Among the first things the Uttar Pradesh government did after the election results were announced was reviving a tender — one first published in 2020 and canceled in 2021 — to hire a consultant to “boost the size of Uttar Pradesh’s economy to a trillion dollars in five years”. The idea of turning UP into a trillion-dollar economy was originally floated by Prime Minister Narendra Modi during the state’s 2018 investor summit. The call for tenders for 2020 set 2025 as the deadline for achieving the goal. While the recent tender pushes that goal back by two years, how achievable is it?
An HT analysis shows that it will take unprecedented economic growth to achieve this goal. Uttar Pradesh’s Gross Domestic Product (GSDP) for the period 2021-22 – these are Extended Estimates issued by the Directorate of Economy and Statistics of Uttar Pradesh – in current prices €19.10 lakh crores. At the current exchange rate from €76.41 to the dollar on March 16, that’s $250 billion. For that to become $1 trillion, a compound annual growth rate (CAGR) of 31.95% is required.
Is such a growth rate possible? A look at the past economic development of Uttar Pradesh could be a good way to answer this question. The CAGR of the GSDP in current prices for Uttar Pradesh was 10.19% over the last decade (2012-13 to 2021-22). The CAGR for GSDP was 8.19% under the first government of Yogi Adityanath (2017-18 to 2021-22).
See Chart 1: CAGR of Uttar Pradesh GSDP in current and constant prices
Uttar Pradesh has shown somewhat lower growth rates than India over the past decade (2012-13 to 2021-22) and under the government of Yogi Adityanath (2017-18 to 2021-22). India’s CAGR of gross domestic product (GDP) in current prices was 10.47% over the last decade (2012-13 to 2021-22) and 8.96% between 2017-18 and 2021-22.
According to the latest estimates from the International Monetary Fund, India’s CAGR of GDP in current prices is forecast at 11.25% for the next four years (2022-23 to 2025-2026). Even if the economy of Uttar Pradesh manages to register a CAGR of 11.25% for the next five years, it can only reach around US$426 billion in size by 2027.
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