Maharashtra's growth rate slips to 7%

The State Economic Survey for 2012-13 presented a gloomy report card, with most of the overall growth indicators showing a marginal drop and the debt stock rising. The main silver lining was per capita income rising by 14% in Mumbai, from Rs.1.33 lakh in 2010-11 to Rs.1.51 lakh in 2011-12. The overall rise in the state’s per capita was also the same.
The report said inflation in urban areas from April 2011 to January 2012 was 9.6%, resulting in a rise in the price of essential commodities, including food and clothing. The Gross State Domestic Product (GSDP) is expected to grow at 7.1% as opposed to 8.5% the previous year. Agricultural growth has been pegged at minus-1.4%, while the slowdown is also apparent in industry and services. Industry is expected to grow at a slow 7% as opposed to the rate of 9.1% in 2011-12, and services at 8.5% as compared to 10.1% in 2011-12.

The survey, presented a day before the budget, said the global financial crisis has ebbed but domestic growth is sluggish and could only be controlled with “policy reforms, fiscal consolidation, and price control possibility, which will all help level off declining growth”. This is the second straight year in which Maharashtra’s financial health has seen a drop, after 2009-10 and 2010-11 showed signs of encouragement. With the economic survey highlighting a tight fiscal position, it is likely that financial consolidation and a search for additional tax revenue could be on finance minister Ajit Pawar’s radar when he presents the budget on Wednesday.
Another worrying sign for Maharashtra is the rising debt stock growing at an average rate of 11.2%; it is expected to reach Rs.2.5 lakh crore at the end of 2012-13. The accumulation of unpaid loans and other liabilities form the debt stock. The state is expected to pay interest of Rs.18,523 crore as opposed to Rs.17,211 crore paid in the previous year.

For long the state has presented itself as numero uno in attracting Foreign Direct Investment (FDI). But between September 2010 and March 2012, the state received only 25 proposals worth Rs 13,200 crore.
According to the Indian Human Development Report (IHDR) 2011, which is quoted in the economic survey, Maharashtra ranks fifth in human development, preceded by Kerala, Delhi, Goa and Punjab.