» Business » Can Maharashtra regain lost economic glory?

Can Maharashtra regain lost economic glory?

By Priya Ganapati in Mumbai
March 27, 2003 16:53 IST
Get Rediff News in your Inbox:

At a recently concluded Confederation of Indian Industry conference on how Maharashtra can take the lead again, top political leaders and industry honchos got together to discuss ways to make the state the most preferred investor destination.

Among those on the podium were Dr Patangrao Kadam, Maharashtra's Minister for Industries & Parliamentary Affairs and Ganesh Natrajan, CEO, Zensar Technologies.

In about 20 minutes, that the two spent together onstage, Kadam not only managed to convince Natrajan to buy a 10-acre plot at Kharadi near Pune, but was busy pitching for a bigger MIDC plot nearby.

"It is a reflection of the dynamism with which the leadership in Maharashtra is now approaching the industry. In the past, the political leadership has not projected the dynamism as a result of which some incremental investment has gone to the southern states. But we see that situation changing now," says Ganesh Natrajan, CEO, Zensar Technologies.

The complacency of Maharashtra's leadership has taken its toll on the state. Over the last few years, the state has seen southern upstarts take some gloss off its glory and emerge as preferred destinations for newer investments.

In just about five years, Bangalore has become the Silicon Valley of India and the top choice for most IT companies coming to India.

In close competition, is Hyderabad whose Chief Minister Chandrababu Naidu prefers to be called chief executive officer and is relentless in wooing investments for his state (Andhra Pradesh) in IT. Even Tamil Nadu has managed to carve its space as the Detroit of India, with a number of auto manufacturing companies having set shop there.

But Maharashtra seems to be dogged by a feeling of a has-been, a state that was once the financial capital of the country but is now a giant that has become too unwieldy and slow to respond to change.

The second most populous state in India, average annual growth of Maharashtra has declined from 24 per cent in the beginning of 1990s to 15 per cent during the later half of the 90s. Percentage of people in labour force has declined from 71 per cent in 1983 to 65 per cent in 1999-2000.

The state government borrowings stand at over Rs 83,000 crore (Rs 830 billion) of which Rs 30,000 crore (Rs 300 billion) are in the form of loans that require a payment of Rs 9,000 crore (Rs 90 billion) as just interest every year.

Chief Minister Sushil Kumar Shinde concedes that the state's fiscal scenario is perturbing but says that he is confident that Maharashtra can tackle it.

"I am not afraid of these loans. Maharashtra is the number one state in resource mobilisation and it has received the highest investment intentions in the country. I am sure along with industry support, Maharashtra can easily tackle the financial situation," he said.

At the CII conference in Mumbai, Shinde himself decided to address the industry leaders on the initiatives taken by the State.

He said, Maharashtra is concentrating on expanding the Special Economic Zones that it had set up and is in the process of formulating its own SEZ Act for speedy development of these zones that will make investment attractive.

"Maharashtra has been the first state in the country to take initiative and effective steps for setting up SEZs. There will be self governing industrial townships for SEZs and the area will be exempted from all state taxation, levies, et cetera," explains Shinde.

According to Shinde, Maharashtra is still the numero uno in the industrial and the financial sector.

"The latest annual survey of industries' results of 2000-01 show Maharashtra contributed 21.5 per cent in the net value added in the organised sector in the country," Shinde said.

So what has the state been up to in the last few years?

Shinde said Maharashtra has been concentrating on improving its agricultural output. It has emerged as the biggest producer of horticultural products in the country. Food parks at Nagpur and Pune are also being set up.

Recently, the government announced a grape processing policy under which parks are being set up in Nashik and Sangli districts and incentives were being offered to the processing units.

Agricultural export processing zones are being set up with an investment of Rs 100 crore (Rs 1 billion) over the next 5 years. Exports of fruits from these zones are estimated to touch Rs 400 crore (Rs 4 billion).

"We are looking at not just small islands of excellence in the state but want to spread it throughout. Our focus is on Nashik, Pune, Mumbai and Thane, which form a golden quadrilateral for industries," says Vishwas Dhumal, principal secretary, industries, Maharashtra.

And that's not all, according to the bureaucrats.

Even in information technology, Maharashtra is crawling back into the reckoning, thanks to some help from the IT-enabled services companies.

Navi Mumbai and Pune have seen a significant amount of investments by IT-enabled services and this has led to the creation of a number of jobs.

Along with Nasscom (the Natioanl Association fo Software and Service Companies), a policy for the ITES sector has been drafted and the state has also aggressively undertaken e-governance projects that would change the way government services are delivered.

At 163 locations, throughout the state, kiosks under the Integrated Citizen Facilitation Centres have been installed, which deliver about 100 government services to citizens. In September, the government plans to install 60 kiosks throughout Mumbai to deliver key state government and municipal services.

"Maharashtra is taking various steps to ensure that the state becomes the best choice for doing business. We are working with the Infrastructure Development Finance Corporation and McKinsey & Co to build a policy framework. This demonstrates that the government is not working in isolation," says Dhumal.

But for all its initiatives on the ground, experts say Maharashtra may be suffering from an image problem more than anything else. And that is what will need to be addressed first.

"Many times, states say they are going to do something much before they have done it. Its all a matter of perception. To make it in the lead, the first step is to get the perception right and that will help get the people and the investments," said Arun Maira, chairman, Boston Consulting Group.

Get Rediff News in your Inbox:
Priya Ganapati in Mumbai

Moneywiz Live!