e000001218.3244.cii investment climate uttar pradesh

8/2/2019 E000001218.3244.CII Investment Climate Uttar Pradesh

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Investment Climatein Uttar Pradesh

HARYANA

UTTARAKHAND

DELHI

Confederation of Indian Industry


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Investment Climatein Uttar Pradesh



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Economic Research & Policy Division - CII (NR)

CHAPTER 1 : OVERVIEW OF THE STATE & ITS ECONOMY 1

CHAPTER 2 : SOCIAL SECTOR 4

CHAPTER 3 : PHYSICAL INFRASTRUCTURE 11

CHAPTER 4 : INDUSTRY 17

CHAPTER 5 : AGRICULTURE 21

CHAPTER 6 : INVESTMENT CLIMATE 24

CHAPTER 7 : STATE FINANCES 29

ANNEXURE 33

TABLE OF CONTENTS

All data is at 2004-05 prices, unless explicitly stated otherwise

BE stands for Budget Estimates

CAGR stands for Compound Annual Growth Rate

CSO stands for Central Statistical Organisation

GDP stands for Gross Domestic Product

GSDP stands for Gross State Domestic Product

RE stands for Revised Estimates

SEZ stands for Special Economic Zone

URP stands for Uniform Reference Period


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Economic Research & Policy Division - CII (NR)

The report 'Investment Climate in Uttar Pradesh' is eighth in the Talking North series. Talking North series

of CII Northern Region is an endeavour to benchmark the progress of the Northern Region vis--vis other

regions on various aspects like economic growth, progress in social sector, infrastructure development,

PPPs etc. The series also captures the Investment Climate in the Northern Region and Northern States.

The objective of this report is to provide the status and development of various macroeconomic parameters

such as economic growth, health, education, agriculture, investment policies, fiscal stability etc. in Uttar

Pradesh.

The report is structured along the following lines:

Chapter 1 gives a brief economic profile of the State. The status of social sector development in the Statefocusing on health, education and skills is discussed in Chapter 2.

Chapter 3 gives the current state of infrastructure in the State. The sectors covered include power, roads,

rail, airports and telecommunication.

The focus of the study thereafter shifts to parameters which shape the investment climate of the State;

Chapter 4 dwells on the industrial performance of the State and incentive schemes for industry. It also

highlights the State Government's initiatives in establishing industrial parks/clusters and the status of SEZs.

Chapter 5 showcases the importance of agriculture in the State economy. It also dwells on policy issues in

agriculture.

The Ease of Doing Business relating to procedures and timelines required for setting up business units and

investment facilitating measures in the State are discussed in Chapter 6.

Chapter 7dwells on fiscal performance and State taxes.

OBJECTIVE AND STRUCTURE OF THE REPORT


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CHAPTER 1 : OVERVIEW OF THE STATE & ITS ECONOMY

This section highlights the structure of the State economy and also looks at the current performance of

the State on various economic indicators.

I. OVERVIEW

Uttar Pradesh is surrounded by Uttarakhand, Himachal Pradesh in the Northwest, Haryana, Delhi and

Rajasthan on the West, Madhya Pradesh on the South, Chhattisgarh and Jharkhand on the Southeast

and Bihar on the East. Uttar Pradesh has the largest share of population and is the fifth largest State of

India area wise. The State has 7.3% of country's area against its share of 16.5% of the country's

population (Census 2011).Table 1.1 Uttar Pradesh & India at a Glance

Profile Uttar Pradesh India

General Profile

State Capital Lucknow New Delhi

Total Area (sq km)71 districts, 915 towns and 1.06 lakh villages

2,40,928 32,87,263

Population (crore) (Census 2011)

19.9 121.0

Percentage share of Urban Population (Census 2011)

22.3 31.2

Density of Population (per sq km) (Census 2011) 828 382

Literacy Rate (%) (Census 2011) 69.7 74.0

Females per 1000 Males (Census 2011) 908 940

EconomicProfile

GSDP (Rs crore) (2009-10) 3,63,560 44,93,743

Per Capita Income (Rs) (current prices) (2009-10) 23,132 46,492

CAGR (%) ( 2004-05 to 2009-10) 7.1 8.6

Key IndustriesSugar, textiles, IT/ ITeS, auto components,leather, jute, tourism, engineering, cement

Key Industrial Areas Noida, Ghaziabad, Lucknow, Mathura,Kanpur, Khurja, Firozabad, Sahibabad

Source: Various Government documents

II. STATE GDP

The GSDP has been estimated at Rs 3,63,560 crore in 2009-10 as against Rs 3,39,072 crore in 2008-09

recording a growth of 7.2% during 2009-10.

Graph 1.1 GSDP of Uttar Pradesh

Source: CSO

Note: Figures are in Rs crore


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The share of GSDP of Uttar Pradesh in national GDP is 8.1% during 2009-10.

The States GSDP grew at a CAGR of 7.1% between 2004-05 and 2009-10 as against the national

GDP growth of 8.6%.

Graph 1.2Sectoral Composition of Uttar Pradeshs GSDP

Source: CSO

The growth in the tertiary sector is driven by sub sectors like transport, storage & communication,

banking & insurance, real estate & business services.

The share of the secondary sector increased from 22.4% in 2004-05 to 24.6% in 2009-10. The growth

in this sector is driven by both manufacturing and construction.

Table 1.2 Structure and Growth of the Economy

Economic Activity

Uttar Pradesh All India

Share in GDP(2009-10)

CAGR(2004-05 to

2009-10)

Share in GDP(2009-10)

CAGR(2004-05 to

2009-10)

Primary Sector, of which 25.2 2.9 16.9 3.2

Agriculture and allied activities 23.9 2.5 14.6 3.0

Mining & quarrying 1.3 12.1 2.3 4.1Secondary Sector, of which 24.6 9.1 25.8 9.2

Manufacturing 14.6 8.6 15.9 9.5Construction 8.5 9.9 7.9 9.2Tertiary Sector, of which 50.2 8.5 57.3 10.3

Trade, Hotels & Restaurants 12.1 5.4 16.4 9.1Transport, Storage & Communication 9.2 10.7 10.2 12.8Banking & Insurance 5.7 16.8 7.9 15.7Real Estate & Business Services 9.3 8.8 9.3 9.5Gross Domestic Product 100.0 7.1 100.0 8.6

Source: CSO


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Per Capita Income

The per capita income of Uttar Pradesh increased at CAGR of 12.5% from Rs 12,840 in 2004 -05 to

Rs 23,132 in 2009 -10 (at current prices) whereas the per capita of India increased by CAGR of 14.0% in

the same period. The States per capita income continues to be lower than all India average.

Uttar Pradesh ranks 31st among 35 Indian States and Union Territories on the basis of per capita income.

Graph 1.3 Per Capita Income

Source: CSO

Income Disparities

In Uttar Pradesh, Gini coefficient1 (2004-05 URP) for rural and urban is 0.29 and 0.37 respectively while in

1999-2000 it was 0.25 for rural and 0.33 for urban. Income disparities have increased over the years in

Uttar Pradesh but they are still comparable with all India average. Gini coefficient for all India (2004-05

URP) for rural and urban is 0.30 and 0.37.

1The Gini coefficient is a measure of the inequality of a distribution, a value of 0 expressing total equality and a value of 1

maximal inequality.


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CHAPTER 2 : SOCIAL SECTOR

This section looks at the present status of social infrastructure- Health, Education and Skills in the State.

I. OVERALL PERFORMANCE

Uttar Pradesh ranked 16th among 35 Indian States and Union Territories in terms of improvement in

Human Development Index (HDI) over a decade (1996-2006).

