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Uttar Pradesh is known as the heart of India; it is the land of epics, holy rivers and ancient cities. Since the times of Rama, Lord Krishna and Gautam Buddha the state was the centre of cultural and intellectual brilliance. The stories of India’s two great Sanskrit epics, the Ramayana and the Mahabharata have strong connections to Uttar Pradesh, as the state was the central setting for both epics and played a role in their composition and preservation.

The state has a rich history spanning ancient times, where it was known as "Madhya Desh" and home to several Mahapadas, through the Mughal and British periods, until it was officially named Uttar Pradesh in 1950. In the British era, the region was called the United Provinces of Agra and Oudh, a name shortened to United Provinces in 1935, before the final renaming after India's independence. 

Uttar Pradesh is called the “Heart of India” because it shares borders with nine states — Uttarakhand, Himachal Pradesh, Haryana, Delhi, Rajasthan, Madhya Pradesh, Chhattisgarh, Jharkhand and Bihar. Being connected to so many states makes UP the true center of India and gives it a strategic heartbeat, playing a vital role in the country’s politics, culture, and economy.

The state’s unique geographical position and rich history and spiritual sites like the Taj Mahal, Agra Fort, Fatehpur Sikri, Varanasi and Ayodhya has made it a delight for tourists, both domestic and international. The state recorded its highest ever tourist footfall of 649 million in 2024, a significant increase of about 480 million in 2023. The state greeted over 23 lakh foreign visitors in 2024, which was over 25% more than 2023. the state is on track to surpass one billion tourist visits, generating INR3 lakh crore in economic activity. According to the government the state is on track to surpass one billion tourist visits, generating
INR 3 lakh crore in economic activity soon.

State is emerging as a growth driver

Uttar Pradesh is one of India's largest states and also one of the poorest. The dichotomy is palpable but not surprising as the state’s economy has remained largely agrarian. The state’s high reliance on traditional agriculture with small, vulnerable farms, poor human development infrastructure like schools and healthcare, issues with governance and the law and order situation have often worked against its economic prosperity.

Uttar Pradesh although is the most populous state and is the fourth largest state India in terms of area with extensive fertile land and early industrial establishments, it has not grown to its potential and has remained as one of the poorest states in the country.

If the state remained a poor performer in the past, it is slowly coming out of its economic adversities and is emerging as a driver of the nation’s economy with its network of expressways, industrial corridors, international airports, centers of educational and medical excellence, and an exporter of indigenous products.

At current prices, the gross state domestic product (GSDP) of UP is estimated to be INR25.47 trillion in 2023-24 only behind Maharashtra and Gujarat. Gujarat’s GSDP, however, was only marginally higher than that of UP in 2023-24. What is significant is that in the last ten years, the GSDP of UP has gone up by more than two and a half times from INR 9.40 trillion in 2013-14 to INR 25.47 trillion in 2023-24.

The state government is confident that the uptrend in GSDP will continue in the coming years. According to the  2025-26 state Budget the GSDP for 2025-26 at current prices is projected to be `30.8 lakh crore growing by about 12% over 2024-25.

A growing GSDP together with a better fiscal management, the state hopes to create a favourable investment climate. In 2025-26, the fiscal deficit is estimated to be 3% of GSDP. For 2025-26, the central government has permitted a fiscal deficit of up to 3% of GSDP to states. As per the revised estimates the fiscal deficit in 2024-25 was 3.4% of GSDP against 3.5% projected in the budget. The fiscal deficit is projected to be lowered further to 2.9% of GSDP by 2026-27.            

The GSDP of UP at constant prices has grown steadily in recent years. In the last five years, between 2018-19 and 2023-24, it has grown by 29.7%. India’s overall GDP during the same period has increased by 26.1%. The share of the state in the national GDP as a result, has gone up by about 0.22 percentage points.

But since the state has a huge population with a population density of approximately 828 persons per square kilometre against the national average of 479 in  2022, the average earnings of individuals in the state remains considerably below that of the country.

The per capita income of UP has remained less than half that of the nation as a whole, for a long time. Although the state’s share in national GDP has increased, the difference between the state and the nation in per capita income has stayed unchanged. This was largely because of higher population growth in the state compared to that of the nation.                    

The per capita income of the state at current prices has increased by 49.8% during the last five years from INR62,350 in 2018-19 to INR93,422 in 2023-24. Interestingly, the per capita income of the country, as a whole, too has increased by nearly the same degree during the period. That is, if the state is not outpacing the country, it is at least, not falling behind.

Agriculture remains the growth driver

As UP looks for growth and economic prosperity, one sector that is driving this transformation is agriculture and farming. The state has traditionally been a leader in agriculture in several respects, but after years of neglect the state administration is putting special emphasis on the sector that employs an estimated 68% of the state’s population.

Uttar Pradesh has the third largest economy among the Indian states but its huge population exceeding 240 million makes it poor when considered against the economic wellbeing of individuals. The state’s economy is largely the reflection of its huge area and rich fertile land that makes it the biggest producer of foodgrains in India. Much of the area of UP is covered by a deep layer of alluvium spread by the slow-moving rivers of the Ganges system. Those extremely fertile alluvial soils range from sandy to clayey loam. The soils in the southern part of the state are generally mixed red and black or red-to-yellow.

