Industry alarmed over Maharashtra’s falling health

Industries like textiles and garments have already shifted base from Maharashtra to Tirupur in Tamil Nadu, pharmaceuticals and chemicals has gone to Gujarat and new oil refineries are coming up in Jamnagar,he said, adding that employment and small business opportunities have gone out of the state to neighbouring places.

In fact, the inexperience of the present government could be gauged by the fact that barring Enron, not a single new manufacturing capacity has been built in the State. “Outdated taxes like octroi have only bred corruption… not only trade and industry, even a common man is harassed in the octroi posts. In the long term, it will only scare new investors and the state will turn worse than Bihar and UP,” Deora said.

“Instead of slapping new taxes on its people, the state government should plug tax leakages in order to reduce its deficit… for example more than 50 per cent of octroi is siphoned off by its employees,” said an official of the Indian Merchants Chamber (IMC). Maharashtra lost out several big projects to other states due to faulty policies of the government.

This government, say analysts, has failed to create new employment due to faulty and ill-conceived policies. In NaviMumbai, as many as 554 of the existing 2,600 small scale units have closed down. "Things are certainly far from rosy in Maharashtra, it will require much more than sops to farmers and idle promises for the state to bring back its economy on rails," says All India Association of Industries (AIAI) president, Vijay Kalantri.

Addressing the members of Indian Merchants Chamber (IMC), the executive president of Maharashtra Planning Board, Prakash Javadekar expressed his concern over the growing revenue deficits of the state and he attributed this crisis to the 5th Pay Commission recommendations for which the government had to cough up Rs 3,400 crore at one go towards hike in wages. The state’s annual revenue earnings is in the region of Rs 24,000 crore and it pays about Rs 15,000 crore towards wage bills of its 20 lakh employees, he said.

A clear strategy is needed to develop the state’s infrastructure. The government should take effective steps to improve communications, transport systems and abolish theprimitive octroi duty, Kalantri pointed out.

While several other States, including UP, have managed to bring down the deficit levels, Maharashtra has the dubious distinction of showing a 700 per cent rise in its revenue deficit this year. Ringing the alarm bells for the state government, the revenue deficit of the state — which was already downgraded by rating agency Crisil — is expected to zoom from just Rs 669.6 crore in 1997-98 to Rs 4,621 crore in 1998-99, as per a study conducted by the Reserve Bank of India (RBI).