Uttar Pradesh: An Introduction

Part 1

Uttar Pradesh @ Double Digit Growth: Unfolding Investment Opportunities

INTRODUCTION

Uttar Pradesh – An Introduction

1.1 Generic Profile Uttar Pradesh is acknowledged for its rich endowment. It offers a good mix of culture, religion, art & crafts, architecture, minerals, forests, flora and fauna. Geographically, it sits in the Northern part of the country, bordered by Bihar, Madhya Pradesh, Rajasthan, Delhi, Haryana, Uttrakhand, Himachal Pradesh and even Nepal. It can be divided into three distinct regions: 1. The Himalayan region in the North 2. The Gangetic plain in the center 3. The Vindhya hills and plateau in the south. A quick fact-sheet of the State Uttar Pradesh enumerated below:

Uttar Pradesh – An Introduction

The state has a population of about 190 million according to the Census 2011, with a 20% growth rate. The population gender split and the literacy ratio is heavily skewed towards the male population. A social profile of the state is captured below:

Capital Markets

The retail investors are still hesitant in investing in the markets. Savings and investment behaviour, to a large extent are guided by the attitude towards risk and Indians in general are risk averse when it comes to savings and investment of the savings. Apart from that, the fact is that India is the largest consumer of gold, year after year, for the simple belief that gold is safe. Many of the Indian retail investors invest at highs instead of lows and ultimately lose money or don’t get the returns. Educating investors about the risks associated with markets is never-ending.

Economic Profile

At current prices, the Gross State Domestic Product (GSDP) of Uttar Pradesh stands at INR863 (Cr. 000s) in 2013-14. The GSDP grew at a CAGR of 14.2 percent from 2004-05 to 2013-14. The growth in GSDP over previous year stood at around 10 per cent. The Net State Domestic Product (NSDP) of Uttar Pradesh was about INR 761 (Cr. 000s) in 2013- 14. The NSDP grew at a CAGR of 14.2 per cent between 2004-05 and 2013-14. The state’s per capita NSDP in 2013-14 was INR 36,000 compared with INR 13,000 in 2004-05. Per capita NSDP increased at a CAGR of 12.2 per cent between 2004-05 and 2013-14.

Capital Markets

Another important factor impacting the investment in the financial markets is the awareness about the need of financial planning and knowledge of the corresponding financial products. In India, awareness of both is significantly low. A survey by Visa ranked 28 countries on the basis of financial education among the population. India was ranked 23rd among the 28 countries taken up for survey. Countries like Lebanon, Taiwan, Egypt, and Saudi Arabia were ranked higher indicating better levels of financial knowledge among masses. Brazil, often compared with India among the developing countries was ranked first.

Performance by Sectors

The primary sector continues to be dominant income provider to the majority of the rural households in the state. However, the growth in the agricultural sector moderated to 2.6 per cent in FY14 from 4.7 per cent in FY12. Services sector grew at an average of 9.1 per cent during FY 07-14. The growth was led by sectors like Real Estate, Ownership of dwellings and business services and banking & insurance. During the same period, the growth in the industrial sector averaged about 5 per cent.

Capital Markets

The return of the market is shown in the chart 2. In this we see that the equity market has given a return of around 17-18% and the commodity market gave a return of just 3.7%.The Bond market gave a return of around 16.5% in terms of the yield change. The FII & DII investment in the market is really not good seeing the amount of investment made. In the last 6 years, the net investment by the DIIs have been negative.

Investment Profile

Cumulative FDI inflows in Uttar Pradesh (including Uttarakhand), as per the Department of Industrial Policy & Promotion (DIPP), amounted to US$ 454 million. This pertains to the period starting April 2000 to January 2015. In 2013-14 alone, outstanding investments in the state totalled US$ 110.0 billion. In terms of sector contributions, the electricity sector accounted for around 31.0 per cent, followed by other sectors at 29.0 per cent (constituting real estate at 26.8 per cent) and the service sector at 26.6 per cent.

Inter-State Comparison of Key Economic Indicators

Inter-State Comparison of Key Economic Indicators Having introduced Uttar Pradesh at an absolute level, it becomes important to understand how the state stacks to national average and other counterparts on key social and economic indicators. We have benchmarked the state to other BIMARU states (Bihar, Madhya Pradesh, Rajasthan) and to Delhi, Maharashtra and Tamil Nadu.

Inter-State Comparison of Key Economic Indicators

In terms of attributes, the choice has been kept as a mix of hard fiscal parameters like NSDP, Per Capita NSDP and Number of PPP projects to more social ones like Sex ratio etc. A brief comparison is captured below:

Inter-State Comparison of Key Economic Indicators

THANK YOU

Email: jyoti.gadia@resurgentindia.com Call Us: +91 124 4754550

www.resurgentindia.com

Read full report on: http://blog.resurgentindia.com/uttar-pradesh-double-digit-growth-unfolding-investment-opportunities/