Economic Impact of the Proposed Ratnagiri Refinery in Maharashtra Impact on Maharashtra’S Economy

National Council of Applied Economic Research

Economic Impact of the Proposed Ratnagiri Refinery in Maharashtra Impact on Maharashtra’s Economy

Report January 20210102 2021

1 2 Economic Impact of the Proposed Ratnagiri Refinery in Maharashtra Impact on Maharashtra’s Economies

Project for the Ratnagiri Refinery and Petrochemicals Limited Mumbai

January 2021

NATIONAL COUNCIL OF APPLIED ECONOMIC RESEARCH NCAER India Centre, 11-Indraprashtha Estate, New Delhi-110 002, India STUDY TEAM

Project Leaders: Saurabh Bandyopadhyay and Laxmi Joshi

Domain Experts: Devender Pratap, Pradip Kumar Biswas, and (Late) Prof M.R. Saluja

Senior Advisor: Shashanka Bhide

Core Team Members: Tarujyoti Buragohain and Ajaya K Sahu

Research Support: Ashutosh Vashisht

Editor: Anupma Mehta

Published by

Publications Coordinator

ii FOREWORD

he Indian petroleum refining industry has and the operational phases of the project starting done remarkably well in establishing itself from 2021 onwards. These are estimated at the as a major player globally. The last decade national level. has seen the emergence of India as the Tlargest exporter of petroleum products in Asia. The NCAER study also brings out these India’s refining capacity has grown from a modest economic benefits for the State of Maharashtra. 62 million metric tonnes per annum (MMTPA) in The NCAER study further discusses the impact of 1998 to about 250 MMTPA at present, comprising the RRPCL investment on economic conditions 23 refineries—18 in the public sector, 3 in the in the relatively backward districts in the western private sector and 2 as joint ventures. coastal region of Maharashtra. This covers the impact on economic opportunities, mobility, and India is planning to double its refining capacity the employment of the local population during both for crude oil to 450-500 MMTPA by 2030. India’s the construction and operational phases of the consumption of petroleum products is likely to rise project. to 335 MMTPA by 2030 and to 472 MMTPA by 2040 according to government estimates. I join the NCAER team in expressing my India needs to boost its refining capacity urgently appreciation for the insights and guidance received to meet the growing demand. from officials of RRPCL at various stages of this study. I would like to thank the RRPCL core team A new refinery at Ratnagiri with a refining led by Mr B K Namdeo and complemented by capacity of 60 MMPTA is one of the key projects Mr Satya Prakash, Mr Rupam Sutradhar, and Mr in this planned expansion of refining capacity. Pawan Goswami, who, throughout the entire study This is being promoted by the Indian PSUs, period, took part in discussions and interacted with Indian Oil Corporation Ltd, Bharat Petroleum the NCAER team to carry out this Economic Impact Corporation Ltd, and Hindustan Petroleum Assessment study. Corporation Ltd Global multinational companies, Saudi Aramco & the Abu Dhabi National Oil I would like to thank the NCAER team co-led by Company have also shown interest in the project, Dr Saurabh Bandyopadhyay and Dr Laxmi Joshi and will participate in its development through a and team members Mr Devender Pratap, Dr 50 per cent equity participation. Pradip Kumar Biswas, Dr Tarujyoti Buragohain, and Mr Ajaya Sahu for their diligence in carrying NCAER was requested by the Ratnagiri Refinery out this study. I would like to pay our last respects & Petrochemicals Limited (RRPCL) to conduct to late Professor M R Saluja, who was integral an economic impact analysis of the project to part of this study and contributed significantly to estimate the economic rate of return of RRPCL’s it but who sadly passed away before it could be investment during its investment horizon. In this completed. Finally, I am grateful to Dr Shashanka study, the NCAER team reports on the extensive Bhide, NCAER’s Research Director, who ensured estimation of the benefits of the RRPCL investment quality control and provided overall supervision in terms of overall output, incomes, employment for the study. and tax contributions during both the construction

