Maharashtra and Haryana: How these two poll-bound states fared under BJP govts
Maharashtra & Haryana house 11% of population but contributed 18% to India's economic output in 2018-19.
Under the current government, Haryana’s gross state domestic product (GSDP) growth outpaced India’s gross domestic product (GDP) growth in all but one year between 2014-15 and 2018-19, according to the Central Statistics Office. Maharashtra has done the same in the past three years. All told, in the past five years, the Indian economy has expanded at an average annual rate of 7.5%, while Maharashtra’s and Haryana’s have grown at 7.6% and 8.7%, respectively.
That is why it is important to assess these two economies in the run-up to the polls on October 21 in 288 assembly constituencies in Maharashtra and 90 in Haryana. Around 108 million voters in both states will decide who will form the next government. Though the intricacies of the economy will hardly be a talking point during campaigning, there will certainly be acrimonious exchanges between parties about growth, or the lack thereof, in agriculture and job creation.
Haryana is ruled by the Bharatiya Janata Party (BJP) and Maharashtra by a BJP-Shiv Sena coalition. The BJP’s victory in the 2014 assembly elections in the two states, which followed the general election, was in no small measure due to Prime Minister Narendra Modi’s appeal among voters. The states, to be fair, have had their own allure on the industrial front.
Haryana and Maharashtra ranked fourth and fifth, respectively, on a 2018 index measuring states’ investment potential, according to the National Council of Applied Economic Research. Mumbai, Maharashtra’s capital, is India’s financial hub, and 14 of Haryana’s 22 districts are part of the National Capital Region. The two states are also have major auto hubs — the Gurgaon-Manesar-Bawal belt in Haryana and Chakan near Pune in Maharashtra.
Haryana, home to Maruti Suzuki’s and Hero MotoCorp’s plants, produces two thirds of the country’s passenger cars and 60% of its two-wheelers, according to the commerce ministry. But the states’ economies could be hit as passenger vehicle sales have declined for the 10th consecutive month in August. Captain Abhimanyu, finance minister of Haryana, says the fall in auto sales is only cyclical.
“There is no need to panic but at the same time, we are keeping a very close watch, though this does not affect my GDP numbers or revenue generation.” It is not clear how much auto contributes to Haryana’s economy (or Maharashtra’s). But Vishnu Goyal, head of the Haryana Chamber of Commerce & Industry, says the state should reduce its dependence on the sector. “The state is setting up food and pharma parks and promoting agro-processing.”
Haryana is developing 140 horticulture clusters at a cost of Rs 510 crore. Agriculture and allied activities accounted for 17% of Haryana’s GSDP in 2017-18, compared with 12% for Maharashtra. In Maharashtra, one of the biggest challenges facing Chief Minister Devendra Fadnavis is tackling discontent among farmers, which has manifested in huge rallies. He is betting on his farm-loan waiver, announced in June 2017, and a large water-conservation initiative to win farmers’ support. Earlier this year, Fadnavis said his government had disbursed Rs 24,000 crore under the loan waiver to 4.3 million farmers, with another Rs 8,000 crore to be spent.
Sudhir Mungantiwar, Maharashtra’s finance minister, could not be reached for comment. On the industrial front, the state has been procuring land through the Maharashtra Industrial Development Corporation (MIDC) for prospective investors. MIDC has acquired around 10,000 acres in the past three years.
But the state has had its share of setbacks, including its failure to convince Foxconn, the Taiwanese electronics contract manufacturing company, to set up a unit here. A proposed Rs 3 lakh crore refinery and petrochemicals complex in the coastal Ratnagiri district was put on hold after opposition by locals and the Shiv Sena. The CM has hinted at reviving the refinery in Ratnagiri but there is no clarity on Foxconn.
“This will definitely send the wrong signal to potential investors,” says Deepak Mukhi, head of the Maharashtra council of Ficci. He adds there have been concerns about the government’s plan to hold up to a 9% stake in any new industrial project with an investment of more than Rs 500 crore. But a senior bureaucrat in the state says the proposal was not included in the government’s latest communication on industrial policy.
Former Maharashtra chief minister and Congress leader Prithviraj Chavan says the state has failed on multiple counts. “Industrial growth in Maharashtra has declined and the state has slipped in the ease of doing business ranking.”
