Maharashtra's Economic Survey Finally Accepts that a Slowdown is Upon Us

As per advance estimates, Maharashtra’s economy is expected to grow at 5.7% during the Financial Year (FY) 2019-20 while the Indian economy’s expected growth is 5.0%. According to the state government’s Economic Survey for 2019-20, growth of agricultural and allied activities are at 3.1%, industry is at 3.3% while the services sector is at 7.6% in 2019-20. The numbers are enough to show that the once numero uno state in India is rapidly losing its shine.

The most worrying aspect of state finance are loans. The state is under a huge debt of Rs 4,71,642 crores. Maharashtra’s revenue deficit stands at Rs 20,293 crores while the fiscal deficit has shot through the roof, and is at Rs 61,670 crores.

All sectors of the state’s economy are struggling to grow, including industry, agriculture and services. While agriculture growth is at minus 2.2%, crop growth stands at minus 3.8%. The livestock sector is also down from 8% in 2018-19 to 6% in 2019-20. Forestry and logging has also seen a huge decline, from 9.3 percent in 2017-18 to minus 7.4% in 2019-20.

Growth in the industrial sector is down to 5.5% from 7.1% –  manufacturing is at 6%, mining has seen zero percent growth and construction, one of the most lucrative sectors, is at 5.1%. The services sector has seen growth from 6.9% in 2017-18 to 8.1 percent in 2018-19; it is expected to grow at 7.6% in 2019-20. 

Foreign direct investment (FDI) has been Maharashtra's stronghold over a sustained period. However, it has rapidly declined between 2017-18 and 2019-20. FDI was Rs 80,013 crores in 2017-18 and has now declined to Rs 25,316 crores. During the same period, the state of Gujarat, a key competitor, saw growth from Rs 12,618 crores to Rs 24,012 crores. Maharashtra, which led the country in FDI during 2017-18, is now down to the third spot on the podium. 

"The survey has provided clarity on the fact that consecutive droughts and a financial slowdown has had serious negative impact on the state's economy. The new government will have to follow a disciplined approach for fiscal deficit. It will also have to come up with reforms for revenue generation," said Professor Sanjeev Chandorkar, an economic expert.

State Finance Minister Ajit Pawar has accepted that the current challenges demand out-of-the-box thinking. "We have multiple challenges –  improving the agriculture sector, giving confidence to industry and curbing unemployment are the major ones. We are confident that we will find a way out of it," he added.