Maharashtra polls: How did state fare in terms of investment, jobs?

The Fadnavis government set a target of making a Maharashtra a 1-trillion-dollar economy by 2025, but it is also impacted by economic slowdown. While a comparison shows Maharashtra received two times more investment than the erstwhile Congress-NCP government.

How has the ruling Bharatiya Janata Party-Shiv Sena government fared in generating investment in the state?

Maharashtra CM Devendra Fadnavis & Shiv Sena Chief Uddhav at a function in Mumbai. (Hindustan Times)

An investment of a whopping Rs.20 lakh crore was promised through the ‘Make in India’ in 2016 (Rs.8 lakh crore, with 30 lakh jobs) and ‘Magnetic Maharashtra Convergence’ in 2018’ (Rs.12 lakh crore, with 37 lakh jobs). Of the total investment promised in the ‘Make In India’ event, 26.63% has been generated. In case of the ‘Magnetic Maharashtra Convergence’, the state has managed to convert only 2.09% of the total investment promised. The two mega events gave the state an investment of Rs.2.48 lakh crore — Rs.2.13 lakh crore from ‘Make in India’ and Rs.34,908 crore from ‘Magnetic Maharashtra Convergence’. The government is expecting another Rs.1.36-lakh-crore investment from 3,376 MoUs and investment proposals, which are still in primary stages. The primary stage can be receiving a formal proposal, seeking land etc, the officials said. This means, a total of Rs.4.18 lakh crore is likely to come as investment in the coming years.

So effectively, the state government will be able to convert only 20.94% of what was expected.

REALITY CHECK

The Devendra Fadnavis-led state government has come to a conclusion that many of the firms are no more interested in taking their investment proposals forward. Subsequently, it has now dropped 256 MoUs worth over Rs.10.31 lakh crore, which means Maharashtra is set to lose half of the total proposed investment collectively from both the events. It also means over 46.20 lakh estimated jobs will not be generated in the state. In addition, there has been no progress on 717 MoUs and investment proposals worth Rs.5.84 lakh crore, with an estimated 4.97 lakh odd jobs. Of them, 386 MoUs worth Rs.63,659 crore investments are related to ‘Make in India’ and 331 MoUs worth Rs.5.20 lakh crore investments are from ‘Magnetic Maharashtra Convergence’.

From the 2,984 MoUs through ‘Make in India’ (worth Rs.8 lakh crore, with 30 lakh jobs), as declared by the CM on its concluding day, the state industries department has made proposals for 2,850 MoUs worth Rs.3.93 lakh crore, as the remaining companies are not interested in taking their proposals forward. Similarly, it was declared that the state had received 3,965 investment proposals (worth Rs.12 lakh crore, with 37 lakh jobs), but currently, the state industries department is focusing on 3,843 investment proposals worth Rs.5.75 lakh crore, as the rest are not interested.

Harshdeep Kamble, secretary, state industries department, said they decided to drop those MoUs and investment proposals only after consulting the investors. “We take monthly review on the progress of the MoUs and if we find no progress on a certain proposal, we ask the company concerned whether they are serious about their plans. Sometimes there are challenges at their end as well. However, the government doesn’t expect 100% conversion rate,” Kamble said.

He said the process of converting an investment proposal into reality takes time. Also, no firm invests thousands of crores at one go. “For instance, the government gives seven years to those who are interested in investing in mega projects. This, the ‘investment period’, varies from three years to seven years depending on the size of the project as investors, too, have their own issues and compulsions. Considering all these aspects, we are doing very well,” he clarified.

Chandrakant Salunkhe, president, Maharashtra Industrial and Economic Development Association (MIEDA), said: “The events were good, but after that we found companies not showing any desire to invest. It probably means lack of expected support and regular follow-up by the government. Moreover, the focus of the government was only Mumbai, Thane, Pune, Aurangabad, Nagpur and not the other areas of the state where we have abundant land.”

A look at the records of the Department of Industrial Policy and Promotion (DIPP) that works under the commerce and industry ministry reveals the state’s performance in implementing industrial entrepreneurs’ memorandum (IEM) has not been consistent over the past five years. This year till June, total 185 IEMs, with investment worth Rs.23,106 crore, were filed and 71 were implemented, bringing in an investment of Rs.20,896 crore. In 2018, total 426 IEMs, with investment worth Rs.86,163 crore were filed, and 159 were implemented, attracting an investment of Rs.1,30,797 crore, while in 2017, against 354 IEMs (investments worth Rs.48,581 crore) only 112 were implemented, bringing in an investment of Rs.18,993 crore. The implementation was lowest in 2014, when 277 IEMs with investment worth Rs.40,367 crore were filed and a meagre 48 were implemented, generating investment of just Rs.6,024 crore.