Table 2.1 Rankings based on improvement in

HDI Scores (1996-2006)

Index Uttar Pradesh

HDI 16

Health 13

Education 8

Income 33Source: Ministry of Women and Child Development

However, the rank of Uttar Pradesh in HDI, 2006 was 34 th among 35 Indian States and UTs. In terms of

HDI indicators-Health, Education and Income Indices of 2006, the State was ranked at 33 rd, 30th and 34th

position respectively.

II. HEALTH SECTOR

Performance on Key Health Indicators

Infant Mortality Rate (IMR): It denotes the number of deaths of infants under one year old in a given

year per 1,000 live births in the same year.

The IMR in Uttar Pradesh is estimated at 63 deaths before the age of one year per 1,000 live births, down

from 76 in 2003. However, IMR for the State remains higher than the all India rate of 50.

Graph 2.1 Infant Mortality Rate (2009)

Source: SRS Bulletin, January 2011


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Life Expectancy at Birth: The life expectancy at birth for male and female in Uttar Pradesh is lower than

that of all India.

Graph 2.2 Life Expectancy at Birth

Source: Planning Commission, 2010

Note: Figures for Uttar Pradesh include Uttarakhand

Crude Death Rate (CDR): The Crude Death Rate measures the rate of deaths for every 1,000 people in

a given population. The CDR in Uttar Pradesh is higher than all India average.

Graph 2.3 Crude Death Rate (2009)

Source: SRS Bulletin January, 2011

Maternal Mortality Rate (MMR): The Maternal Mortality Rate is a measure of the number of maternal

deaths per 1,00,000 women of reproductive age in same time period.

In Uttar Pradesh, MMR is 40.0 which is much higher than all India average of 16.3. The high level of

mortality during childbirth or soon after childbirth indicates the inadequate facilities for antenatal care and

deliveries.


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Graph 2.4 Maternal Mortality Rate (2007-09)

Source: SRS Special Bulletin June, 2011

Note: Figures for Uttar Pradesh include Uttarakhand

Health Infrastructure

The performance of Uttar Pradesh in health indicators like IMR, CDR, MMR and life expectancy shows

the inadequate health infrastructure facilities available in the State. The shortfall in nursing staff at PHCs

and CHCs is about 64%.

There are only 3 doctors2 per 10,000 population (2008) and 2 beds3 per 10,000 population in Uttar

Pradesh (2008) as against national figures of 7 doctors per 10,000 population (2008) and 4 beds per

10,000 population (2008).

Table 2.2 - Health Infrastructure at a Glance (March 2010)

Particulars Required In position Shortfall

Sub Centres 26,344 20,521 5,823

Primary Health Centres (PHCs) 4,390 3,692 698

Community Health Centres (CHCs) 1,097 515 582Health worker (Female)/ANM at Sub Centres & PHCs 24,213 19,209 5,004

Health Worker (Male) at Sub Centres 20,521 2,097 18,424

Health Assistant (Female)/LHV at PHCs 3,692 2,040 1,652

Health Assistant (Male) at PHCs 3,692 4,518 @

Doctor at PHCs 3,692 2,861 831

Surgeons at CHCs 515 315 200

Obstetricians & Gynecologists at CHCs 515 378 137

Physicians at CHCs 515 282 233

Pediatricians at CHCs 515 281 234

Total specialists at CHCs 2,060 1,256 804

Radiographers at CHCs 515 163 352

Pharmacists at PHCs & CHCs 4,207 3,527 680

Laboratory Technicians at PHCs & CHCs 4,207 995 3,212

Nursing staff at PHCs & CHCs 7,297 2,627 4,670

Source: RHS Bulletin, March 2010, Ministry of Health & Family Welfare

Note: @ denotes surplus

2Allopathic doctors with recognized medical qualification (under IMC Act) and registered with state medical councils in India

3Includes only government hospital beds

Source: Registrar General of India, Ministry of Health & Family Welfare, Medical Council of India


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The health institutions in the State are detailed as under:

Table 2.3 Medical Institutions (2008)

Health Institutions Number

Medical College 16District Hospitals 71Ayurvedic Hospitals 1,771Ayurvedic Dispensaries 340Unani Hospitals 210Unani Dispensaries 49Homeopathic Hospitals 8

Homeopathic Dispensary 1,482

Source: Ministry of Health & Family Welfare

Expenditure on Health

The expenditure on health as a ratio of total expenditure of the State Government has been above the all

States average since 2004-05. Though the expenditure on medical, public health and family welfare asratio to aggregate expenditure is higher than all States average the health infrastructure of the State,

continues to be inadequate.

Graph 2.5 Expenditure on Medical, Public Health and Family Welfare

as ratio to Aggregate Expenditure

Source: State Finances-A Study of Budgets of 2010-11, RBI

III. EDUCATION SECTOR

Performance on Key Education Indicators

The overall literacy rate in Uttar Pradesh is 69.7%, which is significantly lower than the national average

of 74.0%. In Uttar Pradesh, male literacy is 79.2% while female literacy is 59.3%. All India male and

female literacy is 82.1% and 65.5% respectively.

Uttar Pradesh has a low Gross Enrolment Ratio. The Pupil-Teacher ratio at 65.0 is much higher than the

all India average of 37.0. This shows inadequate number of teachers per student. The Dropout rate in the

State is lower than all India average.


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Graph 2.6 Literacy Rate, Gross Enrolment Ratio, Pupil-Teacher Ratio & Dropout Rate

Source: Census of India 2011, Selected Education Statistics 2007-08Note: Literacy Rates (2011), Gross Enrolment Ratio pertains to Classes I-VIII,

Pupil-Teacher Ratio pertains to Higher Secondary Schools/Intermediate Colleges,

Dropout Rate pertains to Classes I-VIII. Dropout figures for Uttar Pradesh includes

Uttarakhand

Education Infrastructure

Universities in Uttar Pradesh constitute about 8.8% of total Universities in India. The proportion of

colleges for general education is comparably higher than that of colleges for professional education.

Table 2.4 Share of Uttar Pradesh in All India for Higher Education Infrastructure

Colleges for India % in Uttar Pradesh

General Education 14,145 16.7

Professional Education 13,584 6.5

Universities/Deemed Universities/Institutions ofNational Importance 409 8.8

Total 28,138 11.6

Source: Statistics of Higher & Technical Education 2008-09, MHRD

Note: General Education includes Art, Fine Art, Social Work, Science & Commerce Colleges;

Professional Education includes Engineering, Technology, Architecture, Medical Education,

Teacher Training Colleges, Polytechnics & Others

Uttar Pradesh has 3 premier institutes: the Indian Institute of Technology (IIT) at Kanpur, IT-BHU atVaranasi and the Indian Institute of Management (IIM) at Lucknow.

Other prominent universities / institutions of excellence in Uttar Pradesh include Uttar Pradesh

Technical University (UPTU), Allahabad University, Aligarh Muslim University (AMU), King Georges

Medical College, Banaras Hindu University (BHU), Indian Institute of Information Technology

(Allahabad) and National Institute of Technology (Allahabad).

44% of schools at level in Uttar Pradesh are private schools. This shows that the private sector has a

significant contribution in school education.


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Government schools at the level of High and Higher Secondary are very few.

Graph 2.7 School Infrastructure

Source: Selected Education Statistics 2007-08

Note: Private schools includes private aided and private unaided,

Government schools also includes local bodies schools

Skill Infrastructure

In Uttar Pradesh like most of the States of India, Vocational Education and Training (VET) courses are

conducted by the Industrial Training Institutes (ITIs)/Industrial Training Centres (ITCs).

Graph 2.8 Industrial Training Institutes (ITIs)/ Industrial Training Centres (ITCs)

& Seating Capacity in Uttar Pradesh

Source: Planning Commission, 2010


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Expenditure on Education

In terms of expenditure on education, Uttar Pradesh spent 15.9% of its aggregate expenditure on

education which is lower than all States average.

