiber network expansion
Investment Climate
Attracting private investments is crucial for accelerating Uttarakhand’s economic growth by boosting production, exports, employment generation and revenues.
Steps Taken to Improve Investment Environment
- Single window clearance mechanism
- Relaxed labor laws
- Industry friendly policies like IT, biotech, pharma, food processing
- Financial incentives for priority sectors
- Land banks for industrial use
- Infrastructure building (roads, power, water)
Areas Requiring Further Improvements
- Streamlining bureaucratic processes
- Developing industrial land in remote hills
- Improving connectivity to smaller towns
- Ensuring availability of skilled manpower
- Providing quality power, water supply
Employment Dynamics
Employment generation remains a key challenge for Uttarakhand despite decent economic growth in recent years.
Some Observations on Employment Scenario
- Low workforce participation rate: Only 36% compared to national average of 40%
- High unemployment: Unemployment rate increased from 1.7% in 2011-12 to 17.2% in 2017-18, much higher than all India level
- Educated unemployment: Share of unemployed graduates increased sharply from 18.6% in 2004-05 to 60.5% in 2011-12
Government Efforts on Employment Front
- National Rural Livelihood Mission
- MGNREGA
- Skill development programs
- Self-employment schemes
- Migration support initiatives
- Tourism industry promotion
- IT industry fostering
However, the effectiveness of such programmes needs proper monitoring and implementation.
Regional Disparities
There are stark developmental disparities between the hill and plain districts of Uttarakhand:
| Key Parameters | Plains | Hills |
|---|---|---|
| Per Capita Income | 1.5 times higher | Lower |
| Poverty Ratio | 11.6% | 43% |
| Unemployment Rate | Lower | Higher |
| Wage Rate | Higher | Lower |
| Industrialization | Better | Poor |
| Infrastructure | Good | Inadequate |
| Resources | Better | Scarce |
Government Efforts to Bridge Gaps
- Hill Industry Policy
- Migration Commission
- Border Area Development Program
- NITI Aayog’s Sustainable Action for Transforming Human Capital (SATH) initiative
- Special assistance to 5 hill districts
Tourism Industry
Tourism is a mainstay of Uttarakhand’s economy, leveraging the state’s natural beauty, hills, forests, temples and pilgrim centers.
Key Facts
- Accounts for 7-8% of state GDP
- 25-30 million tourists annually
- Over 2200 small hotels, lodges, camps in state
- Employs thousands of taxis, guides etc
However, there are some challenges facing tourism industry:
- Seasonal and uneven demand
- Inadequate infrastructure in remote areas
- Limited connectivity and accessibility
- Environmental sustainability concerns
Steps Taken by Government
- Tourism policy to attract Rs 25,000 crore investments
- Infrastructure building via all-weather roads, wayside amenities, ropeways
- Online portals for bookings, tracking, information
- Promotions and advertisements
- Human resource development
- Home stays and activities promotion
Recent Government Initiatives
Some recent key initiatives of Uttarakhand government to boost economy:
- State Budget 2022-23: Rs 57,400 crore budget with focus on healthcare, jobs, tourism, MSMEs
- Wellness Summit: Efforts to position state as wellness capital of world
- ODOP scheme: Promoting one district one product to boost local economy
- Electric vehicle policy: Aims for 1 lakh EVs in state by 2030
- Kumbh Mela: Hosting event gives boost to tourism and economic activities
- Spiritual Eco Zone: At Jageshwar to promote spiritual/wellness tourism
- Gross Environment Product: Along with GDP to conserve nature
Way Forward
Despite decent growth, Uttarakhand needs to accelerate the pace of economic expansion to uplift incomes and standards of living. Some ways forward:
- Attract industries to remote hills, not just plains
- Improve farm productivity through latest techniques
- Develop offbeat tourist spots to disperse visitors
- Enhance skill development and employability
- Upgrade infrastructure in small towns to stem migration
- Promote traditional hill products through branding/marketing
- Ensure balanced and inclusive growth across regions
With visionary policies, investments and public-private partnerships, Uttarakhand can leverage its natural and human capital to emerge as one of India’s leading hill state economies.
FAQs on Economic Development of Uttarakhand:
What are the main economic sectors in Uttarakhand?
The key sectors driving Uttarakhand’s economy are services, manufacturing and construction along with tourism and agriculture.
What is the economic growth rate of Uttarakhand?
Uttarakhand has witnessed robust growth over the past decade with GSDP growth averaging about 8-11% before the pandemic.
What are the main challenges for economic development?
Key economic challenges are lack of industrialization, seasonal tourism, infrastructure constraints, high unemployment and poverty levels.
What steps can boost economic growth in the state?
Strategic focus on infrastructure, skill development, promoting tourism, IT and biotech industries can accelerate economic progress.
