Strong reforms to boost infra development in Maharashtra: Morgan Stanley

Strong ongoing reform momentum is expected to continue accelerating the infrastructure development of Maharashtra, India’s largest economy, with a gross state domestic product (GSDP) of USD 536 billion, according to a report by the US-based financial powerhouse, Morgan Stanley.

 

The state is consolidating its position with significant infrastructure spending and policy initiatives, such as improving the ease of doing business through steps like single-window clearances. It has one of the best connectivity infrastructures in India.

 

The state government is aiming to develop state-of-the-art infrastructure facilities in an environmentally, economically, and socially sustainable manner.

 

Maharashtra represents 13.7 per cent of India's gross domestic product (GDP), making it India’s top-ranked state for nearly five decades. The government of Maharashtra is aiming for a USD 1 trillion economy by 2030, leading in infrastructure investment and focusing on high-growth sectors.

 

“Maharashtra is the world’s 28th-largest economy. It leads India in multiple areas and appears set to maintain its position through progressive leadership, constructive policies, massive infrastructure investment, and social projects. Maharashtra could approach a USD 1 trillion GDP by 2030,” the report added.

 

The state has 30 mega infrastructure projects in the pipeline aimed at improving connectivity and boosting economic growth. These projects include the Metro Projects in Pune, Mumbai, and Nagpur (USD 21.8 billion), the Navi Mumbai International Airport (USD 2.4 billion), Vadhvan Port (USD 8.8 billion), and various road and highway developments. These initiatives are expected to enhance the state's infrastructure and attract more investment. 

 

Maharashtra accounts for 9.4 per cent of India’s total area, but its share of national highways was 12.6 per cent as of fiscal year 2024 (FY24), up from 6.8 per cent in FY14.

 

The government is also working to develop an efficient public transportation system, in the form of an integrated metro network, for intra-city commutes across key cities.

 

Further, Maharashtra's coastline is seen as a significant asset for the state, stretching approximately 720 kilometres along the Arabian Sea and being home to several major ports, such as Mumbai Port and Jawaharlal Nehru Port Authority, which play a crucial role in the state's economy and both domestic and international trade.

 

In addition to the major ports, Maharashtra has several minor ports that contribute to regional trade and transportation. The state is continuously working on enhancing its port infrastructure to meet the growing demands of trade and commerce.

 

The upcoming Vadhvan Port project, a greenfield seaport located in the Palghar District of Maharashtra, is making significant progress and is poised to become a major hub for maritime trade in India. Valued at ₹76,200 crore, the port is expected to create a cumulative capacity of 298 million metric tonnes per annum and generate 1 million direct and indirect employment opportunities.

 

In a step towards securing enduring and reliable financing for essential infrastructure, such as roads and bridges, the state government has sanctioned the establishment of a specialised infrastructure investment trust (InvIT) platform called Maha InvIT.

 

Moreover, the state has one of the lowest outstanding debt levels, at 18.5 per cent of GDP as of FY25, making it one of the most fiscally prudent states. This is expected to bode well for the state to manage its future fiscal trajectory while maintaining its focus on capex and infrastructure investments, according to the report.

 

The state’s fiscal management has been prudent over the past many years, as evidenced by its low level of fiscal deficit, low revenue deficit, and low overall debt. However, at the margin, the expansion of fiscal and primary deficits poses challenges, especially in the context of the continued need to fund large-scale infrastructure projects while maintaining social expenditure.

 

Additionally, disparities in economic growth across its regions, environmental issues, and emerging issues such as adequate housing, air pollution, traffic congestion, waste management, urban heat, and risks from climate change need to be addressed, the report noted.