Prithviraj Chavan, 22nd Chief Minister of Maharashtra, has been in office for three years. He is a rarity in Indian politics — a well-educated, urbane politician with a genuine desire for inclusive politics. An affable, courteous and unpretentious man, Chavan’s conduct has been dignified in a State where the public conduct of politicians of all parties has often raised eyebrows.

Chavan has retained a clean image, even as he battles a number of rivals both within and outside his party. Over the past three years, he has surprised those who thought he would be a pushover in the murky politics of the State that has trounced many a predecessor. Yet, given the coalition compulsions, there is a limit to what he can do. While the overall economic situation doesn’t look very promising, there are a couple of infrastructure projects that are nearing completion in the State. This should spur some economic activity and revive the optimism needed to finish many other long-pending projects that have still not got past the drawing board.

In a free-wheeling interview, Chavan spelt out his concerns and priorities as he hopes to navigate the State’s economy out of turbulence. Excerpts from the interview.

What is the industrial strategy of Maharashtra in the current economic crisis?

The economic situation in the country is definitely worrisome. The current account and fiscal deficits are adding to the anxiety. In Maharashtra, there has been no fresh hiring except in IT and pharmaceuticals sectors. The automotive industry, which is an employment generator, is also slowing down. But a large stimulus package for the industry is unlikely to be announced from the Centre.

In such a situation, the Maharashtra Government is keen to offer small incentives to the industry to keep the morale up. We want to convey to the industry that the State Government is standing firmly behind it and acknowledge its role in job creation.

Our incentive could be in the form of a subsidy for renewing bus fleet used in public transport. The Maharashtra State Transport Corporation could get new buses and auto companies fresh orders. The money could be raised from the State environment fund.

We are also toying with an idea of giving cash subsidy for taxis and autorickshaw owners with vehicles 12-15 years old. This scheme is to replace ageing vehicles, giving a flip to automobile sales in Maharashtra.

But we will ensure it will be a voluntary scheme as blanket enforcement might lead to resentment among vehicle-owners. Some owners may not even be in a financial position to replace their vehicles. For example the statutory deadline for retiring a taxi is 20 years but the owner has used it for 19 years, then we could incentivise him to buy a new vehicle, which will also help in reducing pollution.

Last month, I had discussed with the Prime Minister about a stimulus package but I realised that the Centre has limitation in providing a large package similar to the one provided in 2008. Therefore, the Maharashtra Government is speeding up clearances of some of the large projects, which will give an impetus to the growth in the State.

The main problem these projects face is environmental clearances, and coal/gas linkages. Some transportation sector projects are pending due to land clearances. We have used this approach to solve the land acquisition problems faced by the Navi Mumbai Airport project. Otherwise, the airport project would have been very expensive.

VAT refund is one more approach for providing incentives. Speedier decision-making, faster dispute settlement and handing over the land quickly to the industry will add to its growth.

Another way is to take a mission mode approach on behalf of small-scale industries for getting their dues stuck with entities such as Indian Railways and Defence Ministry cleared.

I’m extremely worried about small industries because the large units are usurping their credit. Therefore, I have even spoken to the new RBI Governor for a special strategy for small industries.

In advanced economies such as the US, the industry classification is not based on the size of the investment but its ability to create jobs.

We also need to reconsider the definition of a “small industry” and incentivise those units that create more jobs in the State.

What is the strategy for fast-tracking infrastructure projects in Mumbai?

This year the Government will commission projects worth Rs 5,000 crore. They include first phase of the metro rail and mono rail. The safety trials of these rail system are on. The Sahar elevated road and Santacruz-Chembur link will also get completed. A lot of transportation infrastructure is falling in place in Mumbai this year.

Due to the volatile rupee situation and interest rate pressures, the State Government was not successful in awarding a BOT contract for Mumbai trans-harbour link. Therefore we are looking at awarding the project on a cash contract basis.

The second phase of the Mumbai metro, which could not get clearance from the Union Ministry of Environment and Forest, will now have to be redesigned. But it is a fact that large infrastructure project are on hold due to the value of rupee and overall economic situation in the city.

