Growth and Poverty in Maharashtra

Author: 
Srijit Mishra
Manoj Panda
Description: 
WP-2006-001
JEL codes: 
Abstract: 
Maharashtra is among the richest states in India in terms of per capita income, yet incidence of poverty in the state remains close to the national average. The states economy grew at a faster rate than the all-India average during 1980-1 to 1992-3, but it slowed down a bit during 1993-4 to 2003-4 due to poorer performance of agriculture and industry. Agricultures contribution to GSDP has come down to 12 per cent in 2002-3, but more than 50 per cent of total workers are still engaged in this. Cropping pattern has been shifting to greater value addition non-cereal crops like fruits, vegetables, oilseeds and sugarcane. Composition of manufacturing has shifted towards more capital-intensive sectors. Communication, transport and public administration have accounted for large part of service growth. The benefits of this growth process have, however, not spread equally across social groups or regions, which partly explains prevalence of high poverty compared to other states at similar mean income. The much talked about Maharashtra Employment Guarantee Scheme (MEGS) has had limited success and its coverage across districts/divisions is not proportionate to the share of poor. Despite these developments, rural poverty has reduced from 38 per cent in 1993-4 to around 24 per cent in 1999-2000. Given current investment flows, the overall growth potential of Maharashtra does look bright for the medium run. But, distributional implications of the emerging growth pattern across sectors suggest that the poor might not benefit proportionately from the growth process. The lessons that Maharashtra provides is that growth has to be more broad-based and inclusive, and that intervention through social welfare programmes like MEGS should be designed to suit the local resource base of poorer regions for faster poverty reduction.