TIPOS DE EVALUACIÓN

The aforementioned discussions have traced the growth path of various macro-economic indicators and have provided the direction in which the economy of UP is likely to move in the future. Further, wherever appropriate, the policy of the UP Governments has been presented to illustrate the perspective of future changes.

Keeping the above conclusions in view, the economic framework of contemplated development in the yearly plan period 1997-98 to 2000-01 has been reviewed for UP. Based on past performance, likely policy changes, and anticipated development proposals of the economic plans, we have assessed growth prospects of UP for the following economic variables that are considered necessary for traffic forecast.

- State income - Population growth - Per capita income

4.5.1 State income growth perspective.

The Ninth Plan targets remain crucially dependent on substantial private sector investment funding, particularly in the power and industry sectors, as well as in the area of agricultural credit. The approved public sector outlay represents just one quarter of the total investment required by the Plan. Whilst UP's required share of the total gross investment for India as a whole may only be eight %, its ability to attract private sector investment will depend on its competitiveness vis-à-vis other major States in the country and the successful implementation of economic reforms within the State. In this context, the World Bank led initiative on various sectoral reforms is particularly significant. The Bank has prepared an economic and fiscal framework and governance reform program. As part of the various objectives to achieve this support program, the UP State Roads Project feasibility study constitutes one of the elements falling under the theme of Restructuring Infrastructure. Besides roads, the power and irrigation sectors, by virtue of their crucial role in generating economic growth, are the other two key focus areas of the Bank.

The immediate short term predictions for the national economy by the World Bank are for growth in Gross Domestic Product of 6 %, slightly down from 6.8 % achieved in 1998/99. The uptake of excess industrial capacity in the domestic economy allied with recovery in East Asian countries and an expansion in the volume of world trade have created an environment more favourable to robust growth in the short to medium term. Generating private sector investment in the secondary sector, whether in agro-industry or in manufacturing directly, requires enabling investor in utilities and transport, and in terms of the free movement of capital inflows and outflows.

Whilst this may be necessary condition for attracting private sector funding, difficulties may still arise in project implementation and operation, which lie outside the control of the State Government and the State Development Corporations. This will be the case where private sector investors experience financial problems and cash flow difficulties during or after project set up. It should be borne in mind that, notwithstanding potential changes in UP’s investor climate in respect of political and/ or economic instability, the projected growth rates put forward in the Ninth Five Year Plan are susceptible to these external influences. They should be seen therefore as optimum growth targets assuming favourable and stable investment conditions, both within UP itself and external in the investing company environments.

For the short to medium term, Table 4.16 sets out the different assumptions that have been made for three alternative growth scenarios.

Table 4.16 : Economic Growth Scenarios in Uttar Pradesh in 2001-2010

Growth Scenario Assumption

High Optimum Growth

Stable political and economic macro environment;

Successful implementation of World Bank fiscal and governance reform programme;

Successful implementation of privatisation initiatives in infrastructure and other policy and in health and education

Medium Positive Growth

Fluctuations in the national economy;

Upward growth outlook in the national economy;

Positive measures being taken to promote inward investment in UP; Continued dependence on agriculture as important contributor to SDP and associated vulnerability to external forces

Low Trendy Growth

Limited private sector investment;

Greater macroeconomic instability compared with other major States in India.

The annual State Domestic Product growth estimates for UP, by principal economic sector, and by economic region are given in Table 4.17 and Table 4.18.

Table 4.17: Annual NSDP Economic Growth Estimated by Major Sector 2001-2010

Economic Sector Growth Scenario

Low Medium High

Primary Secondary Tertiary 2.9% 3.9% 5.2% 4.0% 7.8% 6.0% 5.1% 12.0% 6.8% Growth expected per year in all

sectors 4.0% 5.5% 7.0%

Table 4.18 : Annual Growth Estimated by Economic Sector and Region 2001-2010 (Medium Growth Scenario)

Economic Sector Uttar Pradesh Primary Secondary Tertiary 4.0% 7.8% 6.0% All Sectors 5.5%

Whilst primary and tertiary sector activities are largely evenly distributed throughout UP, the greater variation in growth rate estimated for the secondary sector reflects the expected impact of the industrial development corridor and growth areas initiatives that have been identified in the State's industrial policy. Because of the inherent unpredictability in medium to longer term forecasting, forecasts of future growth in the economy are usually limited to the very short term, covering the next twelve to eighteen month period. Acknowledging these limitations in the forecasting process, estimates of longer-term future growth rates have been made with reference to historical trends in State Domestic Product (SDP). The data presented earlier in Table 2.5 shows that for the eighteen years period between 1980 and 1998, the UP economy grew on average at 4 % per annum. This overall growth masked higher economic output in the 1980s, at

4.6 % per annum, and a slowdown in growth in the 1990s, at 2.8 % per annum. The last five year period 1993-1998 however saw growth beginning to recover to the earlier higher levels, at 3.9 % per annum.

For the second half of the twenty-year feasibility study evaluation period, 2011-2020, a single, conservative estimate of economic growth, of four % per annum, has been assumed.

4.5.2 Population Growth Scenario

Section 4.2 has dealt with the demographic aspects of the UP economy. The section has concluded that the RGI forecast population growth rates for UP, until 2016, appears to be in the acceptable range for the various reasons described in Table 4.19.

Table 4.19 : Future Population Growth of UP (AACGR in %)

Year Uttar Pradesh

1981-1991 2.41% 1991-2001 2.36% 2001-2006 2.17% 2006-2011 2.27% 2011-2016 2.27%

Chapter – 5