Business Standard Hindi had, some days ago, organised a roundtable in Lucknow. The idea was to bring together bureaucrats, economists and industry for a discussion on industrial development in the state. From the word go, businessmen proved very difficult to get. Normally, they are more than happy to get a platform to interact with top bureaucrats. Here, on one excuse or the other, they all opted out.
One sugar baron said that he would be happy to sit amongst the audience. At the podium, he would explode — such, he said, was his angst. A representative from the carpet industry sent his regrets at the last moment but sent a long list of grievances on e-mail. The only one who agreed was Kanpur-based Irshad Mirza of Mirza International, the grand old man of the Indian footwear industry. He came on time but asked to leave early: “It is Juma (Firday), Allah Mian calls for Namaz.”
The Mayawati government’s representative elaborated how the state will build roads and set up power generation capacity to draw industry to the state. He also outlined an ambitious privatisation roadmap: Roads, power, buses, hospitals, tourist rest houses et al. He categorically stated that the state will make no more investments in manufacturing, not even in restarting closed factories.
This ought to have cheered industry. But none of that cut any ice. Mirza lashed out that there was nobody to hear out industry in the government. His sons, he disclosed, have made up their mind to leave the state. It is only his insistence which has stopped them so far. Mirza was angry and did not mince words.
Sugar barons I had spoken to before the roundtable were no less piqued. As sugar prices are high, the state is all set to announce a record price at which the mills can buy sugarcane from farmers. Since the crop is short, the mills will in all probability pay the farmers in full this season. The high price is expected to result in a huge increase in sugarcane acreage next year. The state-advised price has never been rolled back. Will the mills be able to buy a huge crop at such high prices? As a result, though they have money in hand, the mills do not want to invest any further. An incentive scheme launched by ex-Chief Minister Mulayam Singh Yadav has been scrapped by the Mayawati administration.
Then there are other issues that the industry faces. For example, the power it generates with bagasse is bought by the state at just Rs 1.80 per unit! This perhaps is the cheapest power bought and sold anywhere in the country. “I will not generate any power this year,” a mill owner said.
Still, I had no idea how upset businessman were in Uttar Pradesh. Once the roundtable ended, several hands went up from the audience. They did not have questions to ask, only long lists of complaints to read out. One word that came up frequently was damanchakra (circle of oppression). A businessman, who runs technical education schools, spoke at length about how he was intimidated by officers. Trader after trader from Kanpur complained of harassment from the tax authorities.
An economist explained that Uttar Pradesh ran a perfect budget till recently; the Sixth Pay Commission has thrown its finances out of gear. At the moment, the state is strapped for cash and this may be the reason for the highhandedness of the tax authorities. The carpet magnate had complained that the state insists on collecting VAT, though it is reimbursed. This only increases the bureaucratic hassles for the industry. Clearly, it is like an interest-free short-term loan for the state government. Why should it let go off the facility?
The Uttar Pradesh State Industrial Development Corporation, one person from the audience complained, no longer had any representative of industry. It is now full of officials and political appointees! There is nowhere to go if issues need to be resolved, was the common refrain. The roundtable ended with everybody reiterating that there is an urgent need for government officials and industry to sit together.
It is in the nature of current Uttar Pradesh politics that the state cannot be seen as close to industry, an economist friend told me. It would hurt her constituency if Mayawati is seen in the company of industrialists. So much so, the state had planned a road show in Delhi a few months ago to interact with industry. It was called off at the last moment! Nobody knows when it will happen. The state has no plan whatsoever of marketing itself to investors. The state has a bad name when it comes to law and order, though its record may be similar to that of other states. This is a perception that the state needs to remove as early as possible. If professional help is required, it should be taken immediately.
Businessmen often say bureaucrats from states like Uttarakhand and Gujarat market their state the best. Within hours of announcing an investment plan, you get telephone calls to invite them over! Uttar Pradesh bureaucrats, they say, are not so responsive. One reason for that, a bureaucrat said, was the absence of civil society in the state. This perhaps could be the reason why inefficiency has become a way of life in Uttar Pradesh
So, is Uttar Pradesh a basket case? The fact is, it is not on the radar screen of investors. The state still has its attractions, though. It accounts for 12 per cent of the country’s market. If states in its neighbourhood are also taken into account, the figure swells to 60 per cent. Clearly, it cannot be ignored. But the Mayawati government needs to get its act together first.
