One of the biggest challenges UP Chief Minister Mayawati has faced in her first year at the helm is the huge demand-supply gap in power.
Understandably, reforms in the power sector top industry's demand. The total generation capacity in the state is about 2,700 Mw. The state buys around 3,000 Mw from the central pool. This falls much short of the peak-hour demand of around 8,000 Mw.
Due to power crisis and "complicated tax structure," Ghaziabad-based entrepreneur Anupam Agarwal recently set up his medicine unit in Sitarganj in Uttarakhand.
But things are changing. To tide over the crisis, the state is aiming to ramp up the total generation capacity by 10,000 Mw in the 11th Five-Year Plan in collaboration with National Thermal Power Corporation (NTPC), Bharat Heavy Electrical Limited (BHEL) and private players such as Reliance and the Lanco group.
NTPC is setting up a mega power plant in Lalitpur district of Bundelkhand region while BHEL is setting up a 1,000-Mw thermal power plant. The state government is also setting up two plants of 1,980 Mw and 1,320 Mw each in Allahabad for which Lanco has emerged as the lowest bidder. The bids are being evaluated. However, these initiatives will bear fruit only after 2010.
Also, transmission and distribution losses have put a big question mark over the efficiency of the UP Power Corporation, which has been reprimanded a number of times by central power authorities.
"Due to the power scenario, no industry is coming to UP and the existing ones are migrating to states like Uttarakhand," said SB Agarwal, secretary general of industry body Assocham. He lamented that the state had not received any proposal for an SEZ.
Prominent traders' leader and Rajya Sabha MP Banwari Lal Kanchal, who has been in the forefront of protests against organised retail, criticises the state government for "sabotaging" the proposed mega Dadri power project of the Anil Dhirubhai Ambani Group (ADAG). "Even if we talk about agriculture and the food processing industry, there has been no development. During the previous regime, 35 new sugar mills were established in UP. The business environment has only deteriorated," he said.
The state government implemented value-added tax (VAT) from January 1, 2008, despite protests from traders, who complain about cumbersome processes and non-cooperative officials.
In the rural sector, primary agriculture cooperative societies and district cooperative banks in the state will get around Rs 2,000 crore for revival. This would include a central aid of Rs 1,600 crore spread over two years under the head of recapitalisation assistance to cooperatives.
The state government has also signed an MoU with the Reserve Bank of India (RBI) for better monitoring and control of urban cooperative banks (UCBs). UP was the 16th state to firm up such an agreement with the banking regulator.
"The MoU provides a common platform to ensure better financial discipline by UCBs and protection of small depositors," said UP Cooperative Minister Swami Prasad Maurya. A state-level task force will audit these banks, he says.
Meanwhile, the state has thrown open several lucrative routes for private transport operators. The issue of sugarcane payment is hanging fire with multiple litigation under way at the Supreme Court and the high court. As a result, the area under sugarcane in the state this year is likely to come down by almost 20 per cent.
On the agriculture front, while the potato glut this season ruined farmers, the food processing industry continues to be a non-starter. There have been some reports of suicide by indebted farmers in the impoverished Bundelkhand region.
"The state has failed to secure much investment during the last one year. UP needs to move much faster to attract industries since it is competing with other states who are offering big sops and incentives," said a Lucknow-based senior official of a top IT firm.Concluded
