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Business News/ Opinion / Private investment is the key for development of backward regions
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Private investment is the key for development of backward regions

Will the Maharashtra government accept Kelkar panel's suggestions for improving investment in the backward regions of the state?

Both chief minister Devendra Fadnavis (pictured) and finance minister Sudhir Mungantiwar belong to Vidarbha; when they were in the opposition, they used to attack the government for its apathy toward their region. Photo: S. Kumar/MintPremium
Both chief minister Devendra Fadnavis (pictured) and finance minister Sudhir Mungantiwar belong to Vidarbha; when they were in the opposition, they used to attack the government for its apathy toward their region. Photo: S. Kumar/Mint

Mumbai: On the penultimate day of the winter session of the state legislature earlier this week, the Maharashtra government presented the report of a committee under the chairmanship of former finance commission chairman Vijay Kelkar on regional imbalances.

The reason for choosing the second last day to table the report was obvious. The state government wanted to avoid discussion on the issue of regional imbalance in the session.

One can hardly find fault with the Devendra Fadnavis government, as the issue of regional imbalance in Maharashtra’s politics is nothing less than a walk across a minefield; one wrong step can hurt you fatally or at least result in your losing a limb. That’s why the previous Congress-Nationalist Congress Party (NCP) government avoided tabling the report for a year when it was in office.

The Kelkar panel, which was constituted in May 2011, submitted its report to the government in October last year.

The Kelkar committee is not the first panel appointed by the Maharashtra government to gauge the extent of regional imbalance in the state. The first committee was set up in the mid-eighties under the chairmanship of former member of planning commission late V.M. Dandekar in the wake of the popular agitation for a separate Vidarbha state in the late seventies and early eighties under the leadership of Jambuwantrao Dhote.

The second committee was appointed by the first Shiv Sena-Bharatiya Janata Party (BJP) government that came to power in 1995. However, the scope of this committee was limited. The committee was only asked to find out whether backwardness of regions such as Vidarbha and Marathwada has reduced or increased since the Dandekar committee gave its findings.

The Dandekar committee in 1984 observed that regions such as Marathwada and Vidarbha were allocated 3,168.78 crore less from state’s budget compared with the rest of Maharashtra (RoM)—which comprises western Maharashtra, northern Maharashtra and Konkan—for irrigation, creation of road network, development of power distribution network and other developmental activities since the state of Maharashtra came into existence in 1960.

The Dandekar panel had recommended that a special outlay be made in the state’s budget for removal of the developmental backlog of these two regions. Though the government never announced whether it had accepted the findings of the Dandekar committee report, the term backlog became a part of the political lexicon in Maharashtra.

In fact, in the state’s budget for 1985-86, such special outlay was provided for removal of the so-called backlog, but Congress ministries, which were dominated by politicians from western Maharashtra, ensured these funds were not spent in those regions and at the end of the fiscal year they were diverted to schemes and projects in western Maharashtra.

This created an uproar and led to demands for the creation of statutory development boards (SDBs) under Article 371 (2) of the Constitution.

In 1994, the Sharad Pawar government created three SDBs, one each for Vidarbha, Marathwada and RoM. The SDBs give the state’s governor powers to go into financial allocation by the state government to various regions, and if he or she finds that a particular region has been favoured or neglected, then the governor can ask the state government to take corrective measures. However, despite the creation of such SDBs, the situation on the ground has not changed much.

The Kelkar panel, in fact, documents how this gap increased, especially after 2000. The report points out that in 2000-01 against assumed per capita income (PCI) of Re1 for RoM, PCI of Marathwada was just 66 paisa and PCI of Vidarbha 82 paisa. But in fiscal 2009-10, against an assumed PCI of Re1 for RoM, Marathwada’s and Vidarbha’s PCIs were 59 paisa and 76 paisa, respectively. This was despite large-scale migration from these regions to bigger cities in RoM such as Mumbai, Thane, Pune and Nashik.

However, the Kelkar panel’s approach significantly differs from that of the previous ones about the removal of the so-called backlog. It suggests that the government should focus on the creation of physical infrastructure rather than claiming it has allocated a particular sum for the development of backward regions.

Pointing out that RoM has not developed only on the basis of allocation of government resources, but also because it managed to attract large-scale private sector investment, the Kelkar panel recommends that the state government should create an atmosphere which will attract private investment in these backward regions. The report points out that at best, only 25% of investable funds in the economy are at the government’s disposal.

It will now be interesting to see whether the present state government falls into the same old trap of resource allocation for removal of backlog or accepts the Kelkar committee’s recommendations and creates an atmosphere which will help it to attract large-scale private investment in the backward regions of the state.

It will be particularly interesting to watch because both chief minister Devendra Fadnavis and finance minister Sudhir Mungantiwar belong to Vidarbha; when they sat on the opposition benches, they used to spearhead attacks on the government for its apathy toward their region, protesting against the diversion of funds meant for Vidarbha to western Maharashtra.

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Published: 28 Dec 2014, 11:51 PM IST
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