The supremacy of the agricultural sector in the state’s economy is clearly visible in increasing share of the sector in the net value added (NVA) of the state. When the share of agriculture in the national economy is declining it has been increasing consistently in UP. The share of the agricultural sector of the state’s NVA has increased from an already high 22.6% in 2019-20 to 24.11% in 2023-24 – nearly a fourth of the total net value added, The share of agriculture in NSV for the country as a whole,  has declined from 15.07% to 14.66% during the same period..

Not surprising that the state’s agriculture sector is experiencing significant growth, with a reported 17.7% expansion in 2024-25, driven by improved MSPs, modern farming techniques, and infrastructure development. Key developments include increased yields for some crops, the growth of the milk, meat, and fish sectors, and government support through programs like PM Kisan Scheme. The state is also focusing on public-private partnerships, modern technology, and strengthening rural enterprises to sustain this growth.                  

But if the state’s economy is suffering due its excessive reliance on agriculture, this has come as a boon to the nation. The state alone is producing nearly a fifth of the country’s foodgrains and helping the county to be self-sufficient in food.  Uttar Pradesh is called the "food bowl of India" because it is the major producer of food grains like wheat and rice, and also a leader in other crops like sugarcane and potatoes. Its fertile soil, nourished by rivers and strong irrigation system make it one of India's most productive agricultural regions. The state ranks first in the country for overall foodgrains production and is a leading producer of milk, sugarcane, and pulses.

The manufacturing sector lags behind

Agriculture may be the driving force of UP’s economic prosperity right now but the state has to graduate to the second phase of growth dynamics, that is, industrial development to achieve higher growth.

The government is aware of this necessity and the industrial sector is experiencing significant growth, driven by a focus on new sectors like defence, logistics, and data centers, alongside traditional industries and a strong MSME sector. The state is attracting substantial investment through various schemes and has seen a sharp increase in new factory registrations. Key initiatives include the “One District One Product” scheme, the development of large-scale infrastructure projects like the Jewar International Airport, and the promotion of manufacturing hubs in cities like Noida and Lucknow

The state’s industrial growth is marked by a surge in new companies, a 15.91% increase in factories. The state is attracting substantial investment through government policies aimed at improving the ease of doing business, leading to improvements in its business ranking and significant economic contributions.

The Uttar Pradesh State Industrial Development Authority (UPSIDA) is the premier organisation driving industrial development across the state. Responsible for managing over 155 industrial areas and a land bank exceeding 70,000 acres, UPSIDA is a key enabler of economic growth and job creation in the state. Through its proactive policies, infrastructure upgrades, and innovative digital transformation, UPSIDA has positioned UP as a preferred investment destination. UPSIDA plays a pivotal role in sectors such as manufacturing, logistics, and warehousing, ensuring seamless access to industrial land and delivering world-class infrastructure to investors. It’s commitment to sustainability, digital innovation, and investor-centric services underpin its success as a leader in industrial development.

Uttar Pradesh contributes around 45% of India’s total sugarcane production, making it the leading sugar-producing state. The state has about 120 operational sugar mills. The state is the second largest exporter of leather goods. Noida has emerged as a major IT and BPO hub, hosting companies like HCL, TCS, and Infosys. Companies like Honda, Yamaha, and Tata have set up manufacturing units in the state.

UP is the third biggest fabric-producing state in India producing 13.24% of the national production. The proposed mega textile park in UP has attracted investment proposals to the tune of `  10,000 crore from domestic textile and garment majors. Companies looking to set up units in the UP Textile Park spanning 1,162 acres include Reliance Industries, Arvind Mills, Vardhman and Ahuja Textile Mills, among others.

The recent growth drive marks the government’s commitment to develop the industrial sector in the state. But the result seems to be way behind expectation. So much so, the share of the manufacturing sector in the state’s net value added has declined over the years.                            

The share of the manufacturing sector in the net state value added ahas declined from 13.78% in 2019-20 to 12.9% in 2023-24. In fact, the decline was the sharpest during the last two years.

Post script

Interestingly, even though the larger part of the population in UP is relying on low earnings agriculture for their livelihood and has one of the lowest per capita income in the country; the state has improved its Human Development Index (HDI) over the years. The HDI score has risen from 0.519 in 2011-12 to 0.600 in 2021. This progress is reflected in improvements in key indicators like life expectancy (rising life expectancy (rising from 57 to 66 years), per capita income and mean years of schooling. While still below the national average, the consistent increase indicates substantial progress for the state. 

More importantly, the state has improved substantially on multi-dimensional poverty index over the years. The MPI measures poverty beyond income by assessing deprivations in health, education and standard of living. The headcount ratio in MPI that calculates the proportion of multidimensionally poor population has declined from 37.7% in 2015-16 to 22.9% in 2019-21 in the state – down by 14.8 percentage points. During the same period the proportion of multidimensionally poor population in the country has declined by only 9.89 percentage points. And if at 14.96% the national average of the proportion of the multidimensionally poor population was significantly lower than that of UP, the success of UP in reducing it at a higher rate than that of the nation is noteworthy. Similarly, the MPI figure itself has declined at a higher percentage points in UP compared with the nation as a whole. The MPI has declined from 0.18 in 2015-16 to 0.10 in 2019-21 for UP against the decline from 0.12 to 0.07 for India.