Saturday, May 20, 2006

Maharashtra, a failed state?

B N Yughandar, member of the Planning Commission, stated that Maharashtra is an example of a failed state.
While its economic growth rate of 8% makes it one of the highest in India, this is counterbalanced by staggering debts of up to Rs 80,000 crore.

Development in the state seems to have been accorded low priority, with bloated administrative expenses and debt servicing hogging a bulk of the state’s economic resources, the Planning Commission observed. This has left a measly 9% for investment in plan schemes, and, in an example of gross fiscal mismanagement, the state has not even been able to spend this paltry sum.

On the other hand, the state’s agricultural sector, once fairly vibrant, is faltering and now accounts for just 14% of Maharashtra’s economy. Foodgrain production has dropped by an alarming 7.5% over the past decade, while the official poverty rate stands at 4.7%.

Inadequate spending on infrastructure, both physical and social, has meant that Maharashtra’s human development indicators are far from impressive, especially in parts that primarily depend on agriculture.

A relatated report: 'Villagers don’t have enough to eat, EGS a sham'.
A Pune-based study group which walked through the Maharashtra heartland covering 163 villages in 11 districts for two months (January and February) found people living in sub-human conditions with even basic necessities like water, food and health care lacking.

The Planning commission's major recommendation is rapid privatization!! While I agree privatization is/maybe required, can't we learn from previous examples (Enron for one) and be careful about how things have to be handled, rather treating privatization as the magic wand. Why should all the existing infrastructure built using public money, be handed over to private players because succesive governments screwed up and are inefficient. Isn't another solution greater accountability and appropriate use of available funds?

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