Maharashtra will grow at its slowest pace in three years as agriculture output contracted and manufacturing lost momentum in the western state that contributes the most to India’s GDP.
That’s the estimate from the Economic Survey tabled today in the state assembly in Mumbai. The gross state domestic product is expected to grow at 7.3 percent in 2017-18 compared with previous financial year’s 10 percent.
The gross state value added growth, which strips out the impact of indirect taxes and subsidies, fell to 6.6 percent from 9.9 percent during the period.
That’s a setback for the state that wants to become a trillion-dollar economy by 2025, aiming to grow at an annualised rate of 15.4 percent. Maharashtra, which contributes about 13 percent to India’s $1.2-trillion GDP, is reeling under a farm crisis due to uneven monsoon rains last year. It has already pardoned loans of nearly 60 lakh farmers.
Output off all kharif crops barring sugarcane is expected to decline, led by food grains. Overall production, the survey said, will drop by 14.4 percent of the GSVA of crops.
As a result, farm growth is expected to contract by a massive 8.3 percent compared to a 22.5 percent growth in the previous year. That’s the worst agriculture performance in three years. Farm and allied activities contribute nearly 12 percent to the state’s GDP.
Industry growth will decline in line with a manufacturing slowdown after demonetisation and the Goods and Services Tax across the country. Industry in Maharashtra, which contributes 33.6 percent to the GSDP, will grow at 6.5 percent compared with 6.9 percent a year ago.
The advance estimates peg real gross state domestic product at constant prices (2011-12) at Rs 19.59 lakh crore for 2017-18. Nominal GSDP at current prices is expected at Rs 24.96 lakh crore.
The state’s debt is expected to rise to Rs 4.13 lakh crore against Rs 3.71 lakh crore in 2016-17. That’s 16.6 percent of the GSDP against 16.4 percent a year ago. Yet, fiscal deficit is expected to remain within the 2.8 percent limit of the Fourteenth Financial Commission at 1.6 percent of GSDP or Rs 38,789 crore.
- Interest burden will to rise to Rs 31,037 crore from Rs 28,830 crore.
- The average cost of borrowing will be 8.4 percent against 8.9 percent in the previous year.
- The farm loan waiver of Rs 30,000 crore has put an additional burden on the state, forcing it to cut its expenditure by 20 percent.
- The government estimates total tax and non-tax receipts at Rs 1,66,005 crore against Rs 1,40,864 crore a year ago.
- The tax revenue is expected to be Rs 1.9 lakh crore.
- After the implementation of GST, the state is expected to receive Rs 37,405 crore as its share in central taxes, and it earned Rs 30,138 crore from State GST up to December.