The New Economic Policy announced by the Uttar Pradesh government in December 2007, planning investment up to Rs 1.35 lakh crore in the state with major thrust on Public Private Partnership (PPP), is yet to show positive results.
While January 2008 started on a positive note with the state government awarding its flagship Rs 30,000-crore Ganga Expressway Project to Jaypee Group after a bidding process, the rest of the year witnessed fiascos in other PPP initiatives.
Several sectors, including sugar, power, transport, tourism, roads, health and technical education, had tall plans of private investments. However, no significant headway has been made despite bidding.
While the private sector has not shown much interest in the proposed PPP projects due to the lack of clarity on policies, the government has also failed to catch the fancy of investors.
For example, UP is still not clear on its retail policy after the closure of Reliance Fresh stores in UP following protests by a section of traders last year.
To bring parity in tax rates, UP had implemented Value Added Tax (VAT) from January 1, 2008. However, it substantially hiked VAT rates in over 100 commodities in September evoking protests from traders and industrialists.
In a big jolt to the government’s efforts to solicit the support of India Inc and push forward the economic agenda, an investors’ meet scheduled for July 14, 2008, was cancelled due to alleged bureaucratic rivalry.
Meanwhile, the GEP land acquisition process is in its initial stages, while the alignment is nearing completion, UP Industrial Development Commissioner (IDC) VK Sharma told Business Standard.
In power sector, the two proposed thermal power plants at Bara and Karchhna in Allahabad are still to see the light of the day. For Karchhna, Jaypee Power Ventures had emerged the lowest tariff-based bidder. However, the bid is higher than the two earlier bids of Lanco Kondapalli and Reliance Power, which were previously rejected for being steep. Now, the state government is in a dilemma and Jaypee has refused to revise its bid downward citing difficult credit market condition.
Meanwhile, the state government is awaiting more bids for Bara and the last date for the submission of Request for Qualification (RFQ) has been extended to January 5, 2009 due to lukewarm response earlier.
Another power plant to be set up by Reliance Power at Roza in Shahjahanpur district is likely to go full steam by the end of fiscal 2009-10.
On the other hand, the state government’s plans to privatise 33 sugar corporation mills also failed, since the bidding companies were not ready to pay the reserve price for these units. The government will undertake the bidding process again next year after rationalising the reserve price, a senior industries department official said.
Besides, the bid to privatise the 25 of the 28 cooperative sugar mills could not take off.
The urban development department is working on the Integrated Urban Rejuvenation Plans for seven cities — Lucknow, Kanpur, Varanasi, Agra, Allahabad, Meerut, Ghaziabad and Aligarh — which would include multi-modal transport system, parking facilities, infrastructure development, sanitation and waste management.
In the education sector, over 25 polytechnics and 125 ITIs were to be handed over to a private partner after a bidding process. However, following protests from teachers and failure to get good response, a committee has been formed to study the PPP model followed in technical education in other states.
The state plans to liberalise the transport sector and throw open lucrative routes for private operators, but the response from the private parties has been lukewarm. The earlier bidding process has been cancelled and is likely to be taken up again next year.
Meanwhile, the 50-odd properties of the state tourism department for privatisation has not found suitors.
The selection process for a consultant for the development of an international airport at Kushinagar and development of the Buddhist Circuit in PPP mode on Design Built Finance Operate Transfer (DBFOT) basis is still incomplete although over several months have elapsed.
The state government has approved three Special Economic Zone (SEZ) proposals recently and sent them for central clearance. Earlier, UP had also reframed its rehabilitation and resettlement policy for a more inclusive development.
“2008 has been bleak for the trade and industry in UP. Neither the state government came out with any pro-industry step this year nor worked on its economic policies in all the sectors, including power. UP ushers in 2009 with a subdued outlook,” Assocham Secretary General SB Agarwal opined.