New Delhi Dr Shekhar Shah January 2021 Director General NCAER

iii ACKNOWLEDGEMENTS

his report is the outcome of an in- Transaction Table for both India and the State of depth study conducted by NCAER for Maharashtra. The NCAER analysis is also based the proposed Ratnagiri Refinery and on in-house (both published and unpublished) Petrochemicals Limited (RRPCL) along data provided by the technical and financial team Tthe west coast of the State of Maharashtra in of RRPCL, which facilitated the study. The NCAER India. The study traversed through one of the team would like to express its deep sense of most difficult and challenging periods of human appreciation for the cooperation extended by the history resulting from the COVID-19 pandemic, following RRPCL officials: Mr P. Balasubramanian, but the NCAER team is happy to have completed Mr Gautam Roy, Mr Mohan Menon, Mr Subrata De, the project within the stipulated time frame. Smt Manisha Gangwar, and Mr Nikhil Dayanand. Notwithstanding the difficult situation, the NCAER and RRPCL teams interacted with each other The NCAER study team also gratefully through virtual meetings almost every week since acknowledges the encouragement received from March 2020 till the completion of the study. This Dr Shekhar Shah, Director General of NCAER, close interaction allowed NCAER to complete the and Shri B. Ashok, the CEO of RRPCL. Thanks are study efficiently. also due to Dr Anil Kumar Sharma, Secretary and Operations Director of NCAER, and Dr Sanjib Pohit, We greatly acknowledge the contribution of the Professor at NCAER, for their critical support. Last RRPCL core team led by Mr B.K. Namdeo, and but not the least, the study team is grateful to the supported by Mr Satya Prakash, Mr Rupam IT teams at both NCAER and RRPCL, which offered Sutradhar, and Mr Pawan Goswami, who actively technological and communications support for took part in all the discussions throughout the completion of the project in the midst of the entire study period, enabling the NCAER team to Coronavirus challenge. carry out this Economic Impact Assessment study.

The discussions with the RRPCL team facilitated a better understanding of the oil sector, which added to the value of the Economic Impact Analysis (EIA) that was carried out using the Input-Output

iv ABBREVIATIONS AND ACRONYMS

ADNOC Abu Dhabi National Oil Co LDPE Low Density Polyethylene ASI Annual Survey of Industries LLDPE Linear Low Density Polyethylene ATF Aviation Turbine Fuel LPG Liquefied Petroleum Gas BP Base Prices M Mixed Income BPCL Bharat Petroleum Corporation Limited M&Q Mining and Quarrying CAGR Compound Annual Growth Rate MEG Mono Ethylene Glycol CFC Consumption of Fixed Capital, MFG Manufacturing CGE Computable General Equilibrium MMTPA Million Metric Tonnes per Annum CMIE Centre for Monitoring Indian Economy MoSPI Ministry of Statistics and Programme CNG Compressed Natural Gas Implementation COE Compensation of Employees MPR Monthly Progress Report CON Construction MS Motor Spirit CSA Civil, Structural and Architectural NAS National Accounts Statistics CSO Central Statistics Office NCAER National Council of Applied Economic CV Coefficient of Variance Research DEG Di Ethylene Glycol NDT Non Destructive Testing EGW Electricity, Gas, Water Supply and NIC National Industrial Classification Other Utilities NIT Net Indirect Taxes EIA Economic Impact Analysis NSS National Sample Survey EIL Economic Threshold level NSSO National Sample Survey Office EO Ethylene Oxide OS Operating Surplus EPCM Engineering, Procurement, P&M Procurement and Management Construction and Management PCP Petrochemical Products ESA Ecologically Sensitive Area PFCE Private Final Consumption EV Electric Vehicle Expenditure F.o.B Free on Board PLFS Periodic Labour Force Survey FC Foreign Component PMC Project Management Contract GDP Gross Domestic Product PO Post Office GDVA Gross District Value Added POL Petroleum, Oil and Lubricants GFCE Government Final Consumption PP Purchasers’ Prices Expenditure PP Polypropylene Production GSDP Gross State Domestic Product PPAC Petroleum Planning and Analysis Cell GST Goods and Services Tax PTA Purified Terephthalic Acid GSVA Gross State Value Added PTA Pure Terephthalic Acid GVA Gross Value Added PVC Polyvinyl Chloride HDPE High Density Polyethylene R & D Research and Development HPCL Hindustan Petroleum Corporation RBI Reserve Bank of India Limited RRPCL Ratnagiri Refinery and HPEO High Purity Ethylene Oxide Unit Petrochemicals Limited HSD High Speed Diesel Saudi Aramco Saudi Arabian Oil Co IC Intermediate Consumption SUTs Supply and Use Tables IC Indigenous Component TTM Trade and Transport Margin IGST Integrated Goods and Services Tax UPS Usual Principal Status IOCL Indian Oil Corporation Ltd USS Usual Subsidiary Status IOTT Input Output Transaction Table VAT Value Added Tax

