Maharashtra eyes 8% growth this fiscal

The state economy is buoyant again on the back of a booming services sector. The state has registered a growth rate of over 7 per cent in the last two fiscals and is expected to touch eight per cent this year. In the first half of 2005-06, the state's gross domestic product has already touched 7.5 per cent.

This year, the growth rate is expected to touch 8 per cent with the services sector contributing 66 per cent, manufacturing 20 per cent and agriculture 14 per cent.

Moreover, the state government is targeting a 12 per cent growth rate over the next five years, right up to the 12th plan. This was stated by the state chief minister Vilasrao Deshmukh while releasing the first ever Maharashtra state development report.

Speaking about the state's fiscal reform moves, the CM said that these measures, including the proposed outcome budget, would show "greater accountability and real delivery".

Speaking on the occasion, the Planning Commission deputy chairman Montek Singh Ahluwalia said that individual state development reports help in highlighting the rich variety of development experiences that otherwise do not get reflected in the national document.

He said that Maharashtra has the capacity to achieve the targeted 12 per cent growth rate, provided it addressed the "infrastructure bottle necks".

On projects specific to Mumbai, Ahluwalia said some Central assistance was likely through the National Urban Renewal Mission which is expected to come up for Cabinet approval shortly.

The Maharashtra Sate Development Report, which was compiled during 2002-04, highlighted the state's performance across 15 different sectors including agriculture, industry, services, water, sanitation and urban infrastructure. While the state's performance in sectors like services has been outstanding, registering a growth rate upwards of 60 per cent, the traditional employers like industry and agricultural have lagged behind.

The report noted that the state's growth record has been tarnished by its inability to tackle poverty. It noted its growth rate between 1985 -2001 was 7.3 per cent, but in the 9th plan it dropped to 4.7 per cent. Food grain output in the state has declined from 7.3 per cent in 1981 to less than 6 per cent in 2001. On the industrial front, factory employment has declined from 14.7 per cent in 1990 to 11.2 per cent in 1999.

According to the report, the state's service sector has been contributing 69.3 per cent to the country's output of services, while other industries like entertainment and tourism have not been harnessed enough. The report pointed out that the power sector is suffering due to T&D losses, pilferage, subsidies and obsolete equipment.

Of the total 5.5 million phone connections in the state, only 16 per cent are in the rural areas.The report observed that on the fiscal front, the state has to hasten the reform process and change revenue and expenditure patterns or else it would face an unsustainable fiscal situation. It noted that the state is already experiencing a high level of debts and deficits.

It also suggested that the fiscal autonomy of local bodies should be raised so that their dependence on the state government is reduced. It noted that the state government has a debt of 80,000 crore and has been borrowing in the market to repay earlier loans and service its debts.

On the agricultural front, it noted that though 60 per cent of the people in the state are employed in this sector, its contribution to the state's GDP is only around 14 per cent. The report noted that the state must improve the productivity of traditional crops and move to water-saving commercial crops.

It recommends that the state government should withdraw the subsidy to the sugar sector and phase out the monopoly purchase scheme for cotton and sugar. It also suggested reforms on the rural credit side, given the abysmal record for repayment and high proportion of NPAs.

On the industrial front the report noted that the state, while following the country wide trend of service led growth, has recorded a decline in traditional industries such as cotton textiles, wool and synthetic fibres, textiles and textile products and wood and wood products.

However it has recorded a growth in metal products, machinery machine tools and other manufacturing industries. It suggested that SEZs and single windows clearances should be set up for all departments.

It recommended that small scale units and sick non-BIFR units should be revived. It also suggested that SSI clusters should be promoted as much of SSI out put comes from such clusters.