Graph 2.9 Expenditure on Education as ratio to Aggregate Expenditure

Source: State Finances-A Study of Budgets of 2010-11, RBI


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CHAPTER 3 : PHYSICAL INFRASTRUCTURE

This section looks at the present status of infrastructure in the State - power, roads, railways, airports and

telecommunication.

Table 3.1 Physical Infrastructure - At a Glance

S No Indicator Uttar Pradesh All India

Power

i. Installed Capacity (March 2011) 10,458 1,73,626

ii. Peak Deficit (%) (April 2010- March 2011) 3.7 10.3

iii. T&D Losses (%) (2007-08) 28.6 27.2

iv. Annual Per Capita Consumption of Electricity (kWh)(2007-08) 345.6 717.1

Transport

Road:

i. Total Road (km) (2009-10) 139,362 3.3 million

ii. Length of Road (km/lakh population) (2009-10) 69.8 277

iii. Length of Road (km/ 1,000 sq km) (2009-10) 578 965.7

Railways:iv. Rail network length (km) (March 2009) 8,703 64,015

Airports:

v. Airports (Number) 9^ 117

Communication

i. Teledensity (March2011) 52.9* 70.9

ii. Subscriber base (million) (March 2011) 111.7**

846.3

Source: Central Electricity Authority (CEA), Ministry of Road Transport & Highways, Ministry of Railways, Ministry of

Aviation, Telecom Regulatory Authority of India (TRAI), Report on Infrastructure Development in States 2010

Note: $ Data pertains to March 2008.*Teledensity is calculated for Uttar Pradesh (East) & Uttar Pradesh (West) jointly due to

non availability of separate population data for Uttar Pradesh (East & West). Uttar Pradesh (West) also includes Uttarakhand

**Uttar Pradesh (East) - 65.1 million and Uttar Pradesh (West)-46.6 million

^1 airport is non-operational (at Lalitpur)

I. POWER

Installed Capacity

The installed capacity in the State is 10,458 MW which is about 6% of total installed capacity in the

country. 75% of the States power supply is thermal.

Table 3.2 Installed Capacity in Uttar PradeshSector Hydro Thermal Nuclear RES Total

Coal Gas Diesel Total (MNRE)

State 524 4,072 0 0 4,072 0 23 4,619

Private 0 600 0 0 600 0 586 1,186

Central 1,176 2,589 549 0 3,139 3,356 0 4,652

Total 1,700 7,262 549 0 7,812 3,356 609 10,458

Source: CEA

Note: Figures in MW; Installed Capacity includes allocated shares in Joint and Central Sector Utilities


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Table 3.3 Installed Capacity in India

Sector Hydro Thermal Nuclear RES Total

Coal Gas Diesel Total (MNRE)

State 27,257 47,257 4,327 602 52,187 0 3,009 82,453

Private 1,425 12,616 6,677 597 1,98,901 0 15,446 36,761

Central 8,885 34,045 6,702 0 40,747 4,780 0 54,413

Total 37,567 93,918 17,706 1,200 1,12,825 4,780 18,455 1,73,626

Source: CEA

Note: Figures in MW

Demand Supply position

The peak demand deficit has decreased from 21.1% in 2009-10 to 3.7% in 2010-11. This can be

attributed to an increase in capacity and decrease in transmission & distribution losses. Moreover, Uttar

Pradesh Power Corporation Limited (UPPCL) has been buying electricity from the Central Grid as well

as from private players which are active in captive power generation.

Graph 3.1 Peak Demand Supply position

Source: CEA

Capacity Additions

To cope with the growing demand, Uttar Pradesh planned a number of projects under Central, State and

Private sector during 11th Five Year Plan. But only 790 MW of power has been added while other

projects are still under construction.

Table 3.4 Projects Planned for 11th

Plan

Project Agency Sector Status CapacityRihand-III U-5 NTPC Central Under Construction 500

Dadri Ext U-5, 6 NTPC Central Commissioned 490 MW 980

Parichha Ext U-5,6 UPRVUNL State Under Construction 500

Harduaganj Ext U-5,6 UPRVUNL State Under Construction 500

Anpara-D UPRVUNL State Under Construction 1,000

Anpara-C LANCO Private Under Construction 1,200

Rosa ST-I Rosa Power Private Commissioned 300 MW 600

Rosa ST-II Rosa Power Private Under Construction 600

Source: CEA

Note: Capacity figures in MW


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Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (UPRVUNL) has also planned greenfield units in

Joint Venture with NTPC and Neyvile Lignite at Meja and Ghatampur.

Furthermore brownfield units at Panki (1x250 MW), Harduaganj (1x660 MW), Obra C (2x660 MW)

and Anpara E (2x660 MW) are planned to be implemented during the 12th Plan Period.

The total capacity addition planned through upcoming projects in power sector in Uttar Pradesh is

37,529 MW.

Some of PPP projects planned in energy sector are as following:

Table 3.5 Public Private Partnership Projects in Energy Sector

Project Name SectorProject Cost

(Rs crore)Stage

Input-based Urban Franchise Agra Energy - Construction

Input-based Urban Franchise Kanpur Energy - Construction

Input-based Urban Franchise Moradabad Energy - Construction

Prayagraj Power Project at Bara Energy 10,000 Construction

Source: www.pppindiadatabase.com

Transmission & Distribution (T&D) Losses

The T&D loss in Uttar Pradesh is marginally higher when compared to all India, 28.6% (during 2007-08)

in Uttar Pradesh as against an all India average of 27.2%. However it has consistently declined from a

high of 37.6% in 2001-02.

Graph 3.2 Transmission & Distribution Losses

Source: CEA

The approved distribution & retail supply tariff for FY 2009-10 is given in the Annexure 1.

II. ROAD & RAIL NETWORK

The total road length in Uttar Pradesh is 1,39,362 km. The road density in the State stands at 578 km

per 1,000 sq km, and 69.8 km per lakh of population and is lower than the all India road density 965.7

km per 1,000 sq km and 277 km per lakh of population.


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Table 3.6 Road Network in Uttar Pradesh

Road Networks in Uttar Pradesh At the end of 2009-10 (km)

Primary Network (National Highways ) 5,670

Secondary Network (State, District, Rural Roads) 133,692

State Roads 8,448

District Roads 37,476Rural Roads 87,768

Total Road Network 139,362

Source: Report on Infrastructure Development in States 2010

Uttar Pradesh has the highest value of PPP road projects under implementation. Its 2 large

Expressway projects Yamuna Expressway and Ganga Expressway or Greater Noida-Balia

Expressway together have an estimated cost of Rs 399.4 billion4.

Under the PMGSY (Pradhan Mantri Gram Sadak Yojana) as of May 2010, Uttar Pradesh is one

of the most efficient, completing upgradation of more than 90% of the sanctioned length of rural

roads spending 1-2% more than the sanctioned amount for expenditure5.

Delhi Metro Rail Corporation Ltd (DMRC) has built 12.8 km Metro route linking Delhi to Noida.Ghaziabad Development Authority has signed a MoU with DMRC to connect Delhi with Ghaziabad

through metro in 3 phases.

The railway network in Uttar Pradesh is the largest in the country spanning 8,703 km. Lucknow is the

main junction for the Northern and North-Eastern railways.

There are 2 key upcoming projects underway to improve urban transportation in the State- the

Lucknow Metro, which is to be developed by L&T through the PPP mode and the metro project in

Kanpur.

About 78% (1,002 km) of total length of 1,279 km of Eastern Dedicated Freight Corridor (DFC) will fall

in Uttar Pradesh State.

DFCCIL (Dedicated Freight Corridor Corporation of India Limited) has proposed to provide rail

connectivity to a Logistic Park which will be developed at Kanpur on Public Private Partnership (PPP)

mode.

