Maharashtra’s economy is expected to grow by just 7.3% in 2017-18, down sharply from the 10% growth clocked last year, as per the Economic Survey of the State tabled in the Assembly on Thursday.
While Finance Minister Sudhir Munguntiwar sought to paint a better picture about the state of the economy by arguing that the projected growth is still higher than the 6.5% growth predicted for India in the same period, the Opposition blamed the State’s growth travails on the lingering impact of demonetisation, the switch-over to the Goods and Services Tax and the abysmal conditions in the farm sector.
The Economic Survey tabled in the State legislature by the Finance Minister projects that the agriculture and allied activities sector is expected to contract by 8.3% during 2017-18, compared to a 22.5% growth as per the revised estimates for 2016-17 and a negative growth of 3.2% in 2015-16.
Mr Munguntiwar attributed the negative growth in farms to ‘comparatively low rains’, citing that 84.3% of normal monsoon was received in the year. Former chief minister and Congress leader Prithviraj Chavan said the Survey confirms that the agriculture sector is in deep trouble due to the policies of the government.
“The negative agricultural growth rate is worrisome and a reflection of the ground reality. The Prime Minister and Chief Minister are talking about doubling the farmers’ income, but the figures bely the claim,” he said. “Even the industrial growth is poor. This has led to unemployment in the State now at 2.1%, and 3,557 industries have shut this year when the government is talking about attracting more investment.”
Hitting the brakes
The Survey has estimated that the industry sector, which accounts for over a third of the State’s economic output, would grow by 6.5% in 2017-18, marginally slower than the 6.9% estimated for the previous year. By contrast, industry had grown by 7.2% in 2015-16.
The Services sector, which now accounts for over 54% of the State’s economic activity, is the only sector to see a positive, albeit fractional, uptick in growth – with the Survey projecting 9.7% growth in 2017-18, compared to 9.6% in 2016-17, as per revised estimates. “Demonetisation and GST have adversely affected the economy, which is evident from the lowered estimated growth,” said Mr Chavan, reacting to the Survey.
Chief minister Devendra Fadnavis had earlier projected an accelerated economic growth rate of 15.4%, with a special focus on the services sector, if the State is to meet its ambitious target to become a $1 trillion economy by 2025.
Mumbai 08/03/2018: Maharashtra finance minister Sudhir Mungantiwar with Minister of state for Finance, Deepak Kesarkar posed for the photograph while going through state budget for the last time, at Mantralaya in Mumbai on Thursday. Photo: Vivek Bendre
Deficits under control
Maharashtra’s nominal Gross State Domestic Product (GSDP) is estimated to be ₹24,96,505 crore in 2017-18, compared to ₹22,57,032 crore in 2016-17. The State’s per capita income is projected to have risen by over ₹15,000 from ₹1,65,491 in 2016-17 to ₹1,80,596 in 2017-18. The Survey expects revenue deficit, fiscal deficit and the State’s debt stock to be ₹4,511 crore, ₹38,789 crore and ₹4,13,044 crore, respectively, in line with Budget estimates for this fiscal year. Mr. Munguntiwar said that the percentage of fiscal deficit to GSDP is 1.6% and debt stock to GSDP 16.6%, which are well within the fiscal limits of 2.8% and 22.2%, respectively, as stipulated by the 14th Finance Commission for consolidating fiscal reforms.
Reform claims
The government has claimed it has undertaken virtually all of the 378 reforms mooted by Central government to promote the ease of doing business in the State.
“The ease of doing business indicates simpler, speedy and hassle free-regulations for businesses. The State has submitted evidence for 372 reforms, of which 348 have been approved by the Government of India,” the Survey noted.
Citing the successful outcomes of investment summits in the State as proof of the ease of doing business, the Survey pointed out that the recently concluded Magnetic Maharashtra summit received a total of 4,108 proposals with investment proposals of Rs 12.07 lakh crore and potential job opportunities for 36.77 lakh persons.
The Reserve Bank of India’s Mumbai divisional office received ₹74,123 crore inflows of foreign direct investment (FDI) during April-December, 2017, the Survey added. “About 3.6 lakh micro, small and medium enterprises (MSMEs) committed an investment of ₹85,362 crore and employment to 27.6 lakh people,” it said.
The State’s prospects, as per the Survey, have remained upbeat due to an improved global economic situation. As per the World Economic Situation report, global growth reached 3% in 2017, ‘a healthy acceleration’ compared to the 2.4% growth in the previous year.
