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Uttarakhand suffers from massive inequalities: What's the way ahead?

Rajendra Mamgain | Updated on: 25 March 2017, 15:08 IST
(Arya Sharma/Catch News)

The development experience of Uttarakhand, since its formation, has been quite encouraging in achieving high economic growth and faster reduction in the poverty. The state witnessed a remarkable double-digit growth of about 12% per annum during 2001-02/2014-15. As a result, real per capita income of the state almost increased by 4.5 times from Rs 19,164 in 2001-02 to Rs 92,911 in 2011-12.

This way Uttarakhand has bypassed the level of national per capita income since 2005-06 onwards and that of Himachal Pradesh, since 2008-2009.

This phenomenal economic growth is attributed to the rapid growth in manufacturing and services sectors. Associated with the high economic growth, the incidence of poverty reduced by three times, from 32.7% in 2004-05 to 11% in 2011-12.

This was made possible due to the backward and forward linkages of high economic growth, better functioning of the PDS system as well as the high rate of out-migration from the hill areas, thereby reducing dependency on local land-based resources and improved household incomes through remittances.

The state also witnessed a rapid expansion in road networks, telephony, electricity, educational institutions and health facilities. The human development index of the state stands more than the national average and is far ahead of many other states.

Such achievements have definitely put the Uttarakhand at a far better place than its parental state, Uttar Pradesh.

The problems otherwise

However, such growth has been marked with the ever-increasing regional inequalities in Uttarakhand. Most of the income generating activities, including manufacturing and services, are concentrated in three plain districts and also in the plain parts of Nainital.

The hill regions of the state could hardly witness any remarkable progress in industrial and service sector development. The per capita income in all hill districts, except Nainital, is far less than the three plain districts, showing the widespread inequality in income distribution across districts.

The difference in per capita income of the highest and lowest income districts has risen substantially from 1.6 times in 2004-05 to 2.4 times in 2012-13.

The Socio-economic Caste Census 2011 shows how for a large majority (nearly two-thirds) of rural households the monthly income of their highest earning member was less than Rs 5,000. This proportion is more in hill areas of the state, indicating low income therein.

Agriculture is the main source of livelihood for over half of the workers in the state, but it contributes to less than one-tenth of the GSDP of the state. This shows the magnitude of inequality across different production sectors.

The dependence on agriculture is very high in hill areas with very low levels of earnings. Average monthly income of households practising agriculture was much low in Uttarakhand (Rs 4,701) as compared to India (Rs 4,923) and Himachal Pradesh (Rs 8,777).

Though macro data shows a sharp decline in poverty in the state, the micro household-level data shows over one-fourth of rural households in hill districts of Uttarakhand as poor, including about 9% very poor households.

SCs households suffer from low income and very high incidence of poverty – about 40% SC households were poor as compared to less than 20% for general category households in hill areas in 2014.

Why the disparity?

Reasons for such huge regional disparities in economic well-being in Uttarakhand is attributed to the unequal economic development in the state. Around 90% of the population in hills reside in rural areas, and they are predominately working in agriculture-related activities. 

Conversely, a fairly high proportion of the population in plain areas live in urban areas and is less dependent on agriculture for their livelihoods. 

Agriculture is a backbreaking activity in hill areas, fetching abysmally low incomes for farming households. The major constraints for agriculture development are the predominance of marginal yet fragmented land holdings, very low irrigation, limited diversification in the farm sector, resulting in low productivity in the hill areas of the state. 

The intensity and scale of agriculture has considerably declined over the years in most of the hill areas. Most of the industries are located in plain parts of the state. The Integrated Hill Industrial Development Policy could hardly attract industries to the hill areas of the state.

According to Sixth Economic Census, along two-thirds of workers are employed in private enterprises in three Dehradun, Haridwar and Udhamsingh Nagar in 2013. Due to this lopsided development, migration has accelerated at a faster pace as compared to the hill districts in recent years.

Such migration could hardly contribute to the local economy in terms of creating income opportunities. The pace of out-migration is so huge that many of the villages in hill areas are left with a population in single digit.

The government programmes such as MNREGA and casual wage employment had a very significant impact on augmenting the income levels of poor rural households, particularly in hill areas. The average days of employment per household ranged between 26 in Tehri Garhwal to 44 in Nainital and Dehradun each in 2016-17.

However, despite the long history of self-employment programme, namely, Swarnjayanti Gram Swarojgar Yojana (SGSY) and its recent format, National Rural Livelihood Mission (also called Aajivika Mission), no visible impacts are seen in the enterprise development, particularly in most of the hill areas of the state.

The growth in the number of private enterprises was very low (around 5%) in Almora, Chamoli, Pithoragarh, Rudraprayag and Champawat between 2005-2013, whereas it has been as high as 53% in Hardwar and other plain districts.

A high correlation coefficient value of 0.77 between per capita income and growth in a number of enterprises across districts only shows how important is enterprise development for improving the income levels of households

Corrective measures

The policy framework for the all-round development of the Hill Region of Uttarakhand is comprehensive and appreciable. However, the New Industrial Policy for the Hill Areas of the State has almost remained ineffective in attracting investment and thus needs to be re-looked and made more effective to ensure balanced industrial growth.

Thus, the real policy challenge is to create an environment-friendly micro and small enterprises in the hill region. The persistent bias in credit flow for priority sectors is yet another example where the banking sector prefers to finance only developed districts and is hesitant to take risks in the hilly districts. In this process, the gap in development is bound to widen.

The huge potential of horticulture including off-season vegetables and tourism needs to be developed on a wider scale in the hill region. Irrigation and agriculture extension services need to be strengthened for improving productivity.

Various forms of tourism as outlined in the Tourism Policy of the State need to be developed in letter and spirit within a given time-frame in potential areas. This will create a large number of employment opportunities for local youth and arrest their distress driven migration.

Similarly, given the relatively higher educational levels in Uttarakhand, particularly of the hill population, expansion of communication network, better electricity and comparatively cheap land, there is a good scope for developing knowledge based IT services in the Hill districts.

Towards harnessing the potential of employment opportunities, skill development of both men and women is crucial for various trades and occupations. Most of the people including migrants of the hill region though are better educated, but lack skill training. This severely affects their employability and earnings. This would require training in a larger proportion in different vocations. The skill training measures need to be generic, as well as area specific, depending on the choices and opportunities for such skills.

In sum, the programmatic interventions must support the higher growth initiatives in the hill regions of Uttarakhand which are yet to witness any improvement in employment and income opportunities for their population. These efforts also need to percolate to the poor and the marginalised sections of the society such as the scheduled castes and religious minorities.

The development dreams of people of Uttarakhand, as they had visualised at the time of demanding a new state, particularly those residing in the hill districts, must be addressed on a priority basis.

In fact, there is a need for a strong political will to initiate a process of the niche-based development strategy for the hill areas of the State with a strong support of bureaucracy.

The author is a professor at Giri Institute of Development Studies, Lucknow

First published: 25 March 2017, 15:04 IST
Rajendra Mamgain

Mamgain is a professor at Giri Institute of Development Studies in Lucknow