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Maharashtra maintains industrial lead despite slowdown

Maharashtra remains the most attractive state for foreign investment and also the most industrialised state in the country, but its pace of industrial development has slackened over the last last fifteen years as compared to the earlier decades.

The state has made a rapid change towards the service sector from the traditional agriculture and manufacturing sectors after privatisation and liberalisation began in the early 1990s.

However, much remains to be done in attracting investment for the improvement of infrastructure facilities, says a report published by the Board for Economical Development of Maharashtra under the title Maharashtra -- Emerging Giant of Asia. The report provides detailed information about the changes taking place in Maharashtra's economy.

So far, the state government has been dependent on the Index of Industrial Production and the Annual Statistics of Industries to mark the economic progress in the state. Because of the limitations inherent in each model, the above two indices fails to reveal the total picture of the progress made by the state. To overcome such failures, the report has employed a new model, the Industrial Manufacturing and Production, to provide a more accurate picture of the economic development in Maharashtra from the period 1980-95.

According to this model, the state has recorded an average annual growth rate of eight per cent in production from 1980 to 1995. However, the period from 1990 to 1995-96 saw the annual average growth rate fall to 4.5 per cent. Overall, the growth rate in chemical, engineering, textiles and agro-based industries posted a healthy upswing.

After the decline of the textile industries' share in the overall production, chemical industries took the lead from the beginning of the 1980s. After 1985, chemical industries were replaced by engineering and capital goods, confirming the rapid industrialisation of Maharashtra along with other states in the country.

The report clearly shows disproves the allegation that economic progress and development in the state has taken a severe beating due to political turmoil, harming industrial and infrastructural development.

Maharashtra has once again topped the list as far as investment are concerned. Competition is expected to hot up in the coming years and some experts consider this to be a healthy trend. Many investors were lured towards Maharashtra in the pre-liberalisation period because of its innovative programmes. However, certain schemes initiated by other states attracted many foreign investors, forcing Maharashtra to follow suit. For instance, the state has no dearth of computer software experts, yet it could not become the Silicon Valley of India.

This concern has propelled the state administration into taking some concrete steps to improve and modernise its outdated infrastructural facilities. According to the Centre for Monitoring the Indian Economy, infrastructural facilities available in Maharashtra are at seven per cent above the national average, having come down from its earlier 20 per cent.

The state government's proposals for the development of ports in Dabhol, Sindhudurg, Ratnagiri, and Jayagadh have received a lukewarm response. Along with the lack of basic infrastructural facilities, foreign investors are wary of opposition to their projects from environmentalists and local people.

On the positive side, investors have shown their interest partially in the development of hotels and irrigation facilities.

The transition of the state's economy towards the service sector is an indication of the maturing of the economy. However, some consider this to be an ominous sign, caused by the lack of infrastructure and the high cost of other basic industries.

Regarding regional development of Maharashtra, the Konkan region claimed the maximum investment of 50 per cent, followed by Nagpur (20%) and Pune (15%). Within the Konkan, Raigad and Ratnagiri districts alone account for 63 per cent of the investments, while Bombay and Thane reported a 35 per cent investment share.

Compiled by Prasanna D Zorey from the Marathi press