The big picture is essentially composed of pixels. The micro details from states enable a better comprehension of the distance between what is and what can be in the political economy. This week the government of Maharashtra, arguably among the better-managed states, released its annual economic survey. Entrenched in the details are possibilities and predicaments that political India is faced with. Over 30,000 farmers from across Maharashtra are marching from Nashik to Mumbai. They plan to encircle Mantralaya, the seat of government, to corral political attention. The headline is about fall in overall growth, from 10 per cent to 7.3 per cent. The distress is located in the dip in agriculture and allied activities—from 22.5 per cent to minus (-) 8.3 per cent.
Credit to farmers is stymied by affordability and access—Maharashtra’s 40,959 villages have 2,979 banking offices. Of the net sown area of 17-plus million hectares, irrigation reaches barely 17.8 per cent. In the water-scarce state, the area under water guzzler sugarcane has nearly doubled since 2001. Yes, sugar pays more, but must it be cane, and why not tropical sugar beet, which consumes less water and delivers more? Given the impact of climate change, states need to adopt the paradigm of drip irrigation funded by incentives.
Agriculture accounts for 11 per cent of GSDP but rural Maharashtra hosts 55 per cent of the 11 crore populace. Landholdings have shrunk to an average of 1.44 hectares, reducing viability. But naturally, the marching farmers are demanding a complete loan waiver—and similar agitations are surfacing across India. The problem in Maharashtra represents the larger issue Bharat faces. Farming needs a new viability model with backward and forward linkages. All that talk about contract/group/collective farming must walk, and now!
The consensus view is growth needs investments. State after state is holding investor summits (http://bit.ly/2ItemSongs7) announcing MoUs in lakhs of crores. But what is the conversion rate of intent into investment? The Maharashtra Survey reveals that between August 1991 and December 2017, the state received investment proposals worth `11.89 lakh crore, of which projects worth `2.92 lakh crore were commissioned.
Mind you, Maharashtra is among the better performing states—one can imagine the gap in other states. Indeed, Maharashtra has claimed a better strike rate in the past years. The Survey says that of the `8 lakh crore worth of MoUs signed in 2016 in Maharashtra, “investments worth `4.91 lakh crore are in various stages of implementation.” Milton Friedman once said, “The greatest advances of civilization, whether in architecture or painting, in science and literature, in industry or agriculture, have never come from centralized government”. Ceteris paribus, or other things being equal, investment growth demands dismantling of the Centre-state permission raj.
Development also depends on how the finances of the state are managed. On the face of it, Maharashtra is among the better-managed states. Yet it spends 12 rupees of every hundred to pay interest on its debt of `4.13 lakh crore—and at an average of 8.4 per cent per annum. It begs a question: is the state government less sovereign than the Centre to pay a higher rate?
Public finance ratios depend on how governments price services and manage subsidies. Take a look at the power sector. Agriculture accounts for 26 per cent of power consumption and Maharashtra is aggressively electrifying agricultural pumps. The question: must it be grid power– why not promote solar-plus-hybrid pumps or inverters? Why not push metering and prepaid power through DBT for farmers?
The Survey reveals: “The aggregate technical and commercial (AT&C) losses of MAHADISCOM were 22.1 per cent, Tata Power 0.93 per cent and Reliance Infrastructure 3.63 per cent during 2017-18 up to October.” AT&C is really a euphemism for inefficiency and theft – and it shows in the variation in losses between the state electricity board and private entities.
An interesting factoid in the survey is about use of kerosene. The subsidised quota is about four litres per month and kerosene retails at around `25 per litre. The Survey reveals: “Proportion of households using kerosene as fuel for cooking was highest in Mumbai Suburban (17.6 per cent) followed by Mumbai city (17.4 per cent) and Thane (14.7 per cent) districts.” The reason, perhaps, is the high level of slum population. Why not bring these homes into the ambit of DBT-enabled LPG or piped gas—bringing down subsidies, adulteration and pollution? The Centre has pushed for a kerosene-free regime in Puducherry and Chandigarh. Why not major metros?
Reorganisation of expenditure will enable better spend on critical sectors like education and health. The Survey reveals the percentage of private unaided schools has shot up from 12.4 per cent to 21.1 per cent in just two years. Clearly, poor learning outcomes in government schools are a factor—and the trend is national.
This year’s Union Budget announced the big-bang National Health Protection Scheme. Maharashtra is an early subscriber of the idea of insured health care. The challenge is in the delivery. The infrastructure on the ground, with 6,981 government allopathic doctors and 108 beds per lakh population, is far from adequate. Rural Maharashtra’s 40,959 villages are served by 10,580 sub-centres, 1,814 primary health centres, 360 rural hospitals, 193 PHUs, 40 mobile units and 86 sub-district hospitals. At the national level, the inadequacy of capacity is worse. The issues embedded in Maharashtra’s Economic Survey have a national resonance. It is verily a WhatsApp message for India.shankkar.aiyar@gmail.com