The Yogi Model

UTTAR PRADESH (UP), THE fifth-largest economy in India with a GDP of $170 billion, stands as a testament to the nation’s economic diversity. Home to 16.97 per cent of India’s population, if UP were a country, its GDP would rival Qatar’s. In contrast, its population would be equiva­lent to the combined totals of Germany, the UK, and France. The state is transform­ing remarkably, driven by a services sector and a proactive ap­proach to fostering innovation. With a strong focus on promot­ing startups and enhancing its innovative capacity, UP is steadily building an enabling ecosystem that positions it as a key player in India’s economic and entrepreneurial landscape.

UP’s economy has witnessed a significant transformation, driven by a dynamic shift in the composition and growth of its key sectors. The services sector dominates the state’s Gross State Value Added (GSVA), contributing 47.50 per cent, reflecting the expanding role of trade, transport, financial services, and real estate. The industry sector, accounting for 30.44 per cent of GSVA, has seen a notable boost, with the manufacturing sector—mak­ing up 14.5 per cent—growing at an impressive CAGR of 6.08 per cent between 2018-19 and 2023-24. This growth is fuelled by initiatives promoting industrial parks, ease of doing business, and targeted incentives. Meanwhile, the agriculture and allied sector, contributing 22.06 per cent to GSVA, has grown steadily at a CAGR of 5.95 per cent, supported by diversification into allied activities like dairy, fisheries, and horticulture, alongside productivity-enhancing policies. Despite a compara­tively moderate growth rate of 4.88 per cent CAGR, the services sector remains the backbone of UP’s econo­my, underscoring the state’s balanced growth across sectors and its emergence as a robust economic powerhouse.

UP has demonstrated a significant improvement in labour force participa­tion, reflecting the success of targeted government initiatives aimed at skill development and employability. The Labour Force Participation Rate (LFPR) for the 15–59-year age group rose sharply from 46.1 per cent in 2017-18 to 58.6 per cent in 2023-24. A noteworthy surge in female LFPR—from 14.2 to 35.8 per cent—indicates greater inclusion of women in the workforce, while male LFPR improved from 77.5 per cent to 82.2 per cent.

The most striking improvement in LFPR by education level was seen among individuals with diploma/certificate courses and higher secondary education. For those with diploma/certifi­cate qualifications, LFPR increased from 70.8 per cent to 84.5 per cent, while for higher-secondary graduates, it rose from 36.8 per cent to 48.4 per cent. These gains can be attributed to the successful implementation of initiatives such as Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and the Uttar Pradesh Skill Develop­ment Mission (UPSDM). Under PMKVY, UP has emerged as a leading state, with robust performance in skilling youth through demand-driven training programmes aligned with in­dustry needs. Similarly, the state’s dedicated skill development mission has focused on equipping individuals with job-ready skills and fostering employability in high-growth sectors like manufacturing and services.

Among those with higher education (graduates and postgrad­uates), the LFPR increased by 6 percentage points, signalling incre­mental success in bridging the gap between advanced qualifica­tions and workforce participation. These efforts are closely linked to the broader decline in unemployment, which fell from 6.9 per cent in 2017-18 to 3.4 per cent in 2023-24, by enhancing workforce participation through targeted skilling and training programmes.

These changes are closely linked with UP’s effort to reduce unemployment, as highlighted by the PLFS. UP’s unemployment rate for individuals aged 15–59 years dropped from 6.9 per cent in 2017-18 to 3.4 per cent in 2023-24. This im­pressive decline reflects a reduction of over 50 per cent in just six years. Rural areas saw the most remarkable improvement, with unemployment falling from 6 per cent to 2.5 per cent. Urban areas also saw a significant de­crease, from 10.1 per cent in 2017-18 to 7.1 per cent in 2023-24. These figures underscore the efforts of UP’s targeted initiatives to create employment opportunities across both rural and urban regions. The state has significantly reduced unemployment across all educational categories, as reflected in the PLFS data. Among the least educated, the improvements are particularly remarkable. Unemployment for those classified as ‘not literate’ dropped from 1.9 per cent in 2017-18 to a negligible 0.1 per cent in 2023-24, indicating the effectiveness of rural em­ployment schemes and labour-intensive programmes. Similarly, individuals with education up to the primary level saw unem­ployment fall dramatically from 5.3 per cent to 1 per cent during the same period. For those with secondary and higher secondary education, unemployment rates decreased significantly, from 5.8 per cent and 9.6 per cent to 2 per cent and 3.4 per cent, respec­tively, showcasing the impact of skill development and job-oriented training initiatives.

At the higher education level, the trends reveal a mixed picture. Unemployment among diploma holders halved, from 14.5 per cent to 7.7 per cent, and for graduates, it declined from 16.7 per cent to 13.6 per cent, demonstrating the success of industrialisation and entrepreneurship incentives. However, the unemployment rate for postgraduates and above slightly increased, from 12.7 per cent to 14.6 per cent, suggesting a potential mismatch between advanced qualifications and available opportunities. While the overall reduction across education levels highlights the effective­ness of UP’s policies, the challenges highly educated individuals face underscore the need for a stronger focus on creating high-skill jobs and fostering innovation-driven industries.

