In the spirit of competitive cooperative federalism as stated by Prime Minister Narendra Modi in his address from the Red Fort on Independence Day, along with Uttar Pradesh many other large states are recalibrating strategies to realise unprecedented economic expansion, as each of them aims to far exceed the growth rate targeted by the Centre for the national gross domestic product (GDP) and emerge as a $1-trillion economy over the next 5-8 years.
Prime Minister Narendra Modi, during his address to the nation from the ramparts of the Red Fort on Independence Day, said competitive cooperative federalism was the need of the hour and there should be a healthy spirit of competition among the states while progressing in different sectors.
The trillion-dollar economy target for Uttar Pradesh was suggested by Prime Minister Narendra Modi when he inaugurated the UP Investors’ Summit in Lucknow on February 21, 2018.
“Can Maharashtra and Uttar Pradesh compete with each other to become a trillion-dollar economy? Will the UP government compete with other states? More the competition, the more will be the investment,” the prime minister had said. The prime minister’s observation set the ball rolling and the state government began holding discussions to prepare a roadmap. The UP government floated a tender on June 19, 2020, to hire a consultant. The contract has been awarded to Deloitte and the timeline for achieving the target is 2027.
Uttar Pradesh has lined up the most aggressive target, as it aims to raise its gross state domestic product (GSDP) four-fold to $1 trillion by financial year (FY) 2027. While Karnataka aims to push up its GSDP to $1 trillion by FY 2027 from $275 billion in FY 2022, Tamil Nadu wants to do so by 2030 from $277 billion in FY 2022.
Maharashtra, despite having the largest GSDP among states of $429 billion, is eyeing the $1-trillion milestone by FY 2030. Gujarat wants to raise its GSDP to $0.5 trillion by FY 2027 from $260 billion in the last fiscal.
In contrast, India’s aim of achieving a $5-trillion economy by FY 2027 (delayed by two years due to the pandemic) from $3.1 trillion in FY 2022 requires a compounded annual growth rate (CAGR) of a little over 10 per cent, an average trend growth rate seen in the last decade.
Several states have sought requests for proposals (RFPs) with a wide scope from consultants willing to help realise their aggressive targets. Uttar Pradesh and Tamil Nadu are looking for comprehensive multi-year plans, including sector-specific strategies, to realise their goals. The consultants will also be required to help implement those plans. Odisha and Uttarakhand are among those set to undertake comprehensive reviews of plans to accelerate economic growth. Five states — Maharashtra, Tamil Nadu, Karnataka, Uttar Pradesh and Gujarat — constituted approximately 40 per cent of the country’s nominal GDP in FY 2022.
“These efforts augur well for accelerated growth in India where capacity at the state level has frequently been a limiting factor. It marks a significant shift towards improving competitiveness of state economies,” said an official of a consulting firm. He added, “For a $5-trillion Indian economy, states’ role is going to be vital. If larger states can do a status check of their economies and identify areas from where growth will come from, it is a welcome step.”