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