Along the alignment of Western DFC, Government of India has proposed the establishment of DMIC

(Delhi-Mumbai Industrial Corridor). DMIC will start from Dadri in Uttar Pradesh which is also the

junction point of Eastern & Western Dedicated Freight Corridors.

7 % of DMIC Region will fall in Uttar Pradesh and will cover 12 districts located in the Northern part of

the State adjoining Delhi with a total area of 36,068 sq km.

Table 3.7 Proposed Industrial Projects under DMIC

S No Proposed Location Purpose Phase Period

Investment Regions (IR):

I. Dadri-Noida-Ghaziabad General Manufacturing Phase IA 2008 - 2012

Industrial Areas (IA):

I. Meerut-MuzaffarnagarEngineering/

ManufacturingPhase IB 2010 - 2014

Source: DMIC

4Report on Infrastructure Development in States 2010

5Report on Infrastructure Development in States 2010


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Public Private Partnership (PPP) Projects: Some of the important PPP projects in roads sector in the

State are as follows:

Table 3.8 Public Private Partnership Projects in Roads Sector

Project Name Sector PPP Type

Project Cost

(Rs crore) Stage

Gorakhpur Bypass (NH-28) Roads BOT-Annuity 649 Construction

Gwalior-Jhansi (NH) Roads BOT-Annuity 604 Construction

Bara-Orai Roads BOT-Annuity 465 Construction

50 km stretch Jhansi-Lalitpur (NH-25/26) Roads BOT-Annuity 421 Construction

Jhansi-Lalitpur Roads BOT-Annuity 313 Construction

Merrut-Muzzaffarnagar Toll (NH -58) Roads BOT-Toll 359 Construction

Lucknow-Sitapur Roads BOT-Toll 322 Construction

Agra to Bharatpuron (NH-11) Roads BOT-Toll 195 Construction

Bareilly - Sitapur Roads BOT-Toll 1,046 Construction

Ghaziabad-Aligarh Roads BOT-Toll 1,141 ConstructionMoradabad - Bareilly Roads BOT-Toll 1,267 Construction

Muzaffarnagar - Haridwar Roads BOT-Toll 754 Construction

Inner Ring Road Agra Roads DBFOT 1,099 Construction

Yamuna Expressway Roads BOT 9,935 Construction

Source: www.pppindiadatabase.com

Note: BOT-Build Operate Transfer; DBFOT- Design Build Finance Operate Transfer

III. URBAN INFRASTRUCTURE

In Uttar Pradesh, under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme (as

on March 2010), Rs 69.6 billion has been sanctioned for road infrastructure network out of which Rs 12.8billion is towards public transport and Rs 3.6 billion towards parking infrastructure. 960 buses have also

been sanctioned under the JNNURM at a cost of Rs 989.5 million6.

The following tables provide details about the status of projects (other than roads) under JNNURM in

Uttar Pradesh:

Table 3.9 Status of JNNURM Projects in Uttar Pradesh

Sector-wiseNumber of Projects

SanctionedApproved Cost

(Rs crore)Status

Solid Waste Management(under PPP)

7 242

None of theprojects underJNNURM havebeen completed sofar

Sewerage 12 2,323

Storm Water/Drainage 3 604

Water Supply 11 2,198

Total 33 5,367

Source: JNNURM, Ministry of Urban Development

6Report on Infrastructure Development in States 2010, India Infrastructure Research


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Table 3.10 JNNURM funds released by Uttar Pradesh (December 2010)

State UIG UIDSSMT BSUP IHSDP Total

Uttar Pradesh1,163(43.0)

702(75.0)

532(46.5)

345(52.2)

2,741(50.3)

Source: Report on Indian Urban Infrastructure and Services March 2011, Ministry of Urban Development

Note: UIG-Urban Infrastructure & Governance; UIDSSMT-Urban Infrastructure Development Scheme for Small and Medium

Towns; BSUP-Basic Services for Urban Poor; IHSDP-Integrated Housing and Slum Development Program; UIG & BSUP are for

JNNURM Mission cities (Agra, Allahabad, Kanpur, Lucknow, Mathura, Meerut, Varanasi); UIDSSMT & IHSDP are for non-

Mission cities.

Figures in Rs crore; Figures in bracket indicate percent of funds released of total approved funds

IV. CIVIL AVIATION

Uttar Pradesh has 9 airports including 3 domestic (one is non-operational), 2 customs 7, and 4 civil

enclaves8. The Lucknow airport is the biggest airport in Uttar Pradesh.

Two airport projects are being planned in the State one at Kushinagar (Rs 5.6 billion) and the other

at Greater Noida (Rs 50 billion). The airport project proposed at Greater Noida is the Taj International Airport which will be the second

international airport to be built in the Delhi-NCR region. The airport is proposed at Jewar village,

Gautam Buddha Nagar district, in Uttar Pradesh9.

V. TELECOMMUNICATION

Telecommunication is one of the prime support services needed for fast growth and efficiency in various

sectors of the economy. Globally, the telecom services have been recognized as an important tool for

socio economic development of a nation.

The total number of subscribers in Uttar Pradesh (East & West) is 111.7 million.

The number of telephone exchanges as of December, 2010 in Uttar Pradesh was 3,229.

Total teledensity in Uttar Pradesh is lower than that of all India.

Table 3.11 Service Area wise Access (Wireless+Wireline) Subscribers

& Teledensity (March 2011)

Service AreaSubscribers

(million)Rural

TeledensityUrban

TeledensityTotal

Teledensity

Uttar Pradesh 111.7* 26.6^ 145.2^ 52.9^

India 846.3 33.8 157.3 70.9Source: The Indian Telecom Services Performance Indicators Jan-Mar 2011, TRAI

Note: *Uttar Pradesh (East)-65.1 million and Uttar Pradesh (West)-46.6 million

^Teledensity is calculated for Uttar Pradesh (East) & Uttar Pradesh (West) jointly due to non

availability of separate population data for Uttar Pradesh (East & West)

Uttar Pradesh (West) includes Uttarakhand

7The nearest international airport is in Delhi but airports at Lucknow and Varanasi are custom airports which can accommodate

international traffic if necessary.8A Civil Enclave is an area allotted at an airport belonging to the armed forces for the usage of civil aircraft and civil aviation

related services.9

Report on Infrastructure Development in States 2010


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CHAPTER 4 : INDUSTRY

This section dwells on the performance of Industry in Uttar Pradesh and also covers the highlights of the

Industrial Policy and industrial infrastructure in the State.

Uttar Pradesh has emerged as a key hub for IT/ITeS industries, agro & food processing, tourism, minerals

based industries, textiles and leather based industry.

The State ranks fourth in terms of software exports. It has one of the largest oil refineries in the country,

the Mathura Refinery.

I. ADVANTAGE UTTAR PRADESH

Robust industrial infrastructure-15 industrial areas, 12 specialised parks, 3 growth centres and 4

Industrial Infrastructure Development Centres (IIDC). The State had 17 notified SEZs, as of July

2010.

Proposed 40 IT/ITeS parks, 2 biotech zones and a knowledge park. Development of integrated

agro/food processing zones proposed at Hapur, about 200 km from Delhi.

Proposed integrated logistic hubs (free-trade warehousing zones) in collaboration between IL&FS,

Mineral and Mining Trading Corporation and Mitsui (Japan)10.

About 7% of the Delhi-Mumbai Industrial Corridor (DMIC) will be in Uttar Pradesh. 2 industrial

projects have been proposed for manufacturing and engineering in DMIC.

The State has rich mineral reserves including coal, granite, limestone, bauxite, dolominte, silicasand, china clay, rock phosphate, feldspar, pyrophyllite, etc. These minerals are a source of raw

materials for thermal power, cement, ceramics, aluminum, fertilizer, iron & steel industries. The cost

of mineral reserves in the State is about Rs 1,45,067 crore11.

