Can Fadnavis and his team boost industry in Maharashtra?

  • Kunal Purohit, Hindustan Times, Mumbai
  • Updated: Nov 01, 2014 17:24 IST

According to the Maharashtra Economic Survey 2013-14, the state approved a total of 18,406 industrial proposals between August 1991 and October 2013. The fate of these proposals in the 20 years since then is symbolic of Maharashtra’s industrial performance during the period. In all, only 42.3% have been completed thus far, with just 11% in the process of being executed. The fate of the remaining 8,500 projects remains uncertain.

For a state often hailed for its pace and extent of industrialisation, Maharashtra today stands at the crossroads - any more floundering and it may see smaller states overtaking it. This is why the industrial sector is looking expectantly towards the Devendra Fadnavis-led Bharatiya Janata Party (BJP) government which was sworn in on Friday evening.

The problems are numerous — from taxation, land acquisition and allotment issues, to crippling power and water supply issues, to a seriously skewed balance between the contribution to the GDP of manufacturing, agricultural and services sector. However, beyond all this, many industrial watchers believe that the government needs to gets its basics right.

“For now, long term investors need predictable policy and stable governance. For a while, the state has to just focus on getting this right,” said Prabodh Thakker, Indian Merchants Chamber president.

This fear of instability rises from the previous governments’ flip-flops on various issues, the most significant ones being taxation as well as land acquisition. Nothing, however, embodies the extent of damage that the state’s inconsistencies have inflicted on its industrial growth more than the case of the Special Economic Zones (SEZs).

After framing the SEZ policy, the state received 236 proposals of which 124 were approved. However, only 65 were notified and only handful are operational. More than 20 were de-notified. Realising its failure to make SEZs a reality, the state’s industrial policy last year allowed the de-notified SEZs to exit the project, allowing them to use 40% of their land for commercial and residential purposes and use the rest for industrial purposes.

Another major reason why many industrialists believe the state is floundering is its failure to ensure the balanced development of different regions.

“Today, most major industries that come to the state go to western Maharashtra as it has been favoured by its politicians, while other regions like Marathwada and Vidarbha languish,” said Milind Kank, former president of the Chamber of Marathwada Industries & Agriculture.

This imbalanced development, industry watchers say, has to be corrected by restoring the hitherto skewed distribution of focus on the agriculture, manufacturing and services sectors. For now, services contribute nearly 62% of the State’s GDP, manufacturing nearly 27% and agriculture another 11%. “The state has skilled, semi-skilled and unskilled workers. The only way to accommodate all of them and employ them is if we balance all the three sectors and have a commong focus,” added Thakker.

The questions are many, the problems plentiful.

The industrial sector now looks at the newly-elected government to provide the answers.

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