Wednesday, Feb 01, 2023

Sunrise in the west

As Maharashtra’s budget is presented,a look at the state of its economy — surprisingly good.

I go to Maharashtra a couple of times a year,trips to Mumbai not counted,to a cooperative in the rain shadow region of the Sahyadris.

The cooperative has an old tradition of involving an economist in its work,since it was found by the legendary Professor D.R. Gadgil. Ihave been with them for the last three decades,arguing first for diversification — since cane in a dry region was clearly not sustainable — and then in the early ‘90s arguing for knowledge as a source of growth. They spend around Rs 90 crore a year on education and health now,and I am happy also to see this feed back into better agriculture.

Maharashtra agriculture has done decently well,given its severe resource constraint: water. In my mind,the star performers are: a million hectares under tree crops and horticulture; a fishing economy doing reasonably well; and of course,Bt cotton. The tree crops go back to Shankar Rao Kolhe’s perspective plan for horticulture. Shankar Rao,the sugar baron of Kopargaon,prepared a long-term horticulture plan for Maharashtra when minister,and an excellent support system was developed to implement it. This continues. Today,Maharashtra has a complete package including financial,technological and processingsupport to any one wanting to seriously grow tree crops — a boon in this dry region.

To me,a great pleasure is to watch Gandhi-capped Patils coming on their Hondas and partaking of mutton biryani and Marathi chicken with their Chardonnay in the dry districts’ wineries. There are around 60,producing around 97 per cent of the stuff made in India. Globalisation at its benign best. Dairying has done well too,and in recent years the production of value-added products like skimmed milk,white butter and so on has grown at phenomenal annual rates,like 80 per cent.

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Fish is an interesting case. My friend Vivekanandan,of the first batch from the Institute of Rural Management in Anand and a great leader of India’s fishermen,tells me that as one goes from Gujarat to Kerala,the level of mechanisation goes down,and the Maharashtra Fish Cooperative is the only successful one in India,and still sponsored by the state. Making a point of going to small fishing harbours,I agree with him. The jury is still out as to which is the best system. Fish in Maharashtra is growing with the Bombay Duck leading the pace. Perhaps a hundred flowers should bloom.

Maharashtra has a strong tradition of equity built into its culture,with its saints embedded in its historical memories. This is the land of Mahatma Phule,of Sai Baba,of Tukdudasji and many others. The tradition is grown in its soil,and yet a part of the universal dream of men. Its outcome? An index for primary education at 0.8,higher than that of Kerala (0.67) and Gujarat (0.75). It performs well in national comparisons in higher education and technical education. It has the first rural health university in India. Many of its community and private institutions,some of which are fairly good,have suffered on account of a one-size-fits-all government policy towards them. In actual practice,more differentiated outcomes were achieved by the institutions by using legal mechanisms to protect their interests.

Better policies would achieve better results,because there are substantial reporting requirements made of all institutions — and those not meeting the standards should be penalised,but those that are meeting requirements should be encouraged.


Growing at around 7 per cent annually,the state is doing well. Its FDI is the second-largest in the country — and yet it is not quite the star performer that it was in the earlier decades. The pursuit ofmanufacturing growth is not as single-minded as in some other states. For some reason the city of Mumbai has not been getting the attention it deserves. The promise of making it another Shanghai has to be resurrected — hopefully this year. With some coordination and initiative,a lot can be done,as shown by the Sealink.

In many areas,Maharashtra has best-practice cases. The restructuring of Bhiwandi’s electricity distribution is exemplary,in that it includes the use of information technology for tracking reform,and monitoring a decentralised delivery system. Its experience shows that improved delivery and pricing are two sides of the same coin.

More generally,Maharashtra’s system of decentralisation of manufacturing activity began with the distribution of activity outside Mumbai and the development of industrial centres in the state’s different regions,leading to very fast growth. The fact that it is again a major market for FDI should help in revival; although this year,perhaps,the focus should be on domestic investment. Maharashtra would benefit from implementing the details of the national manufacturing policy commission’s report. V. Krishnamurthy’s action plan for more than 30 industries could be the base for an aggressive manufacturing policy in what is already a technologically progressive state.


Faster manufacturing growth in Maharashtra,with its large base,could well lead to the revival of the India’s entire manufacturing economy. This could well be a breakthrough year for manufacturing,from 7 per cent growth to double-digit growth next year and in the period to come.

The writer,a former Union minister,is chairman,Institute of Rural Management,Anand,

First published on: 21-03-2011 at 00:48 IST
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