Traditional temple

Rise of Gorakhpur, Fall of Mathura – How UP’s temple cities contribute to the economy

Ahe visit to a temple city in southern India shows the abundance and prosperity of various economic activities. From the making and selling of items of faith to markets for traditional items and unique handicrafts, these temple towns are resplendent with the bustle of shoppers and sellers that swarm the streets. Apart from attracting pilgrims and tourists, these towns also play a vital role in the economy of their district.

In this article, we examine the economies of the four most important temple districts of Uttar Pradesh- Ayodhya (Faizabad), Gorakhpur, Mathura and Varanasi. Three of them except Mathura are in the Poorvanchal region of the state. We focus on the relative importance of these districts in their respective regions and how it has changed in recent years. We also examine the contribution of the different sectors of these districts to the economy of the region and its evolution over the last decade.

Four Temple Districts of UP

Ayodhya is generally believed to be the birthplace of Lord Ram (Ram Janmbhoomi). The district of Faizabad, of which the city of Ayodhya is a part, was renamed Ayodhya in November 2018. Mathura, on the other hand, is considered the birthplace of Lord Krishna. The district is home to the twin cities of Mathura and Vrindavan and is often called Brijbhoomi (country of Krishna). Varanasi is famous for its long-standing association with Lord Shiva. The Kashi-Vishwanath temple in the district is home to one of 12 jyo tirlings of Lord Shiva. It is the oldest continuously inhabited city in the world. Gorakhpur is a well known seat of Gorakhnath (another name of Lord Shiva) Math.

The political importance of the temple district in UP cannot be overstated in the region or Indian context. Prime Minister Narendra Modi himself represents Varanasi Lok Sabha constituency. The outgoing Chief Minister, Yogi Adityanath, was a long-serving MP from the seat of Gorakhpur (since 1988). After being chosen as chief minister, he had to resign from this Lok Sabha seat. He is currently a Member of the Legislative Council (MLC). In the current election, he is contesting the Gorakhpur (urban) constituency of the assembly. The policy of the ruling party in the state, the BJP, has focused on building a grand Ram temple in Ayodhya.

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Our data and our method

We use District Domestic Product (DDP) data from 2011-12 to 2019-20 at current prices. Data for an interim year (2018-19) is not readily available, so we are interpolating data for that year. We use Gross Domestic Value Added (GDVA) to measure a district’s economy.

Because UP is extremely diverse, both geographically and economically, it may be prudent to compare districts with their respective regions, rather than the economy of the entire state. We compare three of the four districts – Ayodhya, Gorakhpur and Varanasi – with the eastern region (comprising 28 districts) in which they are located. We compare Mathura with the western region (comprising 30 districts). Moreover, we take the contribution of various sectors and sub-sectors of these districts vis-à-vis the whole region. In addition to the primary sector (agriculture and related sectors), we examine the contribution of manufacturing, construction and trade, hotels and restaurants.

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The Economy of Eastern UP

How does the Eastern Region, consisting of 28 districts, compare to the state as a whole? In Figure 1, we plot the District Gross Value Added (GDVA) of the district pro rata to the state. Additionally, we also plot the shares of five sectors of the economy: Agriculture and related sectors; manufacturing; construction; commerce, hotels and restaurants; real estate and ownership of accommodation and professional services. It may be relevant to note that the 28 districts in the eastern region represent 40% of the state’s population.

Figure 1

The region’s economy accounted for less than a third of the state (28.8% and 28.6% in 2011-12 and 2019-20 respectively. The agricultural sector is more or less in line with this trend. This may seem counter-intuitive to the generally held belief that eastern UP is primarily agrarian. Figure 1 shows the agricultural production of the eastern region compared to that of the entire state. The contribution of western region agriculture to the agricultural sector of the state is higher. In 2011-2012, the agricultural production of the western region was 1.8 times greater than that of the eastern regions. This decreased to 1.6 times in 2019-20.

The manufacturing sector has a much lower share and hovered just above 15% in the early years of the previous decade. There was a sharp decline in 2017-2018, after which it reached 18.4% in 2019-2020. This may be due to the boost given to the manufacturing industry in the region. What led to the decline in 2017-18 and subsequent recovery over the past two years requires further investigation. The share of the construction sector in the Eastern region has remained in the range of 21-22% over the years. Trade, hotels and restaurants, an important component of the service sector, show a similar trend to that of industry, even if the proportion they contribute to the state economy is significantly different. The real estate and professional services sector has been in decline since the mid-2010s.

