Political parties to debate Maharashtra's growth model in run-up to polls

Congress-NCP takes credit for keeping state's pre-eminence, while opposition alleges Maharashtra has lost its glory

As Maharashtra goes to the polls to elect a new legislative Assembly on October 15, both, ruling and opposition alliances in the state are quite keen to flag off Maharashtra's growth during poll campaigning.

While the Congress and Nationalist Congress Party (NCP) alliance has challenged the Gujarat model of development arguing that Maharashtra is way ahead in almost all sectors, the Opposition BJP-Shiv Sena-led Maha Yuti has alleged that the state has lost its past glory due to the Congress-NCP government’s inaction and scam-tainted image.

However, both alliances do agree that the new government would be facing a host of huge challenges — in re-orienting expenditure from revenue towards capital, maintaining a revenue surplus budget, boosting capital investment to leave assets for the next generation rather than liabilities, which would give the much- needed boost to economic activity leading to higher growth, better revenues and better public service delivery.

The Congress-NCP combine is taking credit for Maharashtra topping among other competing states, with a gross state domestic product (GSDP) of Rs 13,23,768 crore (Uttar Pradesh ranked second with Rs 7,68,930 crore while Gujarat was at five with Rs 6,70,016 crore). The state’s per capita income is Rs 1,03,991, second after Harayana’s Rs 1,20,352.  Mumbai along with Thane, Pune, Raigad, Nagpur and Kolhapur have a per capita income of more than Rs 100,000. During 2004-5 and 2013-14, the average annual growth rate of GSDP at constant prices (2004-05) stood at 9 per cent. The ruling alliance would also play up Maharashtra attracting FDI worth Rs 10,21,633 crore as on date with 18 per cent share at the national level.

However, Maharashtra is lagging behind in agriculture compared to Gujarat, Madhya Pradesh and Bihar, which have already achieved double-digit growth. The agriculture and allied activities sector grew at 4 per cent in 2013-14, compared to minus 1 per cent in 2012-13. Opposition parties have blasted the government's neglect of farm growth.

The state’s revenue deficit is 0.2 per cent of GSDP while fiscal deficit is 1.7 per cent against the prudential norm of three per cent suggested by the 13th Finance Commission. Further, the state’s public debt of Rs 3 lakh crore was 17.2 per cent of the GSDP against the national norm of 25.5 per cent.  

“Maharashtra is still one of the best states in the country. However, there is no room for complacency because the state has never bench-marked its performance with the best global practices. In five years, Maharashtra has remained where it was. However, in the dynamically changing domestic and global scenario, a progressive state like Maharashtra must move forward rapidly on the economic front.  Therefore, the need of the hour is rapid growth, coupled with far better regional distribution of economic gains and far superior governance at all levels,” leading Mumbai-based economist C S Deshpande told Business Standard.

On its part, the Maha Yuti alliance is stepping up its attack against Congress-NCP rule, claiming that it owes total responsibility for making Maharashtra bankrupt. Leaders of Opposition in the state Assembly and council Eknath Khadse and Vinod Tawde respectively allege that state has no funds to carry out capital investments and thereby spur growth.

However, state deputy chief minister and NCP leader Ajit Pawar counters these allegations saying that merely ballooning public debt does not make the state bankrupt. Pawar argued that the government has simultaneously focused on increasing tax mobilisation without major hikes and also on implementation of development projects in various sectors.

“As far as indebtedness is concerned, it has not crossed the limits which have been set by the 13th Finance Commission. Secondly, debt itself is not a bad thing provided it is spent only or even largely for increasing productive capacity of the state. Unfortunately, this does not appear to be happening in any of the states in the country due to their revenue expenditure, particularly on salaries of government staff and continuously increasing burden due to periodic recommendations of the pay commissions giving the first claim on state resources of the bureaucracy,” former Planning Commission member B L Mungekar told Business Standard.

However, Congress-NCP would have to strive to counter corruption charges in the irrigation development. Already, Maha Yuti has said the government was responsible for the alleged irrigation scam of Rs 70,000 crore. The allegation has been strongly denied by the  ruling combine. But the new government would have to put in extra efforts to mobilise a whopping Rs 80,000 crore badly required for the completion of pending irrigation projects with a view to reducing the regional imbalance.

Mungekar, who is also Congress member in the Rajya Sabha, opined that Maharashtra continued to be at the top in attracting domestic and foreign investments and its cooperative sector was still vibrant. He hoped that the Congress-NCP, after returning to power, would deal with the problems. On the other hand, Deshpande suggested that the next government's economic road map should focus on labour reforms, urban infrastructure management, skilled development of youth power and tapping renewable energy sources.