Maharashtra is not just a geographical region, but a distinct sociocultural entity built upon the collective efforts of its ethnically heterogeneous people. Maharashtra has played a significant role in the social, economic and political development of India. However, Covid has led to a trail of unprecedented devastation in the state – Maharashtra contains less than 10% of India’s population, but accounts for almost a third of the nation’s pandemic related deaths. This reflects the massive urbanization in Maharashtra (a key indicator of socioeconomic development) vis-à-vis the rest of India.
It will soon be a year since the first lockdown was imposed in Mumbai and Maharashtra …an unforgettable era leading to a pervasive economic slowdown. Over the coming months, the lockdowns in various areas were gradually lifted, but there are now renewed fears of them being imposed again as threats of a new wave of Covid seem to be emerging again in parts of the state.
Maharashtra is a heavily industrialized state, and Covid hit the MSME sector hard. Due to the pandemic, the industrial growth dippedto a negative 11.3% growth, while the services sector fell to negative 9.0%. It was agriculture and allied activities which was basically responsible for ensuring that Maharashtra’s economy remained afloat during the pandemic. The monsoon was kind to Maharashtra this year, and the normal rainfall received ensured that during the kharif season of 2020-21, sowing was completed on 156.89 lakh hectares.
Maharashtra has continued on the path of fiscal consolidation due to which a key economic indicator viz. fiscal deficit as percent of GSDP has remained well within the limits (3% of GSDP) as laid down by the Maharashtra Fiscal Responsibility and Budgetary Management (MFRBM) Rules, 2006. The expected fiscal deficit in 2020-21 (BE) is 2.1% of GSDP. Thus, the state’s finances are being handled responsibly, and that will be a key factor enabling an economic revival under these circumstances.
The hospitality sector was the worst hit byCovid. Given its massive employment generating potential, the government decided to classify the sector as an industry in order to revive it. To start a new business earlier in this sector, about 70 approvals were required from 12 departments earlier. However, considering the impact of Covid on this sector, the government decided to reduce the number of approvals to 15 and approvable from just 7 departments.
Maharashtra has borne the brunt of Covid, but by all indications a bounce-back is imminent.The relatively poor performance of the industrial and agricultural sector has been partially compensated by the proactive and timely measures taken by the state government on the agricultural front.The spread of vaccination is also going to be a game-changer. Policymakers will need to carry out a fine balancing act between restoring public health and reviving the economy. We have faith in the resilience of the government and the people of Maharashtra to emerge even stronger from this ordeal.