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Maharashtra and Gujarat: The growth engines

Our Mumbai Bureau | Updated on October 01, 2013

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Maharashtra and Gujarat are among the more industrialised and economically advanced States. Between them, the two States account for about a fifth of the country’s gross domestic product. They also lay claim to being the growth engines for the country because their economies have grown one to two percentage points faster than the national average, over the last decade.

Entrepreneurial spirit

Maharashtra’s gross state domestic product for 2012, at current prices, was nearly Rs 12 lakh crore, while Gujarat’s was about half that number.

Both States fared reasonably well on per capita income. Maharashtra’s per capita income, at current prices, was Rs 95,339 while Gujarat’s was a shade lower, at Rs 89,668.

The faster growth of these two States, relative to others, is explained by a combination of natural resources and entrepreneurship of the people. Geographical advantages such as a long coastline have facilitated the growth of trade and commerce. Most of India’s imports and exports take place through the ports in these two States.

Urbanisation

Another common factor that both States share is the relatively high level of urbanisation. About 45 per cent of Maharashtra’s population lives in urban areas while for Gujarat it is at 43 per cent, as per the last Census.

This, however, poses new challenges for both States as the quality of services and civic amenities is under strain, given the increasing migration from rural areas. Whether it is access to the basics, such as housing, good-quality water, education, health services, power or transport, the existing infrastructure is crumbling under the pressure of a rising population.

Building Infrastructure

If economic growth needs to pick up in the country, these two States will once again have to lead the way. This calls for a greater impetus to be given to infrastructure-building activities and faster resolution of a number of problems, such as land acquisition and compensation, which bedevil a number of projects.

While Gujarat appears to have been able to tackle this with some success — in part due to political will and single-party rule — the pulls and pressures of Maharashtra’s coalition politics seem to have hindered a more decisive approach to economic reform.

Published on September 29, 2013

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