v CONTENTS

Study Team ii

Foreword iii

Acknowledgements iv

Abbreviations and Acronyms v

Executive Summary 1

Economic Impact Analysis of the Proposed Ratnagiri Refinery in Maharashtra: Implications for the State Economy 4 1. Introduction 5

1.1. Maharashtra: The Location Context for RRPCL 6

2. Explanations of a few Concepts 9

3. The Maharashtra Economy: A Synoptic View 11

4. Methodology for Estimation of Benefits 17

4.1 Estimation of Employment Contribution 18

5. Estimation of Economic Impact Using Type I Multipliers from the Maharashtra 19 IOTT for the Construction Phase

5.1 Economic Benefits during the Construction Phase 20

5.2. Estimation of Economic Impact Using Type II (Economic Effect due to Direct, Indirect and Induced Benefits) Multiplier for the Construction Phase 21

6. Economic Benefits during the Operation Phase 25

6.1 Impact of the Multiplier across Major and Downstream Activities in the State 25

7. Concluding Reflections 29

Appendices 30 Appendix A: Input Output Transaction Table (IOTT) and Mapping and Calibration 31

Appendix B: Regional Input Output Configuration: A Review of Literature on Methodology 37

Appendix C: A Note on Maharashtra Employment for 2015-16 39

Appendix D: Trade Flows between States 42

Table D1: Arms-length Trade Flows between States (C-forms, FY2015-16 in Rs Crores) 42 35 Importing States

vi Table D2: Intra-firm Trade Flows between States (F-forms, FY2015-16 in Rs Crores) 43 36 Importing States

Appendix E: The Gross State Domestic Product of Maharashtra (GSDP) and Its Growth Rate (%) 44

Appendix F: Receipts of Maharashtra Governments and Maharashtra GDP 45

Appendix G: Income (Value Added) and Tax Contribution to Maharashtra GSDP 46

References 47

List of Tables

3.1: Approved and Commissioned Projects in Maharashtra by Industry Types 14

5.1: Inter-state Trade Data of Maharashtra 19

5.2: Output, Income, Employment and Tax Multiplier Effects of Construction due to Type I Multiplier: Total Direct and Indirect Effects 20

5.3: Year-wise Increase in Output, Income, Employment and Tax Revenue due to Type I Multipliers 21

5.4: Output, Income, Employment and Tax Multiplier Effects of Construction due to Type II Multipliers: Total Direct, Indirect and Induced Effects 22

5.5: Year-wise Increase in Output, Value Added, Employment and Tax Revenue due to Type II Multiplier 23

5.6: Year-wise Increase in Output, Income, Employment and Tax Revenue due to Consumption Induced Multipliers (Type II – Type I) 23

5.7: Type I and Type II Multipliers 24

6.1: Feedstock, Operational Efficiency and Total Revenue from Petroleum and Petrochemical Products 25

6.2: Effects of Petroleum and Petrochemical Production on the State in Terms of Output, Value Added (Income) and Employment 26

6.3: Effect of Petroleum and Petrochemical Production on Tax Revenue (Figures in Rs Crore) 27

6.4: Consumption-induced Effects of Petroleum and Petrochemical Production 27

6.5: Year-wise Total of Direct, Indirect and Consumption-induced Effects of Production 28

A1: Simplified Input-Output Framework 31

A2: Supply Table, Rs Billion 33

A3: Use Table, Rs Billion 34

A4: Sectoral Mapping of IO Table for Maharashtra 35

C1: Labour Inputs and Their Share (%) in Three Constituent Categories in Maharashtra: 2015-16 40

vii E1: Actual and Projected GSDP of Maharashtra at Current Market Prices 44

F1: Receipts of Maharashtra Governments and Maharashtra GDP at Current Market Price (in Rs Crore: 2004-05 to 2019-20) 45

