State GDP to top national growth rate

Maharashtra Budget 2007

Maharashtra's economy is projected to be growing at a higher pace than the country's economy with gross state domestic product (GSDP) growing at 9.30 per cent in the current year 2006-07. The national GDP growth has been pegged at 9 per cent.

The state economy had grown at 9.20 per cent in 2005-06. It was for the first time the state's growth rate exceeded 9 per cent. The average annual GSDP had grown 7 per cent during 2002-03 & 2003-04.

The recovery in agriculture and allied activities, which grew at about 6.60 per cent each in the last two years of the Tenth Five Year Plan, appears to be the main driver for the higher growth. Compare this with the sector's negative growth of 5.40 per cent in 2004-05.

The state has the potential to grow at a higher rate and could achieve double-digit growth rate in the near future, if proper thrust is given to create sector-specific, need-based and quality infrastructure.

Maharashtra's fiscal deficit stood at 2 per cent of GSDP in 93-94, which thereafter rose almost continuously to touch 5.30 per cent in 2003-04. The figure has been declining since then, with the government taking up corrective measures. As per the budget estimates for 2006-07, it is likely to decline to 1.70 per cent.

Increased spendings on salaries and pensions, heavy subsidies in power and expenditure on state-owned corporations are major reasons of the high fiscal deficit. The revenue deficit of the state, as percentage of GSDP, is expected at 0.30 per cent in 2005-06 (RE).

The increasing debt and rising interest burden is a major concern for the state government. The state's overall debt is expected to be Rs 1,32,969 crore in 2006-07. The debt-to-GSDP ratio at 26.70 per cent and interest-to-GSDP ratio at 2.40 per cent are rising steadily.