Montek Singh Ahluwalia

MUMBAI: Maharashtra's first State Development Report, released on Tuesday by the Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia, says that its success in achieving a high growth rate had been tarnished by its inability to reduce poverty, ignorance and disease.

The report, prepared by four academic research institutions, takes note of the State's "persistently high fiscal imbalance" and its poor infrastructure and recommends wide-ranging reforms.

Dr. Ahluwalia said independent research institutes were asked to prepare State development reports to obtain a comprehensive analysis of growth constraints. For the country to achieve a growth rate of 8 per cent per annum, better performing States such as Maharashtra would need to achieve an even higher growth rate, he said. But it was poor infrastructure development that was holding the country back from achieving its targeted growth rate. This was one area Governments should concentrate on.

Maharashtra Finance Minister Jayant Patil said that the report had addressed disparities in different sectors. Although in the past Maharashtra had a good growth rate, it had declined post-1995 to 4.7 per cent. Steps taken by the Democratic Front Government had increased it to 7.3 per cent and they aimed to increase it to 10 to 12 per cent by 2012.

Maharashtra Chief Minister Vilasrao Deshmukh said that the Government would have to take "hard decisions" even though it would be difficult for a "populist" Government. The MSDR also notes the Government's inability to take difficult decisions: "coalition politics and coalition governments, in recent years, have given an unfocussed approach to key elements of industrial and policy reforms."

The report has made recommendations that go against the Government's "populist" policies. It recommends withdrawing support to cooperative sugar mills and phasing out the monopoly cotton procurement scheme. To bring in fiscal correction and reduce the State's debt, which stands at Rs. 80,000 crores, the report suggests enhanced resource mobilisation, expenditure restructuring and interest cost minimising debt management policy. One of the suggestions for reducing expenditure is to cut down State Government employees by two per cent a year. The report predicts that the State's fiscal situation could become "unsustainable" if the reforms were not undertaken.

Printer friendly page  
Send this article to Friends by E-Mail