The extent to which the pandemic and the lockdown crippled the state is revealed in Maharashtra’s economic survey that forecasts a negative growth rate of -8% for 2020-21. This is a historic low for the state and a huge slide from 2019 when the revised economic growth rate was 5%. The survey also projects a decline in the state’s per capita income.
The Indian economy is also expected to grow at -8% in 2020-21. The parallel with the state’s growth rate is not surprising since Maharashtra contributes the highest share to the nation’s nominal GDP at 14.2%.
The only sector set to show positive growth is agriculture and allied services, expected to grow by 11.7%, almost twice the 6.1% in 2019-20. This sector benefited from a plentiful monsoon and exemption from lockdown restrictions. The industrial sector is expected to contract 11.3% compared to 0.2% growth last year and services sector at -9%, down from 8.3%.
Within industry, manufacturing and construction were the sectors hardest hit in 2020-21, with the survey forecasting growth of -11.8% and -14.6% respectively. In 2019-20, manufacturing had growth of -1% and construction 1.7%.
Services sector was affected mainly because of the “hard impact of the pandemic on trade, repairs, hotel & restaurants and the transport sector,” the survey says.
Although agriculture is set to show dramatic growth, its impact in computation of economic activity is limited. It accounts for 11.7% of Gross State Value Added. Industry accounts for 32.6% and services 55.7%.
Fall in economic activity is also reflected in other parameters. Nominal GSDP is set to decline by Rs 1.56 lakh crore in 2020-21, from Rs 28.2 lakh crore in 2019-20 to Rs 26.6 lakh crore in 2020-21.
Per capita income is set to fall to Rs 1.88 lakh in 2020-21 from Rs 2.02 lakh in 2019-20. In 2019, Maharashtra was ranked fifth in per capita income, behind Haryana, Telangana, Karnataka and Tamil Nadu.
The survey also shows how revenue collection has been impacted. Actual revenue received by the state in April-Dec 2020 was Rs 1.76 lakh crore, 50% of the annual target.
The state’s debt is expected to be Rs 5.2 lakh crore for 2020-21, 19.6% of GSDP and within fiscal limits, says the survey.
FDI inflows to the state in April-Sept 2021 were Rs 27,143 crore, lower than to Gujarat (Rs 1.19 lakh crore) and Karnataka (Rs 27,458 crore). However, between April 2000 and Sept 2020, the state attracted Rs 8 lakh crore of FDI, the highest in the country.
In terms of projects, Maharashtra accounts for highest number of approved industrial projects between Aug 1991 and Oct 2020. Its 20,909 projects account for 18% share in the country. However, investments generated are lower than Gujarat and Karnataka. Its share of investments is 10.7%, that of Gujarat is 14.9% and Karnataka is 11.2%.
Exports from Maharashtra have also declined during the pandemic. Exports from the state dropped from Rs 5 lakh crore in 2018-19 to Rs 4.6 lakh crore in 2019-20. Figures for April-Sept 2020-21 are Rs 1.72 lakh crore.