There is an uncertainty about commencement of commercial operations of the first phase of the Mumbai metro due to the demand for the hike in passenger fares by the developer, Mumbai Metro One. Do you plan to approach an arbitrator to resolve the issue?

The Commissioner of Railway Safety is undertaking safety trials of the line. Upon completion of those trials the line would be ready. The contract with Mumbai Metro One has many options for addressing issues of fare hike. A view will be taken at the appropriate time for approaching an arbitrator.

In view of the recurrent droughts how is the State Government planning to take up water conservation?

Agriculture in Maharashtra is about 82 per cent rain-fed while in States like Punjab about 90 per cent of the land is irrigated. Therefore, the rain-fed agriculture in Maharashtra has to be made sustainable. It can only be done through water conservation and decentralised water supply schemes. The Maharashtra Government is considering raising a Rs 15,000-crore loan from the World Bank for the water conservation projects.

I want to free Maharashtra from water scarcity. Acute water shortage was seen last year where 5,500 tankers were supplying water to 11,000 villages, and 13,000 cattle camps were providing fodder to 9.5 lakh animals. We want to improve the situation to such a degree that that even if the rains fail for two seasons, there will be enough drinking water.

We want to take up these water conservation measures more aggressively therefore we will require funds for creating small ponds on the farms, which will be able to supply water to the farm during the farming season. Bunds will also be created on small rivulets and old percolations tanks will also require repair and drip irrigation.

On the theme of water, whether it is urban water supply or water resources for rural populations, the state government is spending about Rs 11,000 crore from the budget. This number can easily increased to about Rs 14,000 crore.

In the next three years it would mean spending Rs 42,000 crore over three years from the State budget. Another Rs 25,000 crore could be raised from the World Bank and budgetary support from the Centre and State Governments. It would mean a Rs 60,000-crore plan for the next three years.

If we have decentralised water supply, the State will have enough fodder and drinking water for local needs. In future if the rains fail then the State may not avoid large-scale drought-like situation but there will be enough drinking water for the people.

How does the State Government plan to address the impasse over the Jaitapur nuclear project?

Our role in the project is limited; it is in assuring the people that nuclear power is safe and that it will not affect the livelihood of the local fishing communities or the horticulture.

The project is environmentally benign and it will not have a carbon footprint. The project may not create many direct jobs but it will create lots of jobs indirectly.

Last week I had met the people of Jaitapur, who will be affected by the project. Most are ready to accept the land compensation. The locals are no longer opposing us; now it is for the Centre to negotiate with the French Government for the commercial agreement.

How do you intend to re-energise the cooperative sector?

The State Government wants primary cooperative credit societies to be treated as business correspondents for commercial banks. We are working very closely with National Bank for Agriculture and Rural Development (Nabard) on this issue. Nabard is ensuring that these societies become more vibrant and start taking more deposits and also provide credit to farmers.

There have been instances of urban cooperative banks shutting down. Therefore, there is a need for a concrete mechanism to recover the money from defaulters. Cooperatives societies are very important for Maharashtra and they need to be nurtured back to health.

A number of sick cooperative sugar mills were being sold to private entities. I have stopped this process as the cooperative sugar mills are a pride of Maharashtra and they have contributed immensely to the rural economy. If a mill falls sick then it will be taken over by another cooperative mill on lease for seven-ten years. It will be nursed back to health and then handed over to the original society.

Will the new Land Acquisition bill increase the cost of industrial projects in Maharashtra?

There could be a marginal rise in the cost. But my worry is the consent clause in the Bill. Because, in a collectively held land parcel, few people who don’t agree to the sale can delay the project indefinitely. We need industrialisation to create jobs for the unskilled persons. Projects like the Delhi Mumbai Industrial Corridor will create those opportunities in Maharashtra.

In the State Budget, Maharashtra’s GDP growth was pegged at 7 per cent. In view of the financial difficulties, will you revise the number?

Maharashtra will be able to achieve 7 per cent growth due to the good monsoon and the robust agriculture growth. The State has always grown one-two percentage points more than the national average. This year if the country grows at 5 per cent, then Maharashtra will grow at 7 per cent. There will be a slowing in the industrial sector but it will be compensated by the growth in the services sector.