Maharashtra economic survey: High goals, but state’s growth rate low
While the government has set an ambitious target of making Maharashtra a trillion-dollar economy by 2025, the economic survey 2018-19 presented in the legislature on Monday showed the growth rate has remained at 7.5% of the Gross State Domestic Product (GSDP), the same as 2017-18.
The stagnation has been attributed to the drop in growth of agriculture sector and allied activities, estimated to record a 0.4% drop in growth in 2018-19, against the growth of 3.1% in 2017-18. The industries sector, too, has shown a dip in growth at 6.9% in 2018-19, against 7.6% the previous year. The mining sector, too, recorded a dip at 7.1%, in comparison to 7.7% the previous year, while manufacturing dropped to 7.1%, from 7.7%. Electricity, gas and water supply dropped to 4.3%, from 6.5% in 2017-18. The dip in growth rate is largely owing to the drought in 151 of the total 358 tehsils and 268 revenue circles over the past one year. At least 192 tehsils recorded a deficit in its average rainfall. The drop in the agriculture growth by 2.7% against last year has resulted in the decline in the overall growth, finance minister Sudhir Mungantiwar said.
The state could improve its estimates for 2017-18 from estimated negative growth of 8.3% to 3.1% riding to the substantial growth in production of milk and forestry. Milk production was upped to 111.02 lakh metric tonnes in the year, against 104.02 metric tonnes in 2016-17, the minister said. The services sector, which the state has been counting on for years, has shown growth from 8.1% in 2017-18 to 9.2% in 2018-19. “We have been able to keep the growth rate of the state economy constant, despite the deficit rainfall in the past four years, except in 2016-17. Maharashtra has recorded a substantial rise in foreign direct investment, steady growth in per capita income and has witnessed convergence of memorandum of understanding into actual investments. We are sure to achieve the target of a trillion dollar economy in the next six years, by targeting growth in various sectors,” Mungantiwar said.
The whopping rise in the wage bill after implementation of the seventh pay commission recommendation led to a revenue deficit of ₹14,960 crore. The state expenditure on salary, pension and interest on loans rose to ₹1.50 lakh crore, from ₹1.31 crore in 2017-18.
The debt burden of the state rose to ₹4.14 lakh crore in 2018-19, against ₹4.02 lakh crore, resulting in payment towards an interest of ₹33,929 crore on the debt. The finance minister said the debt is 15.6% of the GSDP, which is within the limit of 22.3% set by the finance commission.
The Opposition raised doubts over the “rosy picture”. “Renowned economists and statisticians had said that the growth figures are flawed. The views were recently seconded by former chief economic adviser to the Centre. The statistics given in the economic survey , too, appear to be overestimated. The state should appoint a group of legislators to study it,” said Dhananjay Munde, leader of opposition in legislative council.
Former chief minister and senior Congress leader Prithviraj Chavan said, “When rabi crop production registered a drop of 63% and kharif crop of 12%, how could the agriculture sector record growth of 3.1% from estimated negative growth of 8.3%?”
The survey again dodged the figures on the growth in irrigation potential after the implementation of irrigation projects. After the controversy raked up during the Congress-led government over a rise of less than 1% irrigation potential achieved after spending more than ₹70,000 crore, the state has been avoiding giving the figure. Mungantiwar said the figures will be disclosed after a panel of experts submits its report.
Neeraj Hatekar, professor of Econometrics, Mumbai University, said, “The problem lies in the decline in agricultural growth. The government should ensure livelihood of people in rain-dependent agriculture. For that, there are various ways, including encouraging drought-resistant crops such as millet that require not much water or fertile land. Becoming a trillion-dollar economy is not difficult, but the government needs to ensure the prosperity obtained out of it reaches the bottom.”