Maharashtra's GDP to grow at 9.4% in 2017 but challenges galore

fter successive years of drought, satisfactory rains in Maharashtra have given a boost to the state's economy which is estimated to grow at 9.4%. This is higher than the expected growth rate of the Indian economy at 7.1% in the same period and the state's growth of 8.5% in 2015-16.

However, despite this upward trajectory, small and fragmented agriculture landholdings, rain-fed irrigation, and disparities in income distribution remain critical areas.

According to the 'Economic Survey of Maharashtra 2016-17' tabled in the legislature on Friday, the agriculture and allied activities sector are expected to grow by 12.5% in 2016-17 compared to last year, while the industry and services sector may grow at a comparatively lower 6.7% and 10.8%, respectively.

As per advance estimates, the real Gross State Domestic Product (GSDP) for 2016-17 is expected to be Rs 18,15,498 crore. The per capita state income is at a higher Rs 1,47,399 for 2015-16 versus the previous Rs 1,32,341 crore - a rise of 11.4%. The government's revenue deficit was expected to be Rs 3,645 crore. The percentage of fiscal deficit and debt stock to the GSDP is 1.5% and 15.7% respectively--within the 14th Finance Commission's limits.

Finance and Planning Minister Sudhir Mungantiwar said it was likely that by the end of the current fiscal, the state could see double-digit growth.

He added that when the BJP-Shiv Sena government came to power in 2014, Maharashtra had a growth rate of 5.4%, which has risen to an estimated 9.4% now. This, he said, was more than the growth rate for economies like the United States (1.5%), Japan (0.5%), and China (6.6%).

"After demonetization, it was feared that the state's revenues would fall. However, actual revenue receipts were 63.8% of the budget estimates by December 2016, which is an increase of 11.4% than the corresponding period in the previous year,” Mungantiwar said.

The production of cereals, pulses, oilseeds, and cotton is expected to increase due to good monsoons — Maharashtra got 94.9% of the normal rainfall after a two-year dry-spell. However, the production of sugarcane and marine and inland fish production has fallen.

Farmer leader Vijay Jawandhia dismissed agriculture growth claims as “statistical jugglery”, and said rising production had not translated into income growth for farmers. “Has the income of farmers grown by 12.5%? Farmers are committing suicide due to their negative incomes,” he stressed.

Moreover, despite the state government's claims of industrial development, it has been able to commission just 44.6% (8,664 projects) of all industrial proposals (19,437) signed from August 1991 to November 2016. This covers just 23.7% of the proposed investment of Rs 11,37,783 crore. When questioned, a senior official noted that this realisation rate was higher than that in the other states.

“Agriculture accounts for maximum employment. Of the 4.55 crore jobs in Maharashtra, farming accounts for over 2.60 crore jobs. When we came to power, agriculture and related sectors were grappling with negative growth of 11.2%. In two years, this has increased to a 12.5% positive rate,” said Mungantiwar.

“The biggest challenge before us is the small and fragmented size of landholdings,” he admitted, stating that the average size of operational holdings had decreased from 4.28 hectare in 1970-71 to just 1.44 hectare in 2014-15. Mungantiwar said disparities in the distribution of income was another challenge before the government.

However, leader of the opposition Dhananjay Munde said that the area under crops had declined though productivity had increased. He also pointed to how the amount of loan disbursed by private money lenders had increased (by 40%) compared to the previous year.

The Economic Survey was also mum on the percentage of irrigated land in Maharashtra - a contentious political issue.

During 2016-17, the number of primary schools stood at 1,04,970 with 159.86 lakh enrollment. The corresponding numbers for secondary and higher secondary schools was 25,737 and 66.15 lakh, respectively.

The state's expected revenue expenditure is Rs 2,24,455 crore as per the budget estimates for 2016-17 as against expected revenue receipts of Rs 2,20,810 crore.

The economic survey noted that while the number of migrants in Maharashtra was 5.73 crore, 41.5% were men and 58.5% were women. Of the total migrants, 38.2% migrated from rural to rural areas, 6.7% from urban to rural. Migration from rural to urban was 23.5% and that from urban to urban was 22.9%. Excluding reasons like marriage, the major factor leading to this movement was employment (53.3%).