The Prime Minister claimed the other day that Maharashtra would be a trillion dollar economy by 2025.
I love it when the Prime Minister quotes numbers. So I decided to look at some. See this with me please. Let us look at what the numbers tell us about Maharashtra economy for the last few years.
We have data from 2011–12 upto 2014–15 that shows the Maharashtra economy growing thus. The rate of growth has been around 13% for the first two years before it dipped to 8.78% in 2014–15. I am not drawing any inferences from the fact that elections, general and State, were held that year and there was transfer of power to the present dispensation.
Then we jump to estimated figures for 2017–18 when the Maharashtra GDP is expected to be INR 25,35,000 Crores (approximately 390 billion). This seems to indicate an Compounded Annual Growth Rate of around 12.25%
So far so good.
Now for the Maharashtra GDP to reach US $ 1 Trillion, it has to increase by 2.56 times it is today.
Assuming the same exchange rate, that means in 2024–25 the Maharashtra GDP goes from INR 2,535,000 Crores to INR 6,500,000 (US $ 1 trillion). This means that it should increase by a CAGR of around 14.4% year on year for seven years.
Does that seem reasonable?
Not, in my opinion, if past performance if anything to go by. In the past four years of THIS government, the CAGR has been 12.25%. This is when they had a good majority in the State and an absolute majority at the Centre. To reach a CAGR of 14.4% (a clear 2 + percentage points over the growth of the last four years) over the next seven years will be very difficult if not impossible.
To achieve this, the State (& centre) will have to take long standing policy decisions related to, amongst others,
- infrastructure (and no I am not talking about bullet trains; I am talking roads, power and water)
- business environment (ease of doing business)
- corruption and
- skills available locally
Further, the government will have to stop wasting time on pointless, populist things, fighting with their allies and wasting resources on silly celebrations and memorials. They have to do this in the context of an ever present and growing agrarian crisis.
Sadly, I have seen little movement on any policy front in the last four years. There is no reason to believe that it will happen in the next seven. Especially if the BJP has reduced power in the State and Centre after the 2019 elections. I would love for the State of Maharashtra to be there, I just don’t see it happening.
My conclusion: This was one of the numerous bombastic statements by the Prime Minister; a statement that is expect to excite the audience but has little basis in reality.
PS: As on 9th March 2018, the results of the economic survey for 2017-18 are out and they show that the State economy shrank by 2.3% over 2016-17. Not an auspicious start to a trillion dollar economy mark.