Maharashtra-Economic Policies

(Note for Paricharcha By Shri Anil Javalekar on 27/08/2010)


1. Introduction

‘Maharashtra’, as the name suggest, should be real Maha-Rashtra,in every sense of governance. The state is definitely leading, compared to other states, in the areas of governance and becoming of a welfare state in the present accepted meaning of governance and welfare state. Its achievements are far better while dealing with poverty, unemployment, education and other areas of economic development including agriculture, industry, services and infrastructure. However, the problems for which it was struggling at the time of independence or becoming of a state are not only remained same today but aggravated in most of its intensity and spread. This is the point we should think. There must be something basically wrong with the approach and policies adopted or simply the mode, methods and procedures adopted were incorrect. Or above all, it may be that the people or the participants or the beneficiaries were not worth it. Then what is that what went wrong? My request to you is to open your thinking and start questioning the basics of all the three aspects of governance and welfare state.

2. The basics of Governance and Welfare State

i. After independence Indian Government accepted that the state will be a welfare state and not a property like ownership of a family or a coterie of persons. It will work mainly for the material welfare of all the constituents of the state including its population. The first and most important aspect of it was acceptance of democracy as a mode of governance and second was to take a lead in economic development through planning and direct intervention where ever necessary. The formation of states on the basis of language has led to creation of Maharashtra. But all other things of governance and welfare state are the same as accepted by central government.
ii. The democracy gave us the constitution separating the Judiciary, Legislation and Administration. The Planning gave the approach towards economic development and policies to intervene. These became the tools of welfare state and everything what state was doing was implemented through mode, methods and procedures suggested and adopted by the agencies created under this umbrella-Bureaucracy and politicians were most important among all.
iii. The welfare state though a wide concept, has, in the time process, taken a limited view of material welfare of the people whom the politicians and bureaucrats considered worth it. Thus discrimination and favoritism were main tools of its welfare programmes and policies of intervention. The geographical areas and the sectors/activities were benefited depending on the choice of people or group of people. This practice and policy led to conflict and competition within the state/areas/groups/sectors/activities resulting in for lobbying.

3 Basics of present Economic policies


I. The basics of economic policies are same for Maharashtra as adopted by central Government at national level. The goal declared was to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering opportunities to all for employment in the service of the community The main focus was for industrial development as this was thought as solution for all economic ills-backwardness, poverty and unemployment. The agriculture was considered surplus in employment but deficient in production.
II. The Industrial Development was approached in two ways, one by leading the economy through Public sector and two, allowing SSI sector taking major role for production and employment. This was revised since 1992 and in the name of liberalization and globalization; the private corporate sector was allowed to lead the economy.SSI sector was asked to compete with private corporate sector for its production activities but expected to continue to provide employment.
III. Agriculture sector was left for cooperative sector for its credit and marketing needs. As agricultural production is directly dependent on water: major irrigation projects were undertaken controlling and directing the river water. Supply and use of HYV seeds along with fertilizer and pesticides were thought essential to increase food production.
IV. The experience of industrial sector, whether public, private, cooperative or SSI, in providing employment or creating prosperity in rural areas was not adequate and therefore, since 1970, direct approach to poverty and rural unemployment was adopted leading to implementation of various programmes for alleviation of poverty and creation of employment in rural areas. These programmes were mainly intended to create self employment opportunities or directly increase the income of rural poor families. Banks nationalization was one effort in this direction so as to make easy and cheap credit to rural poor people. The policy toward banks has now changed and this being again liberalized to minimize public sector role.
V. Initially, infrastructure was considered a states responsibility and all efforts were directed to create infrastructure in public sector. Now with the liberalization this has undergone a change. Now private corporate sector was allowed to lead the sector.
VI. All economic and financial policies were initially focused on controlling the domestic and international trade so as to benefit the agriculture and other domestic sector and help to move towards self-reliance. This has now changed. Now protection of agriculture and domestic sector is being removed.
VII. Public sector was considered essential as provider of Major and important services such as railway, airways, road transport, Banks, finance and insurance, telephone and communication, supply of water and electricity, generation of power, petroleum products etc. Now these services allowed to be provided by Private corporate sector.
VIII. The responsibility of providing essential commodities at fair prices was with the state and entire PDS structure was created for the purpose. Now Government thinks it not necessary.
IX. In Maharashtra particularly, cooperative sector was given a role in the production and marketing and farmers were organsied successfully in a group so as to have a influential cooperative sector. Now neither state nor the politicians are interested in this sector.
X. State took initiatives as policy matter to create infrastructure so as to impart skill among the rural youth and many skill development institutions came up. Now the policy is to allow private sector to do the job.

