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A growth story propped up by weak pillars

Thursday, 5 June 2014 - 7:10am IST | Agency: dna

Maharashtra's economy is expected to have grown at 8.7% during the year 2013-14, with the services and industry sectors growing at 9.3% and 8.8% respectively, according the Economic Survey for 2013-14 released on Wednesday. However, a closer look at the figures reveal a story that has several holes.

First the good news
The gross state domestic product during 2012-13 was Rs 8,25,832 crore, an increase of 6.2% against Rs 7,77,791 crore in the previous year. From August 1991 to March 2012, a total of 4,246 FDI projects with an investment of Rs 97,799 crore were approved of which 45% (with an investment share of 51%) are commissioned and 10% are under execution.

The state ranks fifth in India according to the India Human Development Report, 2011, preceded by Kerala, Delhi, Goa and Punjab and has a literacy rate of 82.3% against the national average of 73%. Also, Maharashtra's decadal population growth rate has reduced by 6.74 percentage points during 2001-11 as against 3.8 percentage points at the national level – the highest reduction in the population growth rate recorded in the state.

Now, some bad news.
Agriculture, which employs 52.7% people as per the 2011 census, saw a negative grown of 1% in 2012-13 and is expected to grow at 4% in the present fiscal, indicating the extent of agrarian distress. Birth rate, infant mortality and death rate were almost stagnant at 16.6, 25 and 6.3 respectively in 2012 compared to 2011.

High inflation during 2012-13 with lower industrial outputs and structural bottlenecks have affected the manufacturing sector, which saw stagnant production resulting in almost zero growth. Construction activities have slowed down and hence growth in the sector was 8.6% compared to 11.5% in 2011-12. The industry sector has grown at a paltry 2.7%. The state government also has a Rs 3,017 crore revenue deficit as against a projected surplus of Rs 184.38 crore.

So, what is happening to the Maharashtra growth story? That the state is a land of extremes, with a focus on physical infrastructure while overlooking the need for a robust social infrastructure, may be evident from these indices. For instance, only 77% schools have functional girls toilets in Maharashtra, which boasts of being a pioneer when it comes to girls education. Maharashtra is also the most industrialised state with 45.2% urban population (up from 28.22% in 1960-61 and 42.43% in 2000-1).

The slum population in the state is 1.18 crore – the highest (18%) in India. The proportion of slum population to total urban population in Maharashtra is 23.3% in 2011 down from 27.3% in 2001.

"Maharashtra is a relatively fast growing and healthy economy but with many structural weaknesses in areas like health, education, public finances and regional inequalities," said Neeraj Hatekar, professor, department of economics, University of Mumbai.

He stressed on the need to focus more attention on social infrastructure like schools, education, health and added that even if the infant mortality rate (IMR) was shown at just 25, it could be much higher due to large-scale under-reporting in government data.

Hatekar said that while poverty reduction rates were good, malnutrition, debt as a percentage of gross state domestic product (18.4%) and high revenue expenditure remained areas of concern. Regional imbalances, with industry and growth focussed on areas like Mumbai, Thane, Pune and Nashik also needed to be looked at carefully, noted Hatekar, adding that this was not just a Western Maharashtra versus Vidarbha debate, with huge inequities being present even in Western Maharashtra.

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