UP has also made significant strides in reducing multidimen­sional poverty and has improved on important social progress indicators. According to the Multidimensional Poverty Index (MPI) report released last year by NITI Aayog, the state has shown the fastest reduction in MPI value across India, with 34.3 million people escaping multidimensional poverty between 2015-16 and 2019-21. The state’s Head Count Ratio (HCR) of multidimensional poverty has also dropped sharply from 37.68 per cent to 22.93 per cent, marking a reduction of 14.75 percentage points. This de­cline is reflected in targeted efforts to enhance social progress, including improved access to basic education, healthcare, water facilities, sanitation, and rural electrification.

The state has witnessed remarkable improvements in key indicators of basic needs and living standards, as reflected in the National Family Health Survey (NFHS) data. Comparing data for NFHS-4 (2014-15) to NFHS-5 (2019-21) for UP, it can be observed that the state has made significant strides in areas like sanitation, electricity, clean cooking fuel, and health insurance coverage, reflecting the impact of targeted government initiatives.

One of the most notable achievements is the substantial increase in households with improved sanitation facilities, which rose from 36.4 per cent in NFHS-4 to 68.8 per cent in NFHS-5. In rural areas, where toilet infrastructure was historically inadequate, households with access to improved sanitation facilities rose sharply from 23.1 per cent in NFHS-4 to 64.8 per cent in NFHS-5.

This remarkable transformation underscores the success of targeted initiatives under the Swachh Bharat Abhiyan (Gramin), which focused on toilet construction, behavioural change campaigns, and robust monitoring mechanisms to eliminate open defecation. Urban areas also witnessed significant progress, with households accessing improved sanitation increasing from 68.3 per cent in NFHS-4 to 80.9 per cent in NFHS-5. This improvement re­flects the state’s efforts to expand urban sanitation coverage, includ­ing implementing waste management systems, provision of com­munity toilets, and sanitation programmes tailored to underserved areas such as slums. Most districts in UP have shown substantial progress in sanitation indicators, bridging the urban-rural divide.

This improvement has been driven by a concerted focus on building sanitation infrastructure, awareness campaigns about hygiene, and government subsidies for household toilets. These gains in sanitation facilities have had a cascading effect on public health, reducing the prevalence of waterborne diseases and improving the quality of life for millions across the state. UP’s achievements in sanitation are pivotal for sustaining long-term development and meeting key SDG goals of 2030.

SIMILARLY, THE PROPORTION OF households with ac­cess to electricity grew from 72.6 per cent to 91 per cent, driven by schemes like Saubhagya Yojana, which aimed to provide universal electricity access. There has also been notable progress in adopting clean cooking fuels, with households using such fuels in­creasing from 32.7 per cent to 49.5 per cent. This growth reflects the efforts of the Ujjwala Yojana, which subsidised LPG connections for low-income households, reducing dependence on traditional bio­mass fuels and improving health outcomes, especially for women. Furthermore, the percentage of households with at least one mem­ber covered by a health insurance or financing scheme surged from 6.1 to 15.9, driven by initiatives like Ayushman Bharat and state-specific health coverage programmes, ensuring financial protec­tion against medical expenses.

The state has made significant improvements and remarkable strides in economic growth, social development, and infrastructural advancement in recent years. Consider­able progress in employment generation, poverty reduction, and basic amenities like sanitation and electricity highlights the state’s commitment to improving the ease of living for its residents. However, while many indicators show notable improvement, further efforts are needed in key areas, such as reducing anaemia among women, improving child nutrition, and enhancing learning outcomes. Strengthening the Gross Enrolment Ratio (GER) in higher education will also be critical to sustaining sectoral transformations and driving inclusive growth. The state’s focus on innovation is evident in the rise in R&D expenditure, which has increased from ₹371.9 crore to ₹1,002 crore, reflecting a more than 2.5x jump. This strate­gic investment in research and innovation is vital for foster­ing a knowledge-driven economy. While UP ranks 10th in India in terms of overall FDI inflows, its share remains at just 1 per cent, indicating the need for further efforts to attract invest­ment. UP has made significant progress on the entrepreneur­ship front, with 11,336 DPIIT-recognised startups, positioning itself as a growing hub for innovation and enterprise.

Tourism is also significantly contributing to UP’s economy, with the state reaching an impressive total of 476.1 million visitors between January and September 2024. Ayodhya, recognised as the spiritual hub of the area, has taken the lead as the most popular destination, surpassing the renowned Taj Mahal in Agra. The city attracted 135.5 million domestic tourists and 3,153 international travellers during this period, largely due to the recent inaugu­ration of the Ram temple. Meanwhile, Agra saw a total of 125.1 million visitors, comprised of 115.9 million domestic tourists and 924,000 international guests. These achievements underscore UP’s multifaceted progress, reflecting its growing role as a hub of tourism, innovation, and inclusive development while charting a clear path towards sustained economic and social development.

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