UP Number 1? False claim on fudged data in advertisements

UP Government has been proclaiming through front page advertisements in leading newspapers that per capita income in UP has doubled in the last four years since the BJP government came into power in 2017.

In an interview to Economic Times in March CM Yogi Adityanath had said, “the GDP of the state was Rs 10.90 lakh crore in 2015-16 (when the state was being run by the Samajwadi Party govt) which has grown to Rs. 21.73 lakh crore in four years.

He went on to assert, “when we come to power after 2022, UP will become the largest economy”. In an interview to The Week in April the chief minister again asserted, “At the time of independence, per capita income in the state was at par with the national average. In the last 70 years, it became one-third (of the national average). In the last four years, it has more than doubled.”

Doubling of per capita income in four years requires a compound growth rate of 18% annually, which means that the state economy must have been growing at 20% per year during the period. Such a miracle has not been witnessed in history in any national or state economy. The tall claims of the state government, therefore, need to be scrutinised critically.

The claim of Yogi was based on the apparently fudged figure of GSDP in the Budget documents of 2021-22. In the budget estimate for 2020-21 the projected GSDP of UP was shown at Rs. 17,91,263 crore. In the revised estimates for 2020-21 the GSDP figure was also revised upward to Rs. 18,415,27 crore (UP Budget 2021- 22, Khand 2-Part I), implying an increase of 15% over 2019-20.

How the miracle happened in the Covid affected year is nowhere explained. On top of that, for 2021-22 GSDP figure for UP was put at Rs. 21,73,390 Cr, an increase of 12%. This was done by finance ministry officials to show that the debt/GSDP ratio remained in the permissible limit of 4.17%.

The Division of Economic and Statistics, State Planning Institute is the official agency for collecting and disseminating statistics for the state. It prepares the estimates of net and gross domestic product of the state by major sectors as per the commonly agreed methodology of CSO.

The estimates of DES are vetted by CSO before their release. These are used to measure economic growth of the state and changes in its composition. The estimates prepared by the DES are revised as new data come in.

The first estimate is called the advance estimate, then follow the quick estimates which lead to provisional estimates and then to final estimates. It takes nearly four years to come up with the final estimates. Some variations in quick, provisional and final estimates are therefore unavoidable. For instance, for 2017-18 the provisional estimate was 10.9% higher than the advance estimate and the final estimate was 8.7% higher than the advance estimate but lower than the provisional estimate.

The provisional estimates for 2018-19 were 3.5% lower than the advanced estimates. There is thus little possibility of the official estimates of GSDP to be manipulated.

However, no such restriction lies on the budget figures. Finance Department officials resort to creative arithmetic with tacit or non-tacit approval of authorities. While revenue figures are invariably exaggerated, expenditure figures are kept low. The budget also uses projected estimates of GSDP to show that the fiscal deficit is within the approved limit of 3%.

Yogi’s claim was based on the manipulated budget figures. The exaggerated claims of chief minister were far from the official estimates of GSDP prepared by the DES. Thus, the official estimate of GSDP at current prices for the year 2020-21 is Rs. 17,05,593.37 Cr against the figure of Rs. 18,415,27 Cr used in the Budget papers. According to the official estimates, the gross state domestic product of UP at constant 2011-12 prices grew at a compound growth rate of only 1.95% per annum during the last four years (2017-21). If we exclude 2020-21 from calculation the growth rate improves to 4.88 % per annum.

This compares with a growth rate of 6.92% observed during the period 2012-17, when SP government was in power. The annual growth rate of GSDP in UP was 4.57% during 2017-18, went up to 6.26% during 2018-19 but slipped down to 3.81% in 2019-20. The advance estimates for 2020-21 indicate a decline of 6.36% in the GSDP of UP.

The official estimates also show that per capita income in UP at 2011-12 constant prices was Rs. 40,847 in 2016-17. It went up to Rs 41832 in 2017-18 and further to Rs44,618 in 2019-20. It is likely to be lower at Rs. 41,023 according to the advance estimates for 2020-21.

Thus, over the four years of the present government per capita income in UP has increased merely by 0.43% against the tall claim of 100% growth.

Even if we exclude the year 2020-21 which was adversely affected by the Covid pandemic, the increase comes to merely 9.23%. Against this the increase in per capita income during the five years of the previous regime was 27.63%.

Even if we look at the trends in per capita income at current prices the increase comes to 25% during 2017-21 as compared to an increase of 65% during 2012-17.

(Condensed excerpts from an essay published in ‘Economic & Political Weekly’. The writer is a former director of Giri Institute of Development Studies at Lucknow)

This article was first published in National Herald on Sunday

No surprises in UP’s poverty figures

Niti Aayog’s latest poverty figures showed UP among the three poorest states of India. With over 37% of its population living under the poverty line, the state government’s propaganda on poverty alleviation took a serious hit. In a chat Dr Ajit Kumar Singh, former director, Giri Institute of Development Studies, Lucknow, calls the bluff in a conversation with Mini Bandopadhyay:

What is your take on Niti Aayog’s poverty figures?

New indicators like health, education and nutrition have replaced earlier criteria. In UP however the latest NSS data for poverty dates back to 2011-2012 because data from other surveys have been suppressed by the government, possibly because surveys for 2016-17 and 2017-18 were showing adverse results. In all probability even this Niti Aayog survey is based on NSS data of 2011-12.

If base year data is so old, how’d one evaluate the present situation?

Decline in poverty was actually sharp and substantial earlier and came down from almost 55% to less than 30%.

But since UP’s rate of growth was slow, the poverty also declined slower. But recently, prof Santosh Mehrotra of JNU has claimed that in the last 7 years, the number of the poor in the country has increased by 7 crore. UP’s share is likely to be a quarter or more.

The state govt claims effective implementation of welfare schemes like Antyodaya, mid-day meal and employment projects like ODOP. Why have these schemes failed to alleviate poverty?

A major marker is consumer expenditure. Govt may claim to have extended benefits but these are not reflected in consumer expenditure data. Growth has been highly unequal in recent years. During the pandemic, the corporate sector’s profits went up but the informal sector declined. The Covid impact was severe in UP, which is largely dependent on informal sector, which is why UP’s economy is in tatters.

Will it be correct to say UP is a failed state?

We cannot say that. The literacy rate has gone up in UP, health indicators have shown an improvement and fertility has gone down. There has been progress but the relative change has been slower.

Is it because of lack of political will?

Politics is a factor. UP’s share in agriculture is still 25-26% while the national figure is 13-14%. Thus, agricultural growth impacts UP more. Besides, industry is limited and unequal distribution (of resources) is also causing a disbalance.

How do you evaluate the state govt’s efforts to reduce poverty?

UP has always been on the lower rank (of social indicators). In recent years the same structure has been replicated. Figures show an improvement, but the relative position has remained the same. BJP does depend more on propaganda...often false propaganda.

(This article was first published in National Herald on Sunday)