The economic powerhouse

Print edition : November 21, 2003

At the cargo jetty of the Jawaharlal Nehru Port Trust, Mumbai. Maharashtra has two major and 48 minor ports, which handle 50 per cent of India's foreign trade. - SHASHI ASHIWAL

Maharashtra retains its status as the engine of Indian industrial growth thanks to the proactive role played by the State government and the Maharashtra Industrial Development Corporation.

MAHARASHTRA has retained its status as India's economic powerhouse. It is the most industrialised State and contributes around 20 per cent of the country's gross domestic product (GDP). Its per capita income is 1.5 times the national average. It has achieved a steady growth of 6.5 per cent in the last decade. The State has a maturing economy with growing services and a strong industrial base. The government invests half to two-thirds of its funds in infrastructure - power, water and irrigation, roads and transport. It has the highest power generation capacity among the States: 15,000+ megawatt.

Around 30 per cent of India's exports - gems/jewellery, textiles/garments, leather goods, engineering goods, plastics, pharmaceuticals, electronics/Information Technology, horticulture - are from Maharashtra. It has the largest number (563) of 100 per cent export-oriented units (EOUs). It is connected to the world by an international airport and two major and 48 minor ports, which handle 50 per cent of India's foreign trade. The Mumbai-Navi Mumbai-Pune region is Maharashtra's industrial hub. In addition to software services, Mumbai-Navi Mumbai is also the strongest base for IT-enabled services (call centres, back office operations and transcription). Pune is a major centre for high-end IT software. The total (actual and proposed) investment in new infrastructure, industry and service projects in Maharashtra is estimated at Rs.1,68,799 crores ($35 billion). The actual investment under implementation is Rs.77,286 crores ($16 billion) (CMIE, January 2002).

The State has a diversified industrial base. Its output value ranks first in 12 out of 35 sectors. Maharashtra ranks among the top three in 25 sectors. Its share in net value addition is 22 per cent. The per capita value-addition is 2.4 times higher than the all-India average. It has the largest network of industrial areas - 217 industrial complexes, with 125,000 acres (50,000 hectares) of land. There are specialised parks for different sectors, including IT.

Mumbai, India's financial capital, accounts for two-thirds of the country's stock turnover, 90 per cent of merchant banking business and 67 per cent of investor responses to public issues. It is the largest contributor of corporate and income taxes. The value of cheque transactions in Mumbai is more than 10 times greater than that in the next metro. The headquarters of the Reserve Bank of India and most Indian and foreign banks are situated in Mumbai. It is the centre of the film industry. It is also India's e-biz and dot.com capital.

The 2001 industrial policy envisages structural changes such as self-governing industrial townships, special economic zones and specialised parks for IT, BT (biotechnology) and gems and jewellery. It also has special provisions for the development of backward areas.

Maharashtra is the first State to propose labour law reforms in the Industrial Disputes Act and the Contract Labour Act. It has called for rationalisation of procedures and inspections. There are several fiscal incentives in the industrial policy, including 50 per cent stamp duty exemption in backward/developing areas, for IT units in public and private IT Parks, octroi refund and electricity duty exemption. It also has provisions for capital and interest subsidy.

The Bombay Stock Exchange. Mumbai accounts for two-thirds of the country's stock turnover.-SHASHI ASHIWAL

Maharashtra is also encouraging the growth of agri-processing. It is a large producer of fruits, sugarcane and flowers. At present, because of low value addition, there are limited returns to producers, processors and consumers. The State plans to conduct a produce-wise review of infrastructure, linkages, policy and procedural needs. It has planned a floriculture park near Pune and an auction house in Mumbai. It has also planned an orange processing park in Butibori (Nagpur). Around 40 acres (16 ha) will be developed by the Maharashtra Industrial Development Corporation (MIDC)/the Maharashtra Agro-Industries Development Corporation (MAIDC) for orange processing.

The MIDC has played a pioneering role in spearheading the industrial growth of the State. Its objectives are: achieving balanced industrial development with an emphasis on developing underdeveloped parts of the State, developing infrastructure in every district, and facilitating entrepreneurs to start industries at various locations.

The MIDC has been declared an agent of the State government for carrying out activities within the framework of the Maharashtra Industrial Development Act and the Maharashtra Industrial Development Rules. These activities can be divided under the following three broad categories: acquisition and disposal of land; provision of infrastructure facilities; and provision of services.

The Maharashtra government acquires the land required for industrial areas under Chapter VI of the MID Act, 1961, and hands it over to the MIDC for further disposal. Likewise, wherever available, government land is also handed over to the Corporation as an industrial area. The MIDC disposes the land in the form of plots by leasing them out for 95 years. It recovers the premium lease money at different rates for different industrial areas. Also the MIDC constructs built-up accommodation like sheds and flatted units and gives them to prospective industrialists, together with the land, on a lease basis. As on March 31, 2002, it had planned to acquire 87,633.76 ha of land, of which 52,222.57 ha has already come into its possession.

The MIDC is required to provide infrastructure facilities such as roads, streetlight, drainage and water supply and buildings for Post and Telegraphs offices, canteens, banks and telephone exchanges. It meets the expenditure on such works (facilities) generally from the premium lease money received from the allottees. The relationship further prescribes that the industrial area, after it is fully developed, should be returned to the government or handed over to such agency or authority as the State government may direct, after striking out the account of the industrial area concerned.

The surplus/deficit generated out of such operation is to be returned to or recovered from the State government, as the case may be. The power to fix the rates of premium for land for different industrial areas rests with the MIDC. Since it is the aim of the government and the MIDC to achieve balanced development of the entire State with special emphasis on the development of backward regions, the MIDC follows a cross-subsidisation rate structure on the zones pattern, in that the rates of land premium in developed and semi-developed parts of the State are higher than the rates in developing and backward regions.

The unit of Tata Ryseron Ltd at the MIDC-developed industrial estate at Ranjangaon near Pune.-

The MIDC provides the following services to the units in its industrial areas: assured water supply; maintenance of industrial areas; drainage schemes; other services.

From among the various services provided by the MIDC, assured water supply can be regarded as its speciality. The investment in water supply schemes (headworks) made by the MIDC as on March 31, 2002, is over Rs.731.30 crores with an installed capacity of supply of 1,941 million litres a day. The annual revenue from the water is over Rs 375.96 crores.

Maintenance of municipal areas is a municipal function requiring the MIDC to maintain the roads, streetlights and fire stations (in a few areas) during the transitory period up to handing over of the industrial area either to the government or to an agency the government may decide.

The MIDC has effluent disposal (drainage) schemes only in select industrial areas having chemical industries. Such schemes are designed only to collect and discharge the treated effluent. In such areas, it recovers a drainage cess to defray the expenditure on maintenance and to recover partially the capital cost.

Also, with a view to arresting pollution, it has started hazardous waste management and common effluent plants on a joint venture basis with the help of local industrial associations. With both the State government and the MIDC taking a proactive role in supporting diversified industrial development, Maharashtra manages to retain its status as the engine of Indian industrial growth.

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