4 The result of the approach/Policies with reference to Maharashtra

I. Though the Maharashtra State has been recognised as the country's industrial powerhouse and maintains the position of being the most industrialized state, rest of Maharashtra, except Mumbai, is considered poor and lacking every aspect of development. Mumbai has around 12% population contributing more than 20% NSDP. Thus, a striking character of economic development in Maharashtra is the wide disparity in income across districts. Mumbai accounted for about 21% of the NSDP followed by Thane (12%), Pune (11%) and Nashik (6%). In other words, these four urban districts alone accounted for about 50% of the NSDP in Maharashtra.
II. The majority of Maharashtrians were engaged in agriculture but remained neglected at the hands of the ruling classes. Much of pro-people development is reflected in the Human Development Index (HDI). The sorry state of Maharashtra is that almost 12 of its 35 districts figure in the 100 lowest HDI districts of the country. No district of another state in the developed category figures in this list. Some districts in Vidarbha and Marathwada have a lower HDI than that of the backward districts of Orissa and Jharkhand.( Anand Teltumbde EPW may 8, 2010 vol xlv no 19 ).
III. Rural poverty in Maharashtra was generally higher than the national average. Urban poverty was less than the national average till the mid-1980s but has crossed it since then. ( M H Suryanarayana Economic & Political Weekly EPW june 27, 2009 vol xliv nos 26 & 27 )

IV. The policy towards water, electricity, roads transport, communication, production and distribution led to a crisis in every sector. It led not only to misutilisation of natural or otherwise resources but deterioration of the same making its total unavailability to future generations.

V. Commercialization of everything and profit motif at any cost made the affairs complicated reaching to non return stage whether it is education , poverty alleviation programmes, employment generation, infrastructure development building and construction ,production and distribution of essential goods and services or even administration of law and order.

5 Alternate approach
i. The basic problem is with the approach of commercialization and profit in everything. Secondly the short vision while dealing with human and natural resources has led to creating more problem than solving it. Role of politicians and Bureaucracy should be minimum and concept of trusteeship should be brought in.
ii. There is need to understand the problem in its own perspective and take visionary approach to solve it. For instance the water problem. Directing and forcing river water and using water for drinking and industrial purpose has led the problem of deserting some other areas and not helping to agriculture as well. Excess drawing of water has led to non availability of ground water. So it is necessary to think of approach by which indiscriminate use of water without the responsibility of recharging stopped. Similar approaches are needed for other such problems.
iii. Industrial development with help of SEZ approach is nothing but wasting common resources for private use. It will only create rich hub with no benefits to poor. The approach of self reliant villages should be given priority. This will help optimum utilization of village sources and stop migration
iv. Development in relation to nature and other habitat along with definite goal of Anandi Jeevan should be base of all economic policies and exploitation of sources just for profit or satisfying of some undesirable needs should be stopped.
v. It should be understood that the goal of current economic policies of just providing equal standard of living to all is not required and is against the nature. Stratification of society is a part of any society and economic development should take this in to account and work towards satisfying needs commensurate with the stratification of society and help society to produce the required goods and services instead of any type of goods and services and making arrangement for its supply. This has led to all the current problems leading to crisis.