F2: State Share in Petrol 46

G1: Income (Value Added) and Tax Contribution to Maharashtra GSDP during the Construction Phase 46

G2: Income (Value Added) and Tax Contribution to Maharashtra GSDP during the Operation Phase 46

List of Figures

E1: Five-yearly Average Growth Rate in Consumption and Production of LPG, MS and ATF and Others during 2015-19 1

E2. Five-yearly Average Growth Rate of Production and Consumption of Basic Major Petrochemicals, Intermediates and Other Petro-Based Chemicals during 2014-19 2

E3: The Multiplier Effects of Investment of Rs 100 by RRPCL on Output, Income and Tax during the Construction and Operation Phases for Maharashtra 3

E4: Income and Tax Contribution to GSDP during the Construction and Operation Phases for Maharashtra 3

1.1: Five-year Average Growth Rate in Consumption and Production of LPG, MS and ATF and Others during 2014-19 5

1.2: Five-year Average Growth Rate of Production and Consumption of Basic Major Petrochemicals, Intermediates and Other Petro-Based Chemicals during 2014-18 6

3.1: Three-year Average per Capita Income by Districts (Rupees) (2016-17 to 2018-19) 11

3.2: Three-years’ Average Gross District Value Added (GDVA) (Rs. Billion) from 2016-17 to 2018-19 12

3.3: Average Growth Rate of GDVA from 2015-16 to 2018-19 at Constant (2011-12) Price 12

3.4: Average Growth of GDVA from 2015-16 to 2018-19 (at 2011-12 Prices) 13

3.5: GSDP Share (%) of Ratnagiri and Sindhudurg Districts in the Konkan Division 13

3.6: Share (%) of Industry in Gross State Value Added (GSVA) of Maharashtra 15

3.7: Growth of Industry and Its Components (Mining and Quarrying, Manufacturing, EGW and Construction) in Maharashtra 15

Chart 1: RRPCL Investment and Its Broad Linkages 16

5.1: Effect of Type I and Type II Multipliers effect on the Construction Phase 24

7.1: Income and Tax Contribution to the GSDP of Maharashtra during the Construction and Operation Phases of the Refinery 29

viii EXECUTIVE SUMMARY

ndia’s economic growth has fuelled a steady capacity additions. This will make India a net rise in energy consumption. However, despite importer. Similarly, more than 45 per cent of India’s this increase in the demand for energy, India’s petrochemicals demand, valued at US$ 7 billion, is per capita energy consumption is one third of currently fulfilled through imports and is expected Ithe world’s corresponding average consumption. to grow at a rapid pace in the coming years. Although India accounts for around 18 per cent of the world’s population, it consumes only around The 5-year average growth rate of production 6 per cent of the world’s primary energy. It is and consumption of basic major petrochemicals, expected that the growing economy, urbanisation intermediates and other petro-based chemicals and growth in energy-intensive sectors will during the period 2015-19 is shown in Figure E1. continue to propel a strong energy demand in the It may be observed that the overall consumption country. As a result, India’s fuel and petrochemical growth of petrochemical products during the demand is expected to significantly increase five-year period (2015-19) surpassed the growth over the next two decades. As per a study by the in production (4.2 per cent against 2.8 per cent). Petroleum and Planning Analysis Cell ((PPAC), Among the components, barring Intermediates, the India is expected to witness a shortfall of about consumption growth of all the other components 75 million metric tonnes per annum (MMTPA) surpassed production growth (Figure E2). by 2030 despite planned additions to its refining

FIGURE E1: Five-yearly Average Growth Rate in Consumption and Production of LPG, MS and ATF and Others during 2015-19

16 14.2 14

12 10.6

10 8.9 8.6

8 6.8 6.2 6 5.1 4.7 4.9 4.1 4.1 Growth Rate Growth 4 3.4 3.2 2.3 2 1.3 0.5 0 LPG MS ATF HSD Naphtha Lubes Bitumen Petcoke

Consumption Growth Production Growth

Source: Petroleum Planning and Analysis Cell (PPAC).

