Maharashtra plans to focus more on building infrastructure and increase spending for that over the rest of the next two years of the BJP-led government’s term, and which will be reflected in the upcoming budget of the state next month. Chief Minister Devendra Fadnavis said this in Davos Wednesday.
Fadnavis, who is in the Swiss town hosting the annual World Economic Forum to hard sell the state as a preferred investment destination and to meet investors, said capital spending at a time when the economy had slowed down and when the state’s debt had ballooned did pose a challenge but Maharashtra still had the fiscal space to borrow and raise resources.
“If Maharashtra has to grow to a $1 trillion economy over the next few years from $400 billion now, the state will need to grow at 10% over the medium term. For that, we need to improve our infrastructure. So, we are building more rail networks, ports, airports and investing hugely in agriculture too.”
A recent report by Deutsche Bank has said Maharashtra now accounts for over 50 per cent of the large infrastructure projects now under way in the country, which includes the 711-km Mumbai Nagpur Super Expressway and Metro projects in Mumbai, and that the state could be the driver of India’s infrastructure sector, given the progress in the last couple of years on some of these projects and the corporate approach to resolving issues.
Maharashtra is expected to unveil its budget next month — weeks after the Union budget on February 1. According to Fadnavis, Maharashtra, which received 50 per cent of the FDI flows into India, could get a few more greenfield projects with some of the companies that have already invested planning to raise capacities. The chief minister said he told the investors whom he met here that the model of infrastructure-led development and the state’s reputation of being a “forward looking state” would pay off down the line. “Yes. This will mean raising huge resources. But if you have aspirations to invest in projects over two years then you have to find innovative ways,” he said.
What he implies by that is the state taking recourse to special project vehicles (SPVs) to get around the problem of the government borrowing directly and adding to its debt burden. The state is pursuing a land securitisation model — using the land banks it has to raise funds so that it is outside of the budget. “We are using the fiscal space available to us and the state’s debt though high is well within fiscal parameters set out by the central government,” he told The Indian Express.
In a recent working paper he wrote for the Institute of South Asian Studies, and the National University of Singapore, Fadnavis has said a “war room” approach adopted by the state had helped speed up approvals and get projects such as the Metro railway in Mumbai off the ground quickly, with actual work starting within a year of the detailed project report.
He also cited the case of Metro 7, which took even less time. All the land needed for the Mumbai-Nagpur expressway would be acquired by March 2018 and if the state was able to create world class infrastructure in minimum time, it would not only create more jobs and accelerate the growth of the economy but also take the state and the country to the next level, he wrote in the paper detailing Maharashtra’s infrastructure-led growth.
He said the government was also integrating all forms of transport — the bus system, monorail, the Metro and the suburban railway. Countries like Singapore are role models for the Government of Maharashtra, which according to him has the potential to be the model state in India’s economic growth story.
On agriculture, he said while there were challenges, the state’s approach of investing in agriculture and the reforms in agriculture marketing would also pay off in terms of higher productivity. The changes in procurement policies should also help, he said. But what could put some stress on the state is the loan waiver. The state would have to borrow to write off the loans of farmers, which means Maharashtra’s revenue deficit would swell, he said.
Fadnavis claimed that Maharashtra’s farm loan waiver was way better than the one of Telangana or Andhra Pradesh — two states that are also trying to woo investment in Davos. “We have set a model on how to go with a loan waiver while saving money by vetting those seeking the loan waiver for their eligibility.”
He claimed that the state had also moved on after the recent protests by Dalits in Koregaon Bhima near Pune with a stable law and order. “There is no tension because of that incident. In our democracy, such protests are bound to be there. That’s part of democracy,” said the CM. The state would also represent before the 15th Finance Commission to review the incentives for states with a higher GDP.
Speaking about GST, Fadnavis said while collections were good in the first three months, the relatively low revenue receipts in the last two months meant the state government would have to seek compensation for the last two months.