Investment in UP: Issues and Impact

What the official syllabus says

UPPCS Main Examination, General Studies VI.

Investment in UP: Issues and Impact.

Topics in detail

The line asks two questions: what holds investment back or brings it in (issues), and what investment changes in jobs, incomes and regions (impact). Learn the institutions and policies, then the arguments on both sides.

Kinds of investment

• Public and private investment; domestic and foreign direct investment (FDI)
• Investment in manufacturing, services, infrastructure and agriculture
• Capital expenditure in the state budget as public investment
• Proposals, memoranda of understanding (MoUs) and actual investment on the ground: why they differ

Institutions and processes

• Invest UP: the state's investment promotion and facilitation agency
• Nivesh Mitra: the single-window online system for approvals
• Industrial development authorities: Noida, Greater Noida, Yamuna Expressway Industrial Development Authority (YEIDA), UPSIDA, Gorakhpur Industrial Development Authority (GIDA)
• Land banks and land allotment for industry
• Investors summits held in Lucknow (2018 and the Global Investors Summit 2023) and the ground-breaking ceremonies that followed them

Policies

• Industrial investment and employment promotion policies of the state
• Sector policies: electronics manufacturing, IT and IT-enabled services, data centres, start-ups, warehousing and logistics, food processing, electric vehicles, tourism, film
• Incentives offered: capital subsidy, interest subsidy, stamp duty exemption, reimbursement of State GST, land at concessional rates
• Ease of doing business: the Business Reform Action Plan and the state's reforms
• A policy to attract foreign direct investment and large global and Indian companies
• FDI concepts: automatic and government routes, sectoral caps, and why most FDI goes to a few states

Finance for investment

• Bank credit in UP: the credit-deposit ratio and why a low ratio means local savings are lent elsewhere
• Priority sector lending, credit to MSMEs and farmers
• State-level bodies for finance: the state financial corporation and cooperative banks
• Venture capital and funds for start-ups

Where investment goes

• NCR districts: electronics, IT, data centres, logistics, real estate
• Lucknow and Kanpur: defence, aerospace, IT, leather, textiles
• Along the expressways: industrial corridors and logistics parks
• Purvanchal: food processing, textiles, the Gorakhpur industrial area
• Bundelkhand: solar power, defence corridor nodes at Jhansi and Chitrakoot, a new industrial authority near Jhansi
• Tourism and religious tourism: Ayodhya, Varanasi, Mathura-Vrindavan, Prayagraj

Issues

• Land acquisition and the availability of large, clear land parcels
• Power supply, its reliability and its cost
• Law and order and the perception of investors
• Skilled labour and the quality of education
• Distance from ports and the cost of logistics
• Regional concentration of investment in the NCR districts and the struggle of Bundelkhand and Purvanchal to attract it
• Delays in approvals, land disputes and contract enforcement
• Cost to the exchequer of incentives and the competition between states

Impact

• Employment created, directly and indirectly
• Growth of GSDP, exports and tax revenue
• Development of new industrial towns and urban areas
• Effect on regional balance
• Environmental effects and the need for clearances
• Effect on farmers whose land is acquired: compensation and rehabilitation

Overlaps

The industries that receive investment are on Trade, Commerce and Industries; partnership models on Public-Private Partnership.