The State is the leading producer in wheat, sugarcane and potato. It ranks second and third in

vegetable and fruit production respectively among all States.

To promote horticulture business, Potato Agri-Export Zone at Agra, Mango Agri-Export Zone at

Lucknow and Saharanpur and a Vegetable Agri-Export Zone at Lucknow have been set up in the

State.

Proposed state-of-the-art modern terminal market at Greater Noida to cater to the needs of retail

markets of NCR.

Uttar Pradesh has huge market potential owning to a large domestic consumer market. The State

has 16.5% of the countrys population.

10India Brand Equity Foundation (IBEF)

11Granite reserves (48,492 billion tonnes), Coal reserves (7,220 lakh tonnes) & Limestone reserves (4,000 lakh tonnes) as on

March 2006, Source: Directorate of Geology & Mining, Government of Uttar Pradesh


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II. INDUSTRIAL SECTOR PERFORMANCE

General Industrial Production Index (Uttar Pradesh) with 1999-2000 as base year increased from 211 in

2008-09 to 222 in 2009-10 registering an increase of 5%.

Graph 4.1 (A) Uttar Pradesh Industrial Production Index (2009-10)

Source: Directorate of Economics and Statistics, Uttar Pradesh

Note: Base Year 1999-2000

Graph 4.1 (B) All India Index of Industrial Production (2009-10)

Source: CSO

Note: Base Year 1993-94

Industrial Indicators

As per the Annual Survey of Industries 2008-09, Uttar Pradesh was the highest contributor to the

industrial output amongst the Northern States, contributing 6.1% in value of output by deploying 5.9% of

fixed capital and 12.9% of productive capital.


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Table 4.1 Industrial Indicators

Indicators Uttar Pradesh India

1. Number of Factories10,935(7.1)

1,55,321

2. Fixed Capital

62,67,696

(5.9)

10,55,96,614

3. Working Capital40,13,077

(12.9)3,11,23,298

4. Invested Capital94,23,178

(6.1)15,35,17,773

5. Number of Workers5,74,874

(6.6)87,76,745

6. Value of Output2,00,46,266

(6.1)32,72,79,786

7. Depreciation5,35,619

(6.4)83,54,590

8. Net Value Added24,138(0.1)

5,27,76,558

9. Net Fixed Capital Formation

5,56,914

(3.9)

1,42,40,111

10. Gross Fixed Capital Formation10,92,533

(4.8)2,25,94,701

11. Gross Capital Formation1,13,343

(0.4)2,61,58,544

12. Profits10,33,227

(3.5)2,96,99,112

Source: ASI 2008-09

Note: Value figures in Rs lakh & others in numbers; Figures in bracket indicate percentage

comparison with India

III. INDUSTRIAL AND SERVICE SECTOR INVESTMENT POLICY, 2004

The Industrial and Service Sector Investment Policy, 2004 aims at achieving all round development of theState and to accelerate the pace of growth of industry, commerce, trade and services.

Subsidies, Incentives and Grants:

A. Rationalization of Stamp duty & Trade-tax rates:

i. 100% exemption from stamp duty on the purchase or lease of land for the following projects:

a) Small scale and tiny industrial units in 29 districts of Poorvanchal and 7 districts of

Bundelkhand.

b) Development of infrastructure facilities.

c) Information Technology (IT), Bio-Technology (BT), Business Process Outsourcing (BPO),call centres and food processing units.

ii. 50% exemption from stamp duty for all other industrial projects on purchase or lease of land.

iii. Exemption to medium and large scale industries from payment of entry tax:

a) In 29 districts of Poorvanchal and 7 districts of Uttaranchal for 15 years.

b) In other districts for 10 years.

iv. The rate of interest on the arrears of trade tax to be 14% on declared tax and 12% on the

assessed tax.


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v. Power bill subsidy equal to trade tax paid by the unit on purchase of raw materials to be given for

10 years to all new units in the State.

vi. Exemption to industries and traders with turnover of less than Rs 3 lakh from compulsory

registration with the trade tax department.

B. Special incentives on establishment of pioneer units:

i. The first industrial units established in every district and having an investment of

a) Rs 10 crores for information technology, bio-technology or food-processing units

b) Rs 25 crores for any other unit

declared as pioneer units. Such units to be given interest free loan for a period of 15 years.

C. Subsidy to private sector for industrial infrastructure :

Following subsidy to be given from the Industrial Infrastructure Development Fund (IIDF) for

development of infrastructure in private sectors:i) 50% of the capital-investment subject to a maximum of Rs 2.5 crore for establishment of industrial

area related with IT & BT (Bio-Technology).

ii) 20% of the capital investment subject to a maximum of Rs 2.5 crores for establishment of other

industrial areas.

iii) 50% of the capital investment subject to a maximum of Rs 50 lakh for establishment of call centre

zones.

Thrust Sectors

The following thrust sectors have been identified by the State:Table 4.2 Proposals to encourage investment in the Thrust Sectors

Agro-based, Food Processing

& Allied Industry

UPSIDC has planned to set up 2 Agro Parks at Barabanki & Varanasi

Development of integrated agro/food processing zone at Hapur being planned

Information Technology Establishment of Software Technology Park

Handloom, Hosiery & Textile Establishment of Apparel Park at Tronica City, Ghaziabad

Establishment of Textile and Hosiery Park at Rooma, Kanpur on NH-2

Leather Industry

Leather Technology Park developed on 233 acres of land at cost of Rs 2,400 lakhs

near Kanpur at Banthar, Unnao on Kanpur-Lucknow Highway for setting up tanneries

and leather goods units

Transport Network & Services

Yamuna Expressway will connect Greater Noida-Agra and Ganga Expressway will

connect Greater Noida- Balia Upgradation of Road Network in the State

Metro between Delhi and Noida has been built. Lucknow and Kanpur metros are being

planned

Airports at Kushinagar and Greater Noida being planned

Modern Rail terminal at Boraki, Greater Noida for passenger and goods through PPP

Tourism Industry Tourist circuits including Buddhist circuits, Agra circuit & Hindu Pilgrimage circuits

have been planned in the State

List of Industrial Clusters is given in Annexure-2.


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CHAPTER 5 : AGRICULTURE

This section brings together the performance of agriculture sector in the State.

I. OVERVIEW

Uttar Pradesh ranks among the top States in terms of agricultural production in India. The State is one of

the largest producers of sugarcane in the country. The agriculture and allied sector grew at 2.5% CAGR

over 2004-05 and 2009-10. It contributed 23.9% to the States GSDP in 2009-10, indicating the

importance of this sector to the States economy. The workforce participation rate in agriculture is 66% as

against the national average of 58% (Census 2001).

Table 5.1 Vital Agricultural Statistics

Geographical area (ha) 2,40,92,800

Total Cropped Area (000 ha) (2007-08) 24,927Net area sown (lakh ha) (2008-09) 165.1

Cropping Intensity (%) (2007-08) 154.2

Net area irrigated (Total) (lakh ha) (2008-09) 134.4

a) By canals 26.7

b) Tube wells 96.1

c) Others 11.7

Average rainfall (mm) (2009)Uttar Pradesh (East)- 711.1Uttar Pradesh (West)- 52.4

Food grains Production (lakh Tonnes) (2008-09) 474.0

Contribution of Uttar Pradesh to central pool of Wheat (%) 2008-09 35.9Source: Annual Plan 2011-12, State Planning Commission

Note: ha- hectares

II. CROPWISE AREA AND PRODUCTION

Uttar Pradesh is the largest producer of food grains and sugarcane, with a share of 20.2% and 38.9%

respectively, in the countrys total production. About 79.8% of the gross cropped area is devoted for the

production of food grains. In 2008-09, 2.1 million ha of area (47.1%) in the State was under sugarcane

cultivation and total production was 110 million tonnes.