IEM is filed with the Commerce and Industry Ministry for non-MSME category industries. Filing IEMs at two stages – intent and implementation – is not needed for businesses that don’t require an industrial license.

However, state officials claimed that as it is not mandatory, the investors did not bother to file the implementation part. “Most of investors file Part A that signifies the intent to invest, but many of them don’t file Part B to confirm its implementation, so the IEM implementation is low,” said a senior official from the state industries department.

BETTER THAN CONG-NCP

A comparison shows the state has received two times more investment than the erstwhile Congress-NCP government, according to the data of directorate of industries.

It states that Maharashtra has received a total investment of over Rs.2.14 lakh crore in five years, compared to Rs.74,246 crore in the erstwhile government. Investment in the MSME sector has made a difference for this government, as over 10.43 lakh new MSME units were opened, bringing an investment of Rs.1.71 lakh crore. In the previous government, the investment in the sector was Rs.24,846 crore, with 77,948 new units.

However, in terms of mega and ultra-mega projects, the Fadnavis government is still lagging behind, with Rs.35,575 crore investment, compared to the Rs.42,515 crore received in the Congress-NCP government.

Ram Bhogale, executive chairman, Applied Innovation and Technology Group and former president, Chamber of Marathwada Industries and Agriculture (AMIA), said some decisions helped the industry in the past five years. “A major decision was special power tariff for backward regions such as Marathwada and Vidarbha. Both the regions were suffering because of high power tariff slab for industries. Taking this into cognisance, the government decided to reduce tariff by almost Rs.1.5 for every unit for high power consuming units,” Bhogale said.

THE SLOWDOWN

The Fadnavis government has set a target of making a Maharashtra a one-trillion-dollar economy by 2025, but the state is also impacted by economic slowdown. The MSME sector is said to be affected the most, apart from automobile sector.

MSMEs are the backbone of the state’s economy. With more than three million MSMEs, Maharashtra has the largest number of MSMEs in the country, which contribute to more than 80% of the total employment. MSMEs are best placed to utilize local resources and create local entrepreneurship and employment. About 40% of the exports originate from MSMEs.

Many major automobile companies have gradually decreased the number of non-working days at their units. This was validated by the figures released by the Society of Indian Automobile Manufacturers (SIAM), an apex not-for-profit national body representing all major vehicle and vehicular engine manufacturers in India. The figures indicate a sharp dip in demand in the auto sector. “No one is talking about the allied industries that fall in the MSME category, as they are directly related to automobile companies and are impacted as a cascading effect,” said Salunkhe.

The state industries secretary claimed Maharashtra is not hit much, as its consumption is very high. “We also have a strong service sector that is helping the state, which is why the impact is not huge,” Kamble said.

He also added the other reason for automobile companies bringing down their production is the new regulations that they have to comply with from next year. From April 2020, automobiles will have to be compliant with Bharat Stage VI, an emission control standard that will replace the existing Bharat Stage IV norms. This will bring India on a par with advanced countries in auto technology. “This is the reason the companies want to clear their old stock,” Kamble said.

“On an average, we have faced a setback of 12-15% in different sectors. Last year, our growth was 28%, but for me that growth was due to artificial factors that induced the demand. According to me, recession is a perception. However, it is certainly impacting employment,” Bhogale said, an entrepreneur who is part of the auto sector.

UNEMPLOYMENT

In Maharashtra, around 40 lakh people are unemployed, which comes to five per cent of the working population, according to estimates of the state industries department made when the government was preparing to launch the Chief Minister Employment Generation Programme (CMEGP). The scheme aims to generate 10 lakh jobs in the next five years.

Meanwhile, the collection of professional tax was also found short of the annual targets since 2015-16. Professional tax is an indicator of formal sector jobs. In 2017-18, the difference between collection and the annual target was Rs.657 crore, highest in the past three years. The annual target for the year was Rs.2,769 crore and collection was Rs.2,117 crore. Congress spokesperson Sachin Sawant said unemployment is rising in the state with each passing day. “This is being proved as the state is missing its professional tax targets every year. It means people are losing their jobs,” Sawant said.

State BJP spokesperson Madhav Bhandari said: “There are no authentic figures to prove so many people have lost their jobs. All the reports about people losing their jobs due to slump are related to only automobile sector. But no one is talking new jobs being generated because of app-based taxi aggregators. It means, there is a shift in employment practices.”

COMPETITION WITH GUJARAT

The Economic Survey of Maharashtra 2016-17 states Maharashtra has succeeded in attracting the highest number of industrial proposals in the past 15 years, but when it came to the amount of investment, the neighboring Gujarat is ahead.

Maharashtra bagged 19,437 projects with an investment of Rs.11,37,783 crore, which is 10% of the total investment received across all states. However, Gujarat, despite getting 13,308 projects, managed to attract an investment of Rs.14,36,962 crore, which is 2.6% higher than Maharashtra, according to the report.