Investment climate 'worse' in UP: World Bank

LUCKNOW: A World Bank report reveals that 81 per cent industrialists outside the state still find that investment climate in UP was ''worse'' than anywhere in the country.
The World Bank report, which was presented before the Mulayam government on July 28, 2004, has painted a poor picture of investment climate in UP that may come as a rude shock to the State Development Council (SDC) which has rolled out red carpet to woo investors."Regulation and corruption and lack of infrastructure facilities are the two most important growth bottlenecks," points the WB report while ranking UP lowest among ''preferential'' states.
Besides these two, the report has listed high rate of taxes, custom duties, macro and policy instability, skill shortage and access to land as other factors for investors choosing to stay away from UP despite the efforts put in by subsequent governments.
Absence of reliable power at reasonable cost, poor transport infrastructure services and non-availability of ready markets are other bottlenecks which force industrialists to look for other states. On an average, an industrialist in UP loses about 9.5 per cent of its output due to power shortages. Out of their total output, 36 per cent is from power through their own generators resulting in high production cost.
"The private investment in UP averaged poorly at 1.7 per cent in the period 1997-2002 and almost 55 per cent of the new private investment and almost 90 per cent of investments with foreign participation has accrued to only one district of Western UP - Ghaziabad (Noida)," estimates the World Bank, whose total investment into state now touches to Rs 2 billion.
Ironically, the WB report does not mention ''lawlessness'' in the state. "Deteriorating law and order situation has given wrong signals. General perception and euphoria created by the government through the SDC fail ground reality check in UP. Barring a select few, who has dared to take risk?" quips a senior bureaucrat.
In such circumstances, achieving gross domestic state product (GDSP) growth rate of 8 per cent, industrial growth rate of 12.4 per cent and creating 8.1 million job opportunities, as envisaged in the Tenth Plan targets, would remain a Herculean task for the Mulayam government. "To achieve this target, the state government would need an overall investment of Rs 3.6 trillion of which 65 per cent (Rs 2.4 trillion) from the private sector," claims the report.
The report has few suggestions for high-profile SDC to improve the general investment climate. "Alleviating infrastructure bottlenecks, particularly power and transport; regulating business in more effective and transparent manner and phasing out policies that distort the market," suggests the World Bank while strongly recommending implementation of VAT in Uttar Pradesh.
Call it the ''Amar Singh effect'', a few top brass of corporate house may have agreed to test UP waters but general perception about industrial scene in the state remained the same as depicted in the WB report. "Power and law and order are top priorities. Investment in UP would flow only when state government offers a level-playing field and industrial climate by removing constraints," sums up Sanjeev Chaturvedi, Resident Director, PHDCCI.