Uttar Pradesh ranks second in vegetable production among all States. Major vegetables are potato and

peas (leading State), sweet potato (second among States), cabbage (sixth among States). The State

contributes 37-45% of the potato production of the country. Similarly, the State ranks third in fruits

production among all States.

Major fruits grown in the State are Mango (leading State in India in terms of production), Guava (ranked

fourth in India), Banana and Litchi. The overall productivity of fruits in the State is 12.1 tonnes/ha against

national average of 11.9 tonnes/ha12.

12Annual Plan 2011-12, Uttar Pradesh


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Table 5.2 Contribution of Uttar Pradesh in Food Basket of Country

CropsProduction in lakh tonnes during

2008-09Contribution ofUttar Pradesh

(%)India Uttar Pradesh

Total food grains 2,346 474 20.2

Rice 993 130 13.1Wheat 808 290 35.9

Total Pulses 146 21 14.4

Total Oilseeds 288 8 2.8

Sugarcane 2,850 1,110 38.9

Potato 285 106 37.2

Source: Annual Plan 2011-12, State Planning Commission

The contribution of Uttar Pradesh in the total food basket of India is largest in wheat, sugarcane and

potato.

III. FORMULATION OF NEW AGRICULTURE POLICY

The State has approved a New Agriculture Policy in the Annual Plan 2010-11 though it is yet to be

implemented. The policy will revolve around the implementation of activities based on 7 thrust areas,

called SAPTA KRANTI, viz. extension, irrigation and water management, soil health and fertility, seed

management, agriculture marketing, mechanization, agriculture research and diversification. The New

Agriculture Policy will form the very basis of attaining 5.1% agriculture growth rate as envisaged in 11 th

five year plan. The New Policy will plan the formation of Agriculture Technology Management Agency

(ATMA) in each district for the purpose of need based development and dissemination of new technology,

soil and water conservation, Integrated Plant Nutrient Management (IPNM) and restoring soil health

through the use of biotic resources.

IV. AGRICULTURE PRODUCE MARKETING (DEVELOPMENT & REGULATION) ACT, 2003

THE MODEL ACT AND STATUS OF UTTAR PRADESH ON REFORM

Increasing efficiency in the agricultural marketing system requires significant investments particularly for

the development of post harvest infrastructure. A substantial investment may flow from the private sector

if a conducive regulatory and policy environment is put in place. Accordingly, Ministry of Agriculture,

Government of India suggested amendments to State APMC Acts for deregulation of the marketing

system to promote investments in marketing infrastructure, motivating the corporate sector to undertake

direct marketing and to facilitate a national integrated market resulting in drafting of model APMC Act.

Agriculture marketing in the State is regulated under The Uttar Pradesh Krishi Utpadan MandiAdhiniyam, 1964 (as amended upto Uttar Pradesh Act No 7 of 2002). The State has not fully

implemented the Model APMC Act. However, it has allowed few private players for direct purchase by

issuing Government Order. Similarly, the State also issued Government Order for the contract farming

relating to reputed firms but it does not have any provision related to private market yards and direct

purchase. Also, there is exemption from market fee for the purpose of processing and export also.

Licensing system is simplified for bulk purchase, which can be done by single license.

But still there remains a gap with many of the provisions of the Model Act not yet followed or implemented

by Uttar Pradesh.


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V. AGRO INDUSTRY IN UTTAR PRADESH

Uttar Pradesh formulated Policy for Food Processing Industry 2004-09 with an aim to facilitate better

returns to the farmers and to attract investments in this sector. The focus of the policy has been on

generating employment, promoting value addition, minimizing wastage of agri-products, providingappropriate links between the agricultural and industrial sectors and marketing the products.

The State ranks number one in terms of production of wheat, sugarcane, maize, vegetables, potato and

livestock products, including milk. Uttar Pradesh has 311 heavy and medium scale agro processing

industries with a total investment of Rs 2,336 crore.

There are 42,586 small scale agro processing and cottage industries with a total investment of Rs 655

crore. The State has identified a few high potential areas for agro processing including onion flakes, onion

powder, garlic powder, fruits and vegetables, flowers, canned mushrooms, oleo resins, table margarine

and bakery products13.

Incentives given by the State Government to the Food Processing Industry

i. No tax/cess/duty to be levied on any input used in a product that is exported to encourage export of

processed food,

ii. Exemption on electricity duty for 5 years.

iii. Provision for interest free loan for facilitating availability of working capital where cumulative capital

investment during the policy period is Rs 5 crore or more.

iv. For promotion of direct farmer-processor linkages, the payment of Mandi Fee to be made optional to

be paid only by farmers who wish to use the Mandi facilities.

13India Brand Equity Foundation (IBEF)


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CHAPTER 6 : INVESTMENT CLIMATE

This section dwells on the key policies and incentives offered by the State Government to create an

attractive investment climate in the State.

The Investment Climate comprises of institutional and policy variables that have a crucial bearing onbusiness performance.

Graph 6.1 Key Determinants of Investment Climate of a State

Source: IBEF

I. INVESTMENT FACILITATION

Uttar Pradesh has set up a three-tier industrial development agency Udyog Bandhu to facilitate

investment, operation and establishment of industrial undertakings in the State.

Table 6.1 Investment Promotion Agencies in Uttar Pradesh

Nodal Departments Function & Responsibilities

Uttar Pradesh State

Industrial Development

Corporation

(UPSIDC)

Responsible for development of industrial areas Identification and promotion of infrastructure-related and industry-specific projects Execution of civil construction works for government and public sector organizations on

deposit basis Responsible for acquisition of land on demand for large projects Responsible for development of integrated infrastructure industrial townships

Uttar Pradesh Finance

Corporation (UPFC)

Responsible for extending term loan, working capital term loans to green field ventures.

Corporation also extends loans to established industrial concerns for the modernization

and expansion

Uttar Pradesh Power

Transmission Corporation

Limited (UPPTCL)

Responsible for planning and managing the power sector through transmission,

distribution and supply of electricity

Department of Infrastructure

and Industrial Development

Focuses on the development of industrial infrastructure in the State Responsible for promotion of various grants, assistance for industrial and infrastructure

development in the State


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Uttar Pradesh Investment Centre has been established with an objective of attracting new investments in

the State. It facilitates increased interaction with different business delegations, makes presentation on

the investment possibilities in the State at different business meets in various important centers of the

country (e.g. Mumbai, Chennai, Hyderabad, Bangalore, etc) and contacts important business houses of

the country.

Single Table Clearance System

Nivesh Mitra is a web-based Single Table system for the entrepreneurs who want to invest and set up

industries in the State. The main objective of the system is to facilitate the timely issuance of sanctions,

approvals, NOCs, registration, licenses and certificates by the concerned departments to the

entrepreneurs. The system provides a single resource for registration, progress appraisal, review of the

current status of the application, etc.

Timelines for various clearances required for setting up a manufacturing unit in Uttar Pradesh is given in

Annexure-3.

II. COST OF DOING BUSINESS

Doing business entails costs such as land prices, rent, electricity charges, wage rates etc. The following

table provides the major cost estimates of doing business in Uttar Pradesh.

Table 6.2 An indicative table on cost of setting up business in Uttar Pradesh (2010)

Cost Parameter Cost Estimate (Rs)

Land (per sq m)Industrial: 94,000 1,21,025*

Agricultural: 141 1,175

Office space rent (per sq m per month) 47 71

Sources: Industry sources, Central Electricity AuthorityNote: *Government land in key industrial areas of Noida and Greater Noida

Table 6.3 Minimum Daily Wages (Rs per day)

Category of workers

Unskilled Semi Skilled Skilled

160*

183 203

Source: Labour Department, Government of Uttar Pradesh

Note: Minimum wages wef April 1, 2011 to September 30, 2011

Minimum wages for unskilled in Agriculture is 100

III. SPECIAL ECONOMIC ZONES

The State amended its SEZ policy in 2007 in order to foster industrial and economic development and

creating a conducive environment for the development of SEZ.

