Maharashtra's Economy: Status and Challenges

Maharashtra’s economy: Status and challenges

Maharashtra is the second most populous state in India and also the leading contributor to India’s GDP. It houses close to 11 crore people and contributes 16 percent to the GDP. In this article we will look at the current status of Maharashtra’s economy and the problems it faces in agriculture, industrial and service sector.

Agricultural sector in Maharashtra has been a weak performer since the last decade. For the year 2013-14 Agriculture sector’s share in the Gross domestic state product was about 8 percent. Maharashtra also contributed about the same in total agricultural GDP. The most striking paradox is that in spite of agriculture being a poor performer, about 55 percent of workers are still engaged in agriculture. Given its soil and weather, Maharashtra does not have a comparative advantage in agricultural sector. Of the cultivated area in Maharashtra only 18 percent is irrigated. As against this, at the all India level 45 percent of the cultivated area is irrigated.. Yet majority of the state’s population remains employed in this sector. If we look at the cropping pattern, almost 38 percent of the gross cultivated area is under cereals like rice, jowar, bajra, etc. However the percentage of gross value added in agriculture by these cereals is only about 10 percent. On the other hand, fruits and vegetables contributed 38 percent to the total agricultural output with only 4 percent of gross cultivated area under them. Another disturbing observation is while the overall agricultural production is slowing down, the use of inputs such as pesticides and fertilizers has been accelerating. This indicates a lower total factor productivity. There is a considerable difference between the marketable surplus that farmers produce and the actual marketed surplus. This indicates that there are supply side bottlenecks such as lack of storage facilities, inefficient machinery for harvesting, lack of local marketing yards. If we want the agricultural sector to perform better these issues need to be addressed. Increasing the irrigated area in the state should be the priority. In spite of the pressing need, extensive and efficient irrigation has largely remained an elusive dream for Maharashtra. 82 percent of the cultivated area is still dependent on rains. Cropping patterns need to be changed according to the soil and climate conditions. There is a need to spread awareness about alternative crops that may be better suited for local soil conditions and water availability. The right mix of crop choice and improved variety seeds can minimize the losses faced by farmers.

            Turning to the industrial sector, Maharashtra is an important state in India’s industrial scene. The industrial sector in Maharashtra contributed nearly 16 percent to the GDP in 2013-14. The gross value added by Maharashtra in India’s industrial output is 21 percent. Of the total number of factories in India 13 percent are located in Maharashtra. As for the FDI inflows, in the post liberalization period Maharashtra attracted almost 20 percent of the total approved FDI inflows to India. Thus it plays a significant role in Indian industry. Within the industries, petroleum products, chemicals, metal products and rubber are the most dominating industries. During last few years there has been a shift away from textile industry in Maharashtra. In the registered industries sector, relative significance of consumer goods industry has declined during the past decade. There has been a shift towards intermediate goods industry which now constitutes almost 60 percent of registered industries. Industrial sector in Maharashtra faces a number of problems. Foremost is the lack of efficient infrastructure. Because of inefficient infrastructure there is a notable difference between the investment proposals that Maharashtra gets and the investment projects that actually get implemented. In recent past we have had many corporations walk out of Maharashtra in search of better infrastructural facilities. Regional disparities in industrial and infrastructure development are very large. Many areas besides the industrial metros, remain undeveloped in terms of infrastructure. There needs to be a region-need based approach in accelerating infrastructure in these areas. Another problem that hinders industrial growth is widespread bureaucratic red tape. Labor laws. E governance. Procuring Licenses and inspections, online submission of documents.

Turning to the service sector it is the biggest contributor to the GSDP. In 2013-14, it contributed close to 64 percent to the state output. Maharshtra’s service sector contributes close to 16 percent to the total service sector GDP. In the post liberalization period this sector has grown faster. However, employment share of service sector is only 28 percent. Jobless growth.

Maharashtra still has high rates of poverty. Poverty

Sex ratio

Indian Economy: Overserviced?

The latest Economic Survey of India indicates that India has the 2^nd fastest growing service sector in the world, second only to China. Over many past years the service sector has been championed as the cause of India’s fast economic growth.

The share of the tertiary sector has grown very rapidly, making India a ‘tertiarized’ economy- an economy in which the tertiary or the service sector dominates the primary and the secondary sector. Despite having an income level of a low middle income country, the share of the service sector in GDP in India is close to that of a high income country. Second, the service sector grew rapidly as compared with other countries.

India underwent a major economic policy overhaul in 1991- including policy reforms in external sector as well as domestic economy sector. As far as the reforms in the service sector are concerned, there was no separate policy package for the service sector per se. Unlike the secondary sector, the service sector did not get any comprehensive set of policy changes. However, the overall changes in policy regarding deregulation, opening up of FDI and privatization of services previously owned by government were important to the growth of service sector.

