With a US $420 billion economy, Maharashtra can be equated with the world’s 28th most prosperous nation. Looking at our cumulative average growth rate over the past decade it would not at all be an exaggeration to pronounce - Maharashtra’s economy to be bigger than that of the whole of Switzerland within this decade itself.
According to the State Reorganisation Act of 1956, on this very day, May 1, sixty years ago, the State of ‘Maharashtra’ was formed, and it went on to be exemplary ever since.
Over the past six decades, there have been many changes. The population of the State has more than tripled from 4 crore to little more than 12 crore. Over these years, the States nominal income has increased by more than 1,000 times from what was Rs 2500 crore in 1960-61. This growth is of a higher rate than that of growth in national nominal income. Today, the per capita income of Maharashtra is 50-60 per cent higher than that of Indian average.
In 1960, Maharashtra’s share in National GDP was 11 per cent; it has now moved up to 14%. Maharashtra contributes one-fourth of all of India’s exports, and the State attracts more than 30 per cent of all the Foreign Direct Investment (FDI) in India. All of this demonstrates the progress of Maharashtra.
While the progress is undoubtedly a positive, when one looks at the per capita income of about Rs 2,00,000 per annum, this progress isn’t adequate. Once again, if one imagines Maharashtra to be a country and compares it with other countries in the table of ‘per capita income’ then we would find more than 100 countries ahead of us. For the economic and overall progress of Maharashtra this ‘per capita income’ must cross the band of ‘middle-income country’.
Over the past few weeks, we all are struggling with the healthcare crisis leading to an economic crisis that is deeper than that of 2008. It also reminds us of the 1991 economic crisis, where we translated the challenges into opportunity, and over more than 25 years, we are savouring the fruits of those reforms. This crisis also demands us to do the same if not better. Here are some examples of the reforms that Maharashtra should undertake-:
Global experiences demonstrate that if we optimally utilise and monetise the land resources, especially the public land banks, it will lead to larger resource base for State that can be utilised for even better infrastructure development to deliver ‘ease of living’.
There is also a case for land reforms in agriculture land. More than 50 per cent of Maharashtrians still depend on agriculture or agri-processing for their income; however these sectors contribute not more than 12-13 per cent of the total income of the State. This has come down from 36 per cent to about 12% over the past 60 years.
To change this there is need to change the tenancy law. The amended act should allow long-term agricultural land leasing without fear of losing it. As such leases will get registered, they will protect the rights of the farmers and also equip them to take loans and insurance at far better rates than prevalent ones.
To attract productivity and investments, in the best longer-term interests of the labour, these must be reformed. This will only help create more jobs and more formal jobs.
Exports (Addressing demand outside India) is an essential part of national GDP. While we were already facing the challenges of de-globalisation, the COVID-19 crisis has further exacerbated it as more countries will be forced to or choose to focus on ‘localisation’. However, like many major disasters, ‘this too shall pass’, and when it does, we will have gone through a ‘reset’, and the new normal will have some new linkages in the ‘Global Value Chain’ (GVC). While we were not high up the GVC rankings in pre-COVID19 days, it throws an opportunity for us to enter those value chains in the next few months and quarters.
MAGNATE OF FOREIGN INVESTMENT
Maharashtra leads it from the front when it comes to the FDI investments in Indian states. The World Economic Forum published a report earlier this year, and according to them, 2020 will be a year when Asian economies would be bigger than all other economies put together, and they will deliver almost two-thirds of the global growth by 2030.
China and Japan are two major Asian economies other than India. In the backdrop of COVID19 crisis, America, Japan, South Korea, and many other nations have announced their plans to pull out of China. Many will go back to their respective countries. Still, there will be some looking for a more apt home for their factories and companies, and we must grab that opportunity with both hands.
Given the strength of education institutions, national research laboratories, private sector R&D laboratories and the highest number of start-ups in India, Maharashtra should take pole position on ‘knowledge economy’ and compete against many other similar-sized countries. This requires the appointment of a cabinet minister or a czar focussed on ‘Knowledge Economy’. We should be encouraged by the role played by Mr Nandan Nilekani in delivering ‘Aadhar’ to the nation that became the foundation for JAM trinity and enabled direct benefit transfers among other positive externalities.
Maharashtra is blessed with a coastline of more than 720 km to build India’s Blue Economy. The State must catapult its operations in fisheries, port development, water transport, water tourism and also ‘sustainably’ explore deep-sea mining, renewable energy sources and oceanic biotechnology. This will help deliver progress of Konkan and thereby that of Maharashtra.
INDUSTRIAL POLICY OF THE STATE
While the previous government announced the ‘New Industrial Policy-2019’, the industry portfolio has continued with the same Hon. Minister and hence it’s expected that the extant policy will continue until these recommendations and given the economic crisis caused by COVID-19, other studied recommendations are incorporated in the revised Industrial Policy that should be announced within weeks and not months.
Maharashtra should have balanced regional growth. That is what is good for all the regions, including the top three metros of the State. IT requires simultaneously taking up key infrastructural initiatives in all the regions.
For example, development of two major, six non-major and more than 50 minor ports of Konkan, ‘National Logistics Hub’ of Vidarbha, ‘International Cargo Terminal’ to support agri-processing exports in Western Maharashtra and the much talked about ‘water grid’ of Maharashtra that promises to deliver benefits to eight districts by connecting 11 major dams across the region. All of them and other such initiatives across regions need to be taken on a mission mode.
To meet our aspirations, we need to progress even faster, sustainably though and that requires us to compete not with states in India but with those 27 countries ahead of us.
Maharashtra has been on an upward trajectory right since its formation in 1960. While on that journey, we have made significant contributions to national growth. Here is wishing one and all the very best for the journey ahead.
Jai Hind! Jai Maharashtra!
(Prashant Girbane is Director-General of Mahratta Chamber of Commerce, Industries and Agriculture.)