Uttarakhand outpaces Himachal with planned industrialisation, says EAC-PM study

Uttarakhand’s planned industrialisation strategy has helped it outperform Himachal Pradesh over the last two decades, according to a new working paper from the Economic Advisory Council to the Prime Minister (EAC-PM). The report attributes Uttarakhand’s economic growth to its structured approach in establishing Industrial Estates, while Himachal relied on private land acquisitions by industries.

The paper, titled “The Great Convergence: A Case Study of Uttarakhand and Himachal Pradesh (2000 to 2020)”, was co-authored by Shamika Ravi (Member, EAC-PM) and Alok Kumar (Principal Secretary, Industrial Development & MSME, Government of UP). It evaluates how the two states leveraged the Union Government’s Concessional Industrial Package (CIP) for Hill States, introduced in 2003, and how differing land policies influenced their long-term economic trajectories.

Both Uttarakhand and Himachal Pradesh implemented near-identical industrial policies in response to the CIP. However, their approach to land allocation differed significantly. Himachal permitted industries to buy land directly from farmers through private negotiations, allowing for land-use conversions and infrastructure support around new clusters. Uttarakhand, on the other hand, opted for planned industrialization, setting up designated Industrial Estates with state-funded infrastructure.

The outcomes were stark. Uttarakhand’s industrial economy grew 9.5 times, while Himachal Pradesh saw a modest 4.6-fold growth over the same period. “The growth in the manufacturing sector had a multiplier effect on the overall economy. From 2000 to 2011, UK GSDP experienced a CAGR of 11.05 per cent, while HP saw a more modest CAGR of 6.91 per cent,” the report states.

The industrial expansion also had a dramatic impact on Uttarakhand’s tax revenue. The state managed to increase its State’s Own Tax Revenue (SOTR) base by over 18 times in 22 years, essentially doubling its revenue every five years. In contrast, Himachal Pradesh saw a 5.5-fold growth in real terms over the same period.

Uttarakhand, which was carved out as a separate state on November 9, 2000, has consistently outpaced Himachal Pradesh in economic expansion, demonstrating how a structured industrialization approach can drive long-term fiscal and economic growth.

(With inputs from PTI)