Maharashtra’s industrial growth fell from 7.6% in 2017-18 to 6.9% in 2018-19, and the state’s position on the ease of doing business index worsened from 10th to 13th between 2016 and 2018. Maharashtra and Haryana don’t have it easy in attracting businesses. Maharashtra faces competition from neighbouring Gujarat, which has long been perceived as business-friendly.
Haryana, led by Manohar Lal Khattar, has to offer companies enough incentives to choose the state over Punjab and Himachal Pradesh. Goyal says one advantage these two states have over Haryana are cheaper power tariffs. Haryana’s position on the ease of doing business index has jumped from the 6th to the 3rd spot.
“Inspector raj has come to an end in Haryana. But your compliance is expected to be 100%,” says Goyal, whose companies manufacture auto and railway components in Panchkula in northern Haryana.
One of the points of discussion in the election campaign will be jobs. Fadnavis recently said around a quarter of the jobs created in the country during his tenure have been in Maharashtra. The Congress has pressed him for details on the same.
According to a recurring unemployment survey conducted by the Centre for Monitoring Indian Economy (CMIE), Maharashtra’s unemployment rate has risen from 4.6% in January 2016, when the CMIE started the survey, to 5.3% in August 2019. India’s unemployment rate in the same period has fallen from 8.7% to 8.2%. The CMIE survey covers 43,600 households across the country every month. Haryana, which fares the worst among states, has seen its unemployment rate double to 28.7% in this period.
Yogendra Yadav, political scientist and president of Swaraj India, which is contesting the Haryana assembly polls, says: “We have been talking about unemployment in Haryana for a long time to show that government’s claims on jobs are fraudulent.” Contrary to the government’s claim that there are around 6 lakh unemployed in the state, he adds, CMIE’s May-August report pegs the figure at more than three times as many.
Jobs, the auto crisis and competition from other states are not Haryana’s only problems. Its public debt as a percentage GSDP has increased from 16% in 2014-15 to 23.4% in 2018-19. Maharashtra has pared it from 16.5% to 15.6% in the period, says the economic surveys of the states. But Maharashtra’s fiscal deficit has risen from 1.8% to 2.1% in this period; Haryana’s remains at 2.9%, after a spike in 2015-16.
In addition to the strong economic growth of the states in the past five years, the governments in both states have the benefit of having opposition parties that may not be able to put up much of a fight. In Maharashtra, the Congress and the Nationalist Congress Party (NCP) have seen a series of defections to the ruling coalition.
Nitin Birmal, a political analyst, says the BJP-Shiv Sena alliance could end up winning 200 of the 288 seats; in 2014, the parties fought separately. The Shiv Sena has been demanding more seats than the BJP is willing to give up, given the growing influence of the latter in the state. The coalition will also hope to reap the benefit of its decision to set aside 16% of government jobs and seats in educational institutes to the Maratha community. The decision was upheld by the Bombay High Court in June, but the judges said the number should be reduced to 12% in education and 13% in jobs.
The alliance might use the reservation to undercut NCP’s Maratha leader Sharad Pawar, the key opposition face in the election, in his stronghold of western Maharashtra. Earlier this week, the Enforcement Directorate filed a case against Pawar and his nephew Ajit, among others, in relation to irregularities at a cooperative bank.
“It is a clear case of browbeating the opposition,” says Chavan. On Friday, Ajit resigned as MLA. His uncle said the five-time Baramati MLA has left politics.
In Haryana, too, the election is the BJP’s to lose. “The opposition has lost the plot because they could not cut themselves off from dynasty, caste and regional politics. Due to these factors, they have lost the connect with the people of Haryana,” says Captain Abhimanyu. The party will take on a divided Indian National Lok Dal (INLD), which was the second-largest party in 2014 but has seen defections to the BJP lately.
The Congress, under former chief minister Bhupinder Singh Hooda, is hoping to regain its standing in the Jat community, which comprise a quarter of the population in the state. Jats, like Marathas, have been demanding reservation, which has resulted in violent agitations.
G SeetharamanThe BJP is banking on the support of non-Jat castes and will also try to make the best of the revocation of Article 370, which granted special status to Jammu & Kashmir. It will be interesting to see if BJP’s opponents in Maharashtra and Haryana can sweat the party any more than they did in the 2014 assembly elections or in the 2019 general elections. It will be equally fascinating to see how much of the poll discourse is centred on economic development.