As the Maharashtra elections are about to begin, it’s becoming an all-out battlefield. On one side the BJP is desperate to hold on to power after a shocking setback in the general elections, while on the other hand, the Congress is fighting to just keep BJP out of power. The media is also obsessed over the Shinde vs Udhav showdown, but they are ignoring a far bigger crisis that is threatening the very soul of Maharashtra - the economy is shattering.
There is a war happening in Maharashtra, but it is not just with the power it is happening in the economy of Maharashtra, on the streets, and in the lives of crores of Maharashtrians. The economy is cracking under the weight of real issues and while the political parties keep handing out freebies worth tens of thousands of crores to please the voters, the massive East-West divide is tearing Maharashtra apart.
What is the real state of Maharashtra's economy?
Maharashtra's gross domestic product or the state GDP: While India's GDP grew at 8.2% Maharashtra grew by 7.6% Tamil Nadu grew by 88.2% and up grew by 8% so is Maharashtra growing well absolutely yes even on a per capita basis Maharashtra is well ahead with a per capita income of 2.7 lakh rupees which is greater than the national per capita income of 1.84 lakh rupees and Gujarat and Tamil Nadu stand at 2.7 lakh rupees and 3.15 lakh rupees respectively. In terms of unemployment data, while Maharashtra and Tamil Nadu, both, are performing decently on par with national average, Gujarat is performing exceptionally well.
So, everything looks great. The growth is happening, per capita GDP is high, unemployment is decent and the state by itself is the top contributor to India. But, the issue is in the revenue management.
The revenue deficit problem
With the elections around the corner freebies are being rolled out right left and Center in Maharashtra and the disappointing thing over here is that these freebies are coming from the BJP which has always been against freebies.
This is not money that is BJP money or congress money, this is money that is funded by the taxpayers of Maharashtra by everyone who pays taxes in this country. However, there are good bad freebies.
The difference between political propaganda and actual welfare
The Majhi ladki bahin yojna is costing the state 46,000 crores per year.
This scheme provides eligible women with a monthly financial assistance of Rs.1500 rupees; this is very similar to the Congress scheme of providing 1 lakh rupees per year to the women at the bottom of the pyramid. But, this scheme has been useless because of three reasons.
Firstly, direct cash transfers do not Empower women, they create dependency without building skills or opportunities. Secondly, 46,000 crores yearly is a huge drain on the budget and that could be invested in education healthcare, and job creation which will actually empower women in the long run and lastly, short-term cash doesn't lift families out of poverty only jobs do, so this is a temporary fix which will eventually increase dependency and not empowerment.
The youth working scheme
It costs the state 10,000 crores per year but in return it provides job relevant skills through on the job training in both industrial and non-industrial setting, so it is a freebie that will eventually create jobs which is a good thing for the economy of Maharashtra.
The Annapurna Yojna
The government is distributing free gas cylinders for 52 lakh families, which might look bad, but it's actually very good because it prevents people from using kerosene and from burning firewood which causes a lot of internal pollution.
Girls’ free education scheme
Costing us 2,000 crores a year which is again good because it creates jobs and empowers women.
Pilgrimage Dhan Scheme
Residents of Maharashtra aged 60 years and above with an annual family income of up to 2.5 lakh rupees are eligible to get facilities for a pilgrimage with the cost being borne by the government itself and they say that this cost could be in the range of 30,000 rupees per person. From an economic standpoint, it's a disaster because it doesn't result into an economic output, it is not going to cause a dramatic shift in the lives of these elderly people and if it is costing us 30,000 rupees per person, it will cost us thousands of crores in taxes. So, it seems like an election gimmick.
The Baliraja Power Concession Scheme
About to spend 14,760 crores annually for 44 lakh farmers to give them subsidized electricity. But, in the long run it’s not good as paying bills won't make farmers self-reliant it just traps them in dependency, boosting income by subsidies is fake growth it's not real progress in farming and this money needs to be invested in technology and not paying electricity bills and lastly these 14,000 crores could be used to build better roads water and tools that can actually raise the incomes of farmers instead of giving them fake growth at the cost of the taxpayers money.
Now, Maharashtra is starting to sink
Even Maharashtra's own finance department has raised red flags for the same. According to their data, maharashtra's deficit has doubled since June 2024 from 1.1 lakh crores to 2 lakh crores and if Maharashtra fails to get its fiscal and revenue deficits under control, the state will only have two options - either they will have to cut back on highways, schools and hospitals or they will have to borrow more money, which will drag Maharashtra deeper into a debt trap.
Maharashtra has already started slashing budgets across critical sectors like agriculture by 15%, healthcare by 9% and urban development by 27%. Similarly, 400 contractors across four PWD divisions are still waiting for 500 crore rupees in payments for the works that were completed more than a year ago and across all departments pending bills are close to 40,000 crores.
Recently the contractors even protested in 29 districts over these unpaid dues and in spite of this financial mess the freebie announcements.
Terrible revenue management
Economists often use the ratio of capex to GDP ratio to determine how much the state is investing in infrastructure as a percentage of GDP. So, if Maharashtra's capital expenditure is 100 crores and its GDP is 1 thousand crores, the capex to GDP ratio will be 10%.
In the past 5 years, Maharashtra ranked 16 out of the 19 large states with a capex to GSDP ratio of just 1.5% and this is not good news. States like Uttar Pradesh stand at 3.8%, Karnataka stands at 2.5%, Gujarat at 1.7%, and even West Bengal at 1.7%, whereas Maharashtra only stands at 1.5%. So, if Maharashtra doesn't boost its capital investments soon, foreign direct investments will not come to Maharashtra and again the state will lose jobs and lose money.
The East-West divide of Maharashtra
Maharashtra is split into two regions - Western, which is the economic Powerhouse and Eastern Maharashtra which is even today struggling with underdevelopment.
In the west, the per capita income is high and in the East, you only have medium and low per capita income regions and this divide is so bad that while Mumbai has a per capita income of more than 4 lakh rupees, Gharoli stands a just 1.2 lakh rupees (Rs. 10,000 a month), which is three times more than the per capita income.
Also, wealth created in Maharashtra's urban centers is not reaching the struggling districts and if this continues unchecked, while the people in Mumbai will keep on struggling with high real estate costs and extreme traffic, the people on the other end will suffer with unemployment, no development and no growth at all.
What it means to be under the poverty line
A household of four, earning less than 13,120 rupees per month is considered to be below the poverty line and 26% of Maharashtra's population falls below this poverty line.
East Vs West comparison
Private hospitals are mostly in the western districts of Maharashtra and not so much in the East - Pune has 92 private hospitals and Nashik has 184 hospitals but, the east, Garoli has four and Nandurbar only has four. Even the national average for the number of beds in the state is 24 per 1 lakh people but in Maharashtra, there are only 14 beds per 1 lakh people.
Basically, Maharashtra is experiencing growth, it just needs to stretch towards the east otherwise there'll be a massive divide between the East and the west and both regions will suffer because of this divide.
So, the government must spend less on freebies and more on long-term economic upliftment programs or the government needs to develop the East and decongest the western part of Maharashtra and we desperately need to provide education and health care to the eastern part of Maharashtra.
We need a government that breaks these patterns in Maharashtra. Happy voting!
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