The State has 6 functional (Government/Private), 17 notified and 58 proposed SEZs. Among the

notified/formally approved SEZs, IT/ITeS sector dominates the share.


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Table 6.4 (A) Status of Functional SEZs (December 2010)

Source: sezindia.nic.in, Ministry of Commerce and Industry

Table 6.4 (B) Status of Functional SEZs (December 2010)

Source: sezindia.nic.in, Ministry of Commerce and Industry

Facilities and Provisions offered by the Government of Uttar Pradesh to SEZs

The State has divided the SEZs to be developed in the following 3 categories on the basis of area:

Table 6.5 SEZs Category and Nodal Agencies

Categories Area Nodal Agency

Category A Notified area of Noida/Greater NoidaIndustrial Development Authority (Noida/Greater

Noida)

Category B

Notified areas of other development

authorities of the State (including

Industrial Development Authorities)

UPSIDC or concerned Department Authority set

by the Government

Category C Remaining area of the State UPSIDCSource: Annual Plan 2011-12, State Planning Commission

A number of incentives are provided in order to spur industrial development and to boost exports:

i. Exemption from all kinds of state taxes, levies, cess or taxes imposed by local bodies and

authorities.

ii. Exemption from electricity duty and taxes on energy generated or purchased for utilization of

service in SEZ.

iii. The industrial units setting up operations in SEZ are exempted from taxes and additional taxes on

the transport vehicles which are to be used in that area, along with essential services like water

supply.

Government SEZs notified under SEZ Act 2005

Name TypeArea

(acres)

Total PhysicalExports

(Rs crore)

Total Investment includingFDI

(Rs crore)

Noida SEZ Multi-product 310 6,737 3,285

Moradabad SEZ Product-specific 421.6 22 184

Total 731.6 6,759 3,470

Private SEZs notified under SEZ Act 2005

Name Type LocationArea

(acres)

Total PhysicalExports

(Rs crore)

Total Investmentincluding FDI

(Rs crore)

Moser Baer India Ltd

Non-

ConventionalEnergy

GreaterNoida 11.9 509 1,193

Wipro Technologies Ltd IT/ITeSGreaterNoida

20.2 69 670

HCL Technologies Ltd IT/ITeS Noida 18.4 72 437

Seaview Developers Ltd IT/ITeS Noida 12 47 27

Total 62.6 697 2,326


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iv. Use of land for various purposes: The government of India has fixed 50% processing area in the

SEZ, therefore, the land utilization has been fixed for different purposes as under:

Table 6.6 Land Use and Limits

Land Use Limit

Processing area Minimum 50%

Green Belt and Basic Amenities Minimum 25%-25% of both

processing and non processing area

Commercial, Institutional,

Residential

Maximum 10, 10 and 15% of total

area

Source: Annual Plan 2011-12, State Planning Commission

IV. INVESTMENT SCENARIO

Domestic Investment

The State attracted investment intentions worth Rs 10,202 crores in 2009-10 as against Rs 31,710 crores

in 2005-06.Table 6.7 Investment Intentions in Uttar Pradesh

Year

Uttar PradeshUttar Pradesh Sharein All States/UTs (%)

NumberProposed

Investments(Rs crore)

NumberProposed

Investments(Rs crore)

2005-06 631 31,710 9.7 8.2

2006-07 475 33,745 8.4 4.8

2007-08 186 13,051 4.9 1.1

2008-09 203 13,153 5.2 1.1

2009-10 178 10,202 4.7 0.8Source: Department of Industrial Policy & Promotion (DIPP)

Note: Investment in terms of Industrial Entrepreneur Memoranda (IEMs)

filed, Letters of Intent (LOIs) and Direct Industrial Licenses issued;

Investment Intention data is available on financial year basis

The number of Industrial Entrepreneur Memorandum (IEMs) in 2009 was less than 2008. The

implementation rate of IEMs has reduced significantly in terms of value of IEMs, in Uttar Pradesh from Rs

3,691 in 2007 to Rs 733 in 2009.

Table 6.8 Implementation of Industrial Entrepreneur Memorandum(IEMs) in Uttar Pradesh

YearUttar Pradesh Uttar Pradesh Share

in All States/UTs (%)

NumberInvestments(Rs crore)

NumberInvestments(Rs crore)

2005 27 516 6.8 1.4

2006 24 634 9.1 4.2

2007 36 3,691 5.0 19.0

2008 25 1,802 4.6 14.5

2009 18 733 2.2 5.0

Source: Department of Industrial Policy & Promotion (DIPP)

Note: Data pertains to calendar year


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Foreign Direct Investment

The cumulative Foreign Direct Investment (FDI) inflows between April 2000 and December 2010 were Rs

742 crore in Uttar Pradesh (including Uttarakhand)14.

Sectoral Pattern of Investment

The highest share of investment was in the electricity/energy sector accounting for 51.1% of the total

outstanding investments in 2010. This was followed by 26.3% in the services sector and 16.5% in the

construction sector.

Chemicals, irrigation and other sectors accounted for less than 10% of the total outstanding investments.

The following table sums up the sectoral flow of investments in Uttar Pradesh.

Table 6.9 Distribution of Investment by Sectors (March 2010)

Sectoral Composition % Share

Electricity 51.1

Services 26.3

Construction 16.5

Chemicals 3.0

Irrigation 1.1

Others 2.0

Source: Center for Monitoring Indian Economy

Note: Others include food and beverages, textiles, non-metallic

mineral products, metals and metal products and machinery;

Services includes other than financial

14Department of Industrial Policy & Promotion (DIPP)


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CHAPTER 7 : STATE FINANCES

The focus of this section is to examine the fiscal position of the State Government using fiscal indicators

which are generally expressed as ratios of GSDP.

I. OVERVIEW

Central Government has stipulated targets for all States under the Fiscal Responsibility and Budget

Management (FRBM) Act, 2004. The 12th Finance Commission (TwFC) recommended the States to

enact Fiscal Responsibility Legislation (FRL) to ensure fiscal stability and sustainability. The Act provides

for the elimination of revenue deficit by 2008-09 and reduction of fiscal deficit to 3% of GSDP. Uttar

Pradesh had put in place FRL beginning 2005-06 and already enacted fiscal responsibility legislation

even before this condition was imposed by TwFC.

Graph 7.1 Fiscal Deficit as percentage of GSDP

Source: State Finances-A Study of Budgets of 2010-11, RBI Report

The fiscal deficit as the percentage of the GSDP has been varying between 3.1% and 5.3% since

2004-05. The fiscal deficit is an indication of the total borrowings needed by the Government to meet its

expenses. However, Uttar Pradesh could not achieve the target of bringing down its fiscal deficit to 3% as

recommended by TwFC by 2009-10.

Graph 7.2 Revenue Deficit as Percentage of GSDP



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The revenue account of the State turned surplus in 2006-07 and continued to remain in surplus

thereafter. This has been ahead of the target date of 2008-09 recommended by TwFC.

According to 13th Finance Commission (ThFC), any State that has a revenue surplus along with a higher

fiscal deficit should compress its capital expenditure, or alternately, increase its surplus on the revenueaccount. Therefore, ThFC expects that Uttar Pradesh too will be able to come back to the 3% level of

fiscal deficit by 2011-12.

Graph 7.3 Interest Payment-Revenue Receipts Ratio


The interest payments-revenue ratio has been falling over the years and is 12.1% in 2010-11.

