Uttarakhand - Economy
Religious tourism is the lone employment generating source in the state. Migration of people from the state is linked with unemployment. By 2017 as many as 1,100 villages in this mountain state are complete empty, while there are 664 villages in the Garhwal region with just a handful of residents who are either old or sick.
The state of Uttarakhand has drawn up a plan to develop Uttarakhand into a fully industrial economy by the year 2020. The plan is not merely to follow a well worn model of development but to arrive at a unique path to take the state on a path to full employment, energy surplus, road connectivity across all the towns and villages, and to ensure that there is an immediate stop to migration, which has been the bane of the economy. The state faces the challenge of promoting livelihoods to retain people through local employment and income generation and to enhance their quality of life. Hill development remains an uphill challenge as out-migration of local peoples continues from the highland hinterlands.
The hill region districts are relatively less developed in terms of infrastructure, i.e., electricity, roads and irrigation. The inter-district inequality in infrastructure has resulted in increasing disparity in terms of income and livelihood between the hills and the plains. The land holdings are small and fragmented and irrigation facilities are limited. Soil and water conservation is another limiting factor for inclusive development. For physical, geographical and environmental reasons, the scope for agricultural policies based on modern input-intensive agriculture is severely constrained in the hill regions. The marketable surplus in hill situations is low, marketing facilities are limited and marketing malpractices are prevalent. The remoteness and inaccessibility of hilly areas also inhibit the transfer of technology. The credit infrastructure and facilities in the remote areas are lacking. As a result, most of the rural population in the hills either survives on subsistence agriculture or migrates to other parts of the country for employment, leaving their lands untilled and fallow.
The Gross State Domestic Product (GSDP) stood at R60,898 crore in 2011-12 as against R55,536 crore in 2010-11, registering a growth of 9.65%. The state’s Gross Domestic Product (GDP) registered a compounded annual growth rate (CAGR) of 12.9% between 2004-05 and 2009-10 as against the national average of 8.6%. However, its contribution to the national GDP was only about 1% during 2011-12. The state derives most of its GSDP from services and secondary sectors, with shares of 52% and 37% during 2011-12, respectively. Services sector registered a CAGR of 14.1%, while the secondary sector grew at a CAGR of 18.3% during the period from 2004-05 to 2009-10. This growth is largely driven by sub-sectors such as manufacturing, transport, warehousing, communication, trade, hotels and restaurants, financing, insurance, real estate and business services. Manufacturing recorded the highest CAGR, 27.5%, followed by trade, hotels, transport, storage and communication, with a CAGR of 16.8%. Agriculture and allied sub-sectors, which are part of the primary sector, grew by 1.55%. The growth of agriculture and allied sub-sectors was 4.62% in the year 2006/07, which has slowed down thereafter.
Leisure, adventure and religious tourism play a prominent role in Uttarakhand's economy, with Corbett Tiger Reserve and hill stations being amongst the most frequented destinations. Other national wonders include the Valley of Flowers, which along with Nanda Devi National Park, is a United Nations Educational, Scientific and Cultural Organization (UNESCO) World Heritage Site. After attaining statehood, the economic progress of Uttarakhand has been rapid, with its economic growth rate increasing from just less than 3% per annum to surpassing 10% per annum. However, this rapid growth has been accompanied by an adverse impact on the local ecology, thus making the incorporation of sustainable development practices into the state’s overall development strategy imperative. The Government of Uttarakhand has responded by making sustainable development an important element in the state’s growth strategy.
Given the terrain of the state and its favorable climatic conditions, agriculture continues to be the major source of income for more than three fourths of the state’s population. Agriculture and allied activities, with a share of about 11% (at constant 2004-05 prices) during 2011-2012, is a significant contributor to the state domestic product as against the national average of 14.1%. The size of agriculture and allied sub-sectors is growing; however, the share of agriculture and allied sub-sectors in the GDP is decreasing due to the increasing contribution of other sectors during the period from 2004-05 to 2011-12. The state hosts several climatic zones, which gives it an edge in developing activities based on floriculture, fruits and nuts, vegetables and vegetable seeds. Given that Uttarakhand has significant area under forests, forestry and logging were a key component of the agricultural GDP (26.06% of the agricultural GDP) during 2011-12. The productivity of most of the crops in the state was less than the national average during the period from 1999-2000 to 2011-12 as more than half of the agricultural area is in hilly regions.
The per capita income (at current prices) of Uttarakhand registered a CAGR of 21.2%, from R24,740 in 2004-05 to R94,944 in 2011-12, whereas the per capita income of India increased by a CAGR of 14.0% 2004-05 to 2009-10. The state’s per capita income is higher than the all-India average. In Uttarakhand, the Gini Coefficient (2004-05 uniform recall period (URP)) for rural and urban areas is 0.28 and 0.32, respectively. It remains below the national average of 0.30 and 0.37 for rural and urban areas, respectively. Thus, the income disparity in the state is comparatively less skewed than that of India.
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