In Figure 2, we examine the contribution of various sectors to the economy of the Eastern region. The first thing to notice is that the service sector (or tertiary) is the first sector of the economy. Its contribution to the region has grown, slowly but steadily, over the years. This trend is in line with the economy of the state and India. Second, the contribution of the secondary sector (manufacturing, construction and utilities) leaves much to be desired. Its share has also been slowly but steadily declining over the past decade. Third, the most precarious condition seems to be that of the manufacturing sector. This important sector contributes less than a tenth of the region’s economy. In 2019-20, it was at an abyssal low of just 6.9%. Finally, the contribution of the agricultural sector has remained roughly constant over the years. In fact, it dropped slightly from 28% in 2017-18 to just 26.2% in 2019-20.

In summary, there does not appear to have been any structural change in the economies of the eastern region over the past decade. We now focus on the four temple districts of UP.

Figure 2

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Economy of the temple districts

We plot the shares of the four districts in the economy of their respective regions by Figure 3. The denominator for Ayodhya, Gorakhpur and Varanasi is the eastern region, while the denominator for Mathura is the western region. We are seeing significant changes happening in these neighborhoods.

First, Gorakhpur’s contribution to the economy of the eastern region has steadily increased over the past decade, from just 5% in 2012-13 to 6.9% in 2019-20, in less than ‘a decade. The district could very well emerge as an important growth center in an economically remote region of the country.

picture 3

The economies of the other three districts do not show such optimistic changes. Varanasi experienced some positive changes in 2013-2016, during which its share in the regional economy increased from 5.4% (in 2012-2013) to 6.4% (in 2015-2016), after which it is returned to its previous level. Since 2017-18, the district’s share has been constant. Ayodhya’s contribution to the region’s economy has remained roughly constant at around 3.3% for most of the past decade.

Mathura’s share in the western UP economy was 2.9% in 2011-2012, and is down to just 2.5% in 2019-2020. It is perhaps not wrong to observe that the district is losing its economic importance in the region. For the sake of comparability, it may be worth repeating that this share is with Western UP, the economically dominant region of the state. One of the districts in the region is NOIDA, which has grown tremendously over the past two decades. In absolute terms of economic size, Mathura is closer to Varanasi. In 2012-13, their savings were about the same size (about Rs 11.6 thousand crore in current prices). In 2019-20, the district was roughly three-quarters the economic size of Varanasi.

We plot the manufacturing shares of these districts in Figure-4. Varanasi’s share is the highest among the four districts here. Interestingly, this share has been increasing since 2016-2017. The industries that contributed to this sharp rise require further investigation. In 2019-20, Varanasi’s manufacturing sector contributed 9.1% of the region’s total output. Gorakhpur also saw a strong rise in the early 2010s and then stagnated. But overall it shows a positive trend. Ayodhya’s manufacturing sector does not seem to matter much and has hovered around 3%. The relative importance of Mathura, on the other hand, has slowly declined. Its share in the Western region has fallen sharply, from 3.3% (in 2013-14) to just 1.9% (in 2019-20).

Figure 4

We undertook a similar analysis for three other sectors: Construction, real estate & professional services, and trade, hotels & restaurants. For the sake of space, we discuss here only the last of the three sectors (Figure-5). Again, Gorakhpur emerges as a huge winner. Its share has increased from just 4.2% (2011-12) to 5.8% (2019-20). This story also seems to be in line with the contribution of the construction and real estate sector and the professional sector (not represented in the graph). Ayodhya’s share is more or less stagnant, while Mathura’s share has been slowly declining over the past decade.

Figure 5

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The areas in and around a temple are usually a small part of the whole district. It may not be appropriate to give them great economic importance. This is especially the case in a short period of time. With this caveat as a backdrop, we have looked at the economies of the four most important temple districts of Uttar Pradesh. We have seen some interesting changes happening.

Gorakhpur seems to be rapidly emerging as an important district in the eastern region. Varanasi’s manufacturing sector seems to be gaining momentum. With the advent of highways, these two districts, especially Gorakhpur, could be developed to become a regional growth center. Despite the political importance, Ayodhya seems to be stagnating economically. Mathura, on the other hand, seems to have slowly lost its economic importance over the previous decade.

Vikash Vaibhav is Assistant Professor at Dr. BR Ambedkar School of Economics (BASE), Bengaluru. He tweets @VikashVikashv. Akhilesh K. Verma is a research fellow at the Economic and Social Research Institute (ESRI), Dublin, Ireland. He tweets @AkhileshV_. Views are personal.

This article is part of the “UP in numbers” series. Read all articles here.

(Edited by Neera Majumdar)