1 FIGURE E2: Five-yearly Average Growth Rate of Production and Consumption of Basic Major Petrochemicals, Intermediates and Other Petro-Based Chemicals during 2014-19

5.9

4.7 4.2 3.8 3.5 2.8

2.0 1.1 Growth Rate Growth

Basic Major Intermediates Other Petro-based Overall Petrochemicals Chemicals Petrochemicals

Consumption Growth Production Growth

Source: Petroleum Planning and Analysis Cell (PPAC).

In this context, the Ratnagiri Refinery and There will be plenty of opportunities downstream Petrochemicals Ltd (RRPCL) has been manufacturing industries and service providers. conceptualised to meet the growing demand for Various sections of the business community like fuels and petrochemicals in the country. With a suppliers, transporters, and industrialists will be capacity of 60 MMTPA, including 18 MMTPA of able to associate themselves with this project, petrochemicals, and an investment of Rs 3.5 lakh thereby tremendously increasing the scope crore (or US$ 50 Billion), RRPCL is envisioned for vendors and contractors to supply refinery to be the world’s largest greenfield integrated and petrochemical components, construction refinery and petrochemical project, and one that is and building material, and various tools and critical for enhancing India’s energy security and construction equipment for material handling, reducing its import dependence. servicing, and warehousing related to the operation and maintenance of the proposed The successful and timely completion of the refinery along with provision of transportation RRPCL project will deliver strong benefits to both services. In essence, therefore, the project will the State of Maharashtra and the country as a lead to openings for local level participation during whole, creating an immediate short-term impact both its construction and operational phases. fostering economic recovery and employment In addition, RRPCL will attract various domestic generation, while also functioning as an engine and offshore technology and business partners for long-term socio-economic development. to set up their branch offices in the vicinity of the refinery, which will help augment the income The strategic location of Maharashtra will add to shares of the neighbouring areas. the logistics advantage of the project, as most of the crude suppliers are located in the Middle The proposed refinery will make significant East and exporting products from Maharashtra economic contributions to the country and the will be easier due to the presence of well- State by generating employment and purchasing developed ports along the West Coast of India. goods and services on a large scale both while Setting up a refinery along the west coast of India the facility is being set up and when it begins will substantially boost the State’s economy, to operate. Since setting up of the refinery will specifically in the Ratnagiri and Sindhudurg generate employment, incomes, and tax revenues, districts which are lagging behind other districts it would also fuel economic activity in other in economic development. Investment in the sectors by creating a demand for their goods RRPCL will also enable development of the entire and services. The overall economic impact of industrial ecosystem.

2 the refinery is measured as a combination of involved in construction activities in the complex, three impacts: direct impact, indirect impact, and worth lakhs during its peak period of construction. induced impact resulting from the consumption that will be created due to its direct and indirect During the operation phase, the production of fuel impact on the economy. and petrochemical products by the refinery will contribute directly to the output of the industry and The economic impact of the investment has been indirectly to the rest of the economy by generating estimated for the construction phase, which is a demand for intermediate products. During the assumed to be five years, wherein a number of operation phase, the full capacity of production is contractors, vendors, and suppliers will work assumed to be reached after two years of operation, together to create this mega facility, and the say 2027, assuming that the construction of the investment will have a cascading effect on the refinery shall be completed by 2025. output, income, employment, and also tax revenue due to the multiplier effect, as has been explained For easy understanding, the multiplier effects may in detail in the main report. It is estimated that the be simplified, assuming an investment of Rs 100, project will generate direct employment, assessed and the resultant impact on output, income, and in terms of the number of workers directly tax revenue is shown in Figure E3.

FIGURE E3: The Multiplier Effects of Investment of FIGURE E4: Income and Tax Contribution to Rs 100 by RRPCL on Output, Income and Tax during the GSDP during the Construction Construction and Operation Phases for Maharashtra and Operation Phases for Maharashtra

8.74 389.3 8.69

263.3

166.2

Rupees 116 Percentage 1.42 27. 1 0.78 10.4

Output Income Tax Construction Operation

Maharashtra Construction Operation Income/GSDP (%) Tax/GSDP (%)

Source: NCAER estimates. Source: NCAER estimates.

The overall impact of tax contribution and income of 1.42 and 8.69 per cent impact, respectively, generation would contribute 0.78 per cