Economic Survey Report: Maharashtra clocks 9.4 per cent growth despite demonetisation

The positive growth story from rural Maharashtra comes at a time when BJP’s ally Shiv Sena and the Opposition have been targeting the BJP over the demand of waiver of farm loans. Expectedly, the BJP thumped itsback for the growth projections.

While Chief Minister Devendra Fadnavis was in Delhi leading a Maharashtra government delegation to meet Union Finance Minister Arun Jaitley over the farm loan waiver issue, state Finance Minister Sudhir Mungantiwar said, “The ESR is a reflection of the performance of the government on commitments it had made at the start of the year. The policies and the implementing programmes we undertook to turn around the farm sector are bearing fruit.”

Slamming the Opposition for “politicising” the farm loan waiver issue, the finance minister went on to list how credit financing to the farm sector had improved under the BJP reign. The ESR report, too, included data on the improvement in the distribution of crop loans and agricultural term loans this year.

Contending that the state’s economic growth had seen an upsurge at a time when most other state economies had either dipped or stagnated, Mungantiwar said the government will target a double-digit growth for the economy in 2017-18. The ESR indicated this goal too.

“Skillful fusion of technology, social structure, infrastructure backed by natural and human resources, along with the original way of production, development, and exchange ensured the leading position for the state in the national economy. The state is envisaging a double digit growth in the coming years and is putting in place necessary policies and implementing programmes to achieve the same,” it stated.

But the worry line for the BJP-led government in the farm sector was a projection of a steep decline in sugarcane production this year.

The prime kharif cash crop in Western Maharashtra and Marathwada will see a 28 per cent drop in production – from 692 lakh in 2015-16 to 50,084 in 2016-17.

Cane farmers and sugar millers have been protesting against the policies of the government in the wake of rising input costs for production.

Mungantiwar conceded this was a concern.

“We will have to work for improving the situation,” he said. Milk production also increased during the year.

The growth driver within the farm sector was the “crops” sector.

“Satisfactory rains helped register a 19.3 per cent growth in the sub-sector,” the ESR stated. But a stunted growth in the livestock, fishing and forestry sectors, which are all growing at below 2 per cent, limited the overall growth in the farm sector to 12.5 per cent.

The government also thumped its back on the investments it had made in the irrigation and water conservation sector for the positive farm growth. Under the state’s flagship Jalyukt Shivar for drought-proofing villages, the ESR data revealed that 71 per cent of villages – 4,374 out of 6,202 villages – selected under the initiative during 15-16 were now water neutral.

“Additional water storage potential of 11,82,230 thousand cubic metre had been created,” the report said, while listing that another 5,281 villages were covered under the scheme in 16-17.

While the government’s economic report was silent on the impact of demonetisation on output and consumption across sectors, a stunted growth projection for the industry sector gave it away. The sector’s overall growth rate slipped from 7.5 in 15-16 to 6.7 in 16-17.

The current year’s projected growth rate is also lower than the growth it clocked in 14-15, when it had growth at 6.9 per cent. The mining and quarrying sub-sector dipped sharply from 4.3 per cent in 15-16 to 0.5 per cent in 16-17. The manufacturing sector decelerated from 9.3 per cent in 15-16 to 8.4.

The construction industry too recorded a slump. But the power, gas, and water supply sub-sector upsurged from 3.3 per cent to 10.2 per cent.

State’s fiscal managers said that the services sector too appeared to have felt the pinch following demonetisation with the hospitality, communication and transport services recording a slower growth rate. In the shadow of the demonetisation, financial services grew from 10.5 per cent in 15-16 to 11.7. Overall the services sector was growing at 10.8 per cent.

“The year-on-year inflation, which was in the negative zone from November, 2014 to March, 2016, increased from 0.8 per cent in April 2016 to 3.4 per cent in December, 2016. The rise in consumer price index was mainly due to rise in prices of pulses and vegetables. The main commodities responsible were tur dal, chana dal, urad dal, and some vegetables,” the report said further. The state’s per capita net state income for 15-16 was Rs 1,47,399 as against the per capita national income of Rs 94,178.

Another indicator of the demonetisation impact was that till December 2016, only 63.8 of the state’s projected revenue of 2.57 lakh crore had been realised. Mungantiwar said on Friday that the government will “more or less” meet the fiscal targets it had set at the start of the year.

The state’s ESR report was also “silent” on the impact of the proposed Goods and Services Tax to the state’s own tax revenues. “It is difficult to forecast the loss to the tax revenues at this stage. But the Centre has assured that these would be entirely compensated for,” Mungantiwar said.