Graph 7.4 Ratio of Salary and Pension to Revenue Receipts



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A marked improvement in debt-GSDP ratio has been observed in the State from 53.3% in 2004-05 to

45.8% in 2010-11.Graph 7.5 Outstanding Debt Relative to GSDP


II. IMPLEMENTATION OF VAT (VALUE ADDED TAX)

The most significant tax reform implemented by the State Governments relate to the introduction of VAT

(Value Added Tax) in lieu of State sales tax. VAT was introduced in 21 States on April 1, 2005 a crucial

reform considering that sales taxes represented at the time more than 60% of State tax revenues. VAT

was introduced in Uttar Pradesh on January, 2008

Table 7.1 VAT Rates in Uttar Pradesh

State Existing VAT Rates Rate Revision

Uttar Pradesh (4%+0.5%+0.5%)/ (12.5%+1%) Additional Cess wef 01-06-09/AdditionalCess of (4+0.5%)+0.5% wef 20-02-10

Source: www.caclubindia.com

VAT is the most important tax revenue for the State; it contributes 57.5% collections of Own Tax Revenue

(OTR) of Uttar Pradesh.

Table 7.2 Components of Own Tax Revenue

State

Taxes on Property and

Capital

Taxes on Commodities

and Services

VAT as Percentage of

Own Tax Revenue

2008-09 2009-10 (RE) 2008-09 2009-10 (RE) 2008-09 2009-10 (RE)

Uttar Pradesh 16.4 15.2 83.6 84.7 49.3 57.5


Note: VAT is part of Taxes on Commodities and Services

III. TAX ADMINISTRATION

During 2010, Union Cabinet decided to computerize the treasuries of all States to enhance the efficiency

and transparency of various State Governments financial administration. The system in place will enable

the State treasuries to share data with the Reserve Bank of India, various banks and the central plan

schemes monitoring system of Controller General of Accounts.
http://www.caclubindia.com/http://www.caclubindia.com/


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An integral part of reforms undertaken by the State Governments are related to measures to strengthen

tax administration.

During the year 2006, Uttar Pradesh took initiatives to implement and spread e-governance through

capacity building. State Government has prioritized certain departments for e-governance such asRevenue Department, Trade Tax, Department of Tax and Department of Finance and Treasuries.

IV. IMPACT OF THIRTEENTH FINANCE COMMISSION (THFC) ON STATE FINANCES

The report of the ThFC lays the basis for a substantial portion of the Central transfers that will be made to

the State Governments during the five-year period ending 2014-15. The ThFC has suggested a revised

fiscal roadmap for the Centre and the States to provide the basis for sustainable adjustment of public

finances going forward. It has set a target of reducing the consolidated debt stock of the Centre and the

States to 68% of GDP by 2014-15 from an estimated 82% of GDP in 2009-10.

There is a marginal increase in the inter se share15 of Uttar Pradesh during the ThFC period over the

TwFC period.

Table 7.3 Sharing of Union Tax Revenues

Inter Se Share in Shareable Taxes otherthan Service Tax (%)

Share in Proceeds Devolved to States(%)

Devolution ofCentral Taxes

(ThFC)

TwFC ThFC Change TwFC @30.5% ThFC @ 32% Change ThFC (Rs billion)

19.3 19.7 0.4 5.9 6.3 0.4 2,854

Source: Thirteenth Finance Commission Report

15The proportion of tax revenue to be shared with the States


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ANNEXURE

Annexure 1

Rate Schedule: Large and Heavy Power (FY 2009-10)

Description Existing Approved

i) For Supply at 11 kV

Fixed Charge Rs 210/ kVA/month Rs 230/ kVA/month

Energy Charge Rs 4.0/ kVAh Rs 4.6/ kVAh

Minimum Charge - -

ii) For Supply at 33 and 66 kV



Minimum Charge - -

iii) For Supply at 132 kV and above Voltages



Minimum Charge - -

iv) TOD* Rate (common to all Voltage levels)

2200-0600 hrs (-) 7.5% (-) 7.5%

0600-1700 hrs 0 0

1700-2200 hrs (+) 15% (+) 15%Source: Uttar Pradesh Electricity Regulatory Commission

Note: * Time of the Day


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Annexure- 2

List of Industrial Clusters

Source: Annual Plan 2008-09, Government of Uttar Pradesh

Infrastructure Location Area(acres)

Manufacturing units Investments(Rs lakh)

Type Current Future Utilised Future

Growth Centres

Bijoli, Jhansi 385 15 6 9.7 16,522

Shajahanpur 311 29 1 - -

Dibiyapur 346 - - 5,025 -

Jainpur 357 458 plots 4 plots 3,010 8,289

Agro ParksBarabanki 180 7 12 1,250 1,500

Varanasi 261 2 2 1,460 2,186

pparel Parks TronicaCity 145 35 102 4,916 (total)

Textile and Hosiery

Parks Kanpur 174 5 37 2,412Leather Technology

Parks

Banther,

Unnao233 24 31 2,215

Export Promotion

Industrial Parks

Greater

Noida200 14 11 1,845

Shastripuram

, Agra102 - - 1,938

Software

Technology Parks

of India (STPI)

13,000 sq ft, of which 9,296 sq ft of area is being utilised by 15 units. The park is fully

operational


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35

Annexure 3

Timelines for setting up a manufacturing unit in Uttar Pradesh

Department Key Approvals & Clearances RequiredEstimated Time

(Days)

Directorate of Industries Issuance of provisional registration including NOC for220 types of non polluting SSIs Same Day/InstantPermanent registration of SSI 30

Uttar Pradesh State ElectricityBoard (UPSEB)

Sanction of power load for construction 30

Uttar Pradesh Pollution ControlBoard (UPPCB)

NOC for 29 highly polluting type of industries 120

NOC for industries other than above 29 and the list of220 non polluting industries

30

Grant of Consent to 29 types of highly pollutingindustries

120

Grant of Consent to low polluting medium and smallscale industries

30

Trade Tax Department

Temporary registration of trade tax 3

Permanent registration of trade tax 30Inspection report for Trade Tax exemption/department 30

Decision at Commissioners level after submission ofInspection report for Trade Tax exemption/deferment

30

Labour Department

Approval prior to construction of factory building/ useas a factory for non-hazardous industries

30

Approval prior to construction of factory building/ useas a factory for hazardous and major hazardousindustries

60

Fire Department NOC on Fire Safety from Fire Officer 30

Revenue DepartmentDeclaration of land as non agricultural 30Proceedings under section 154 of UP Zamindari

Abolition Act

15

Food DepartmentGrant of License 10Permission/NOC from District Magistrates level forstorage of HSD

30

Drug ControllerNOC for grant of license 30Drug License 30

State Excise DepartmentAllotment assurance from State Excise Dept. 30Excise License 30

Forest Department NOC from Divisional Forest Officer 60

Electrical Safety DirectorateNOC for Electrical Safety 60

Permission under Urban Land Ceiling Act 60Local/Municipal DevelopmentalAuthority

Building Map approval 30

Source: Nivesh Mitra, Government of Uttar Pradesh

Disclaimer

The information presented in this document has been prepared by CII. This paper aims to provideinformation to the user and care has been taken to make the information as accurate as possible.However, CII does not make any representation or warranty regarding the accuracy orcompleteness of the information and expressly disclaims any and all liabilities based on suchinformation. The map on the cover is illustrative & may not be exact.


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Northern Region Headquarters

Dakshin Marg, Sector 31-A,

Chandigarh - 160 030, India

Ph: +91-172-5022522/ 2607228

Uttar Pradesh State Office- Northern Region

Plot A, Vibhuti Khand, Gomti Nagar

Lucknow - 226 010, India

Ph: +91-522-2721950-52


e000001218.3244.cii investment climate uttar pradesh

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