Uttarakhand performs better than Himachal Pradesh in the last 2 decades: EAC-PM paper

New Delhi: Uttarakhand performed better than Himachal Pradesh over the last two decades as it opted for planned industrialization in designated Industrial Estates as compared to its neighbour which asked the companies to buy land directly from farmers, an EAC-PM Working Paper said on Wednesday.

The Paper titled 'The Great Convergence: A Case Study of Uttarakhand and Himachal Pradesh (2000 to 2020)' also said that the growth in the manufacturing sector had a multiplier effect on the overall economy of Uttarakhand, and its tax base.

Co-authored by Shamika Ravi (Member, EAC-PM) and Alok Kumar (Principal Secretary, Industrial Development & MSME, Government of UP), the paper compares the growth and economic transformation of Uttarakahnd (UK) to that of HP over a period of two decades, examining the impact of Union Government's Concessional Industrial Package (CIP) for Hill States announced in 2003.

With identical industrial policies but distinct and different land policies – the trajectories for economic growth of UK & HP resulted in different long-term outcomes. UK better leveraged the benefits of CIP, it said.

The paper said that both the hilly states announced near identical industrial policies in response to the central government's offer; except one critical difference – town planning and land policy – where the two states adopted two entirely distinct approaches.

While HP took the usual route of permitting industries to buy land directly from farmers, through private negotiation liberally allowing land use conversions and providing support for creating infrastructure around the new industrial clusters, UK opted for a planned industrialisation in designated Industrial Estates complete with infrastructure facilities provided and financed by the State Government.

Given their respective strategies, UK witnessed growth in its industrial economy by 9.5 times while HP witnessed a modest 4.6 times.

"The growth in the manufacturing sector had a multiplier effect on the overall economy. From 2000 to 2011, UK GSDP experienced a CAGR of 11.05 per cent, while HP saw a more modest CAGR of 6.91 per cent,” the paper said.

The paper further said that the impact of this industrial transformation was a dramatic increase in the State's Own tax revenue (SOTR) base.

Uttarakhand managed to augment its revenue base over 18 times over a period of 22 years, implying that it is approximately doubling its SOTR every five years.

HP on the other hand has seen a relatively more moderate growth over the same period, representing a 5.5 times growth in real terms.

UK came into existence as a new state on November 9, 2000. UK and HP shares inter-state boundaries.