Aiming at a GDP of $1 trn, the state is likely to be India’s growth engine for the next half a decade. If the CM’s agenda goes as planned, Maharashtra will account for 20% of India’s GDP in 2025. The state contributes about 15% of the GDP at present.
We hosted the HonoUrable Chief Minister (CM) of Maharashtra Devendra Fadnavis in New York recently. The chief minister is revving up the state’s growth with a mix of path-breaking reforms, accelerated infrastructure execution and efficient social programmes.
We summarise the key takeaways from our meeting, which include the state’s focus on urban infrastructure, enhanced connectivity between urban and rural parts of the state, sweeping changes in agriculture, and big focus on skilling of the work force. Bottom line is that the CM has an aggressive plan and target. He expects Maharashtra to be 20% of India’s GDP in 2025, which is an aggregate output of $1 trillion.
The CM’s vision is that Mumbai is the gateway to Maharashtra and therefore needs to be in good shape if state’s economy has to do well. Thus, Mumbai is witnessing a sea change in public infrastructure from new bridges to metros and a new airport. This build is likely to take five years and probably result in a big shift in the city’s quality of life.
Major agricultural reforms
By changing land and labour laws, the CM has sown the seeds for a major migration out of the farm sector to the industrial and services sectors. Maharashtra becomes one of those rare states in India where farm land can be purchased for non-agriculture purposes, setting the stage for land consolidation in the farm sector as well as exodus of marginal farmers into the industrial and services sectors. The state has also liberalised labour laws that now permit greater hiring and firing flexibility for micro and small enterprises as well as relief from onerous regulatory requirements under the old laws. Further, the state has incentivised skilling institutions by providing an outcome-based subsidy. This is probably the most crucial set of reforms by any state in the country.
In less than 12 months, the state has acquired 93% of the land needed to build the new Mumbai-Nagpur 700-km corridor with 24 nodes or interchanges that will be developed as smart cities along its path. According to the CM, this new highway will set the stage to transfer economic prosperity from the state’s major industrial zone cities into Maharashtra’s hinterland.
If the CM’s agenda goes as planned, he believes Maharashtra will become a $1 trillion economy by 2025 – about 20% of India’s estimated GDP in 2025. Currently, the state is about 15% of India’s GDP. This GDP target represents an annual growth of 15% and the state estimates that it will be led by services growth.