The employment in the service sector is very low. Thus some scholars have dubbed Indian economic growth as ‘jobless growth’ (Bhattacharya and Sakhtivel 2002). The service sector, which is recently the fastest growing sector, makes up the biggest part of the GDP, but employs only 28 percent of the population. Thus, the service sector is a “major economic sector” but a “minor contributor to employment” (Papopla 2005).This feature distinguishes India from other developing countries in Asia, where the share of services in total output and in employment match more closely (Papola 2005; Banga 2005).

            In addition to the differential patterns in the sectoral output, the patterns in employment across sectors in India are different as well. The service sector in India employs a lot less people than the service sector in other developing countries. Thus it has been less ‘employment intensive’ as compared to other countries like China and Indonesia. In China and Indonesia, the share of service sector in output was similar to the service sector’s share in employment. For example, according to Table 2.4, in 2002, China’s service sector contributed 34 percent to GDP, and employed 31 percent of the labor force. Indonesia’s tertiary sector contributed 38 percent to GDP and employed 39 percent of the labor force. In contrast to this, India had only 22 percent of its people employed in the service sector, which produced 51 percent of the output (Papola 2005). This is different from the historically observed patterns in structural changes employment that accompany sectoral changes in output. Some possible reasons responsible for slow growth of employment in the service sector. The author mentions that some services such as community, social and personal services that have grown faster and have relatively higher contribution to the GDP have experienced a fall in employment elasticity. Also, sectors like the telecommunications and software services which are growing fast have higher labor productivity and therefore less employment growth.

Various scholars have analyzed the reasons for such rapid growth in the Indian service sector argues that demand side factors like high-income elasticity of demand for final product services, and structural changes in the manufacturing sector, have led to such a fast growth of services. Also, supply side factors like economic liberalization, improvements in technology and higher foreign investment in the service sector might have boosted the growth of the tertiary sector. claim that splintering and high foreign demand may be possible contributors of rapid service sector growth.

Dr. Jane Goodall

How enthralling it is to indeed see a person- whom you have read and admired all your life- up close and listen to her talk right in front of you? I guess only the tears of joy and gratitude can give expression to such an overwhelming feeling. It is exactly what I experienced when I attended primatologist Dr. Jane Goodall’s speech last week.

Since my childhood, in the nooks and corners of my earthy mind, I coveted seeing and meeting Jane Goodall. I was about 8 years old when I first heard about Jane and her seminal research on Chimpanzees. At home, we were not so much of the ‘pet’ people but loved to see and read about animals in the wild and nature at its home turf. A movie named ‘Gorillas in the mist’ about the life and works of another primatologist- Diane Fossey had just released then. My parents discussed the movie at home. Jane being in the same field of primates’ research was an obvious part of the discussion and so I was introduced to Jane’s work and life.

Back in her childhood Jane loved animals and carried a dream of going to Africa.  In those years Africa was mostly unexplored and faraway continent. Being a female and not having enough money, visiting Africa was a distant dream for her back at home in England. However, her mother encouraged Jane to pursue her aspirations. Luckily, Jane’s friend invited her to work on a farm in Kenya. There one day she met Dr. Louis Leakey- the famous anthropologist and paleontologist- in the natural history museum and then on started working as his secretary. Looking at Jane’s interest and knowledge about animals Dr. Leakey encouraged her to study the wild chimpanzees in Gombe National Park in Tanzania and thus began Jane’s kinship with the Chimps.

When the world believed that only the human beings were capable of making tools, Jane made a breakthrough observation. She had seen a Chimp using a stick to fish termites from their mound. This revealed that even Chimpanzees were capable of making tools. Upon this, Dr. Leaky made his famous remark “We must now redefine man, redefine tool, or accept chimpanzees as humans!” In addition, she discovered that Chimpanzees too had complex social, familial and emotional behavior structure just as we humans do. Jane was often criticized in the field for being emotionally attached to her subjects and naming them. While documenting Chimp’s violent and aggressive behavior, she also discovered that Chimps were not entirely vegetarian as was commonly thought in those times. Jane spent almost 50 years in forwarding the research on Chimps. She worked vigorously against the bush meat trade and illegal poaching of wild chimpanzees. Among various honors and accords which she received for her seminal work, Dr. Jane Goodall was appointed as the United Nations Messenger of Peace in 2002. Now her work on conservation and sustainable development continued through the ‘Jane Goodall Institute’ and the ‘Roots and Shoots’ program.

Today the world is torn between insatiable human avarice and natural resource depletion. When we doubt quality of the very air we breathe and the food we eat, Jane offers us optimism. She says that young children, human brain that works in harmony with a compassionate heart, resilience of the nature and indomitable human spirit are our hopes for a better sustainable future. It is not too late yet to save our dear mother earth. Let us take inspiration from legends like Jane and do our bit. Thereupon when we put our children to sleep at night, we can assure them with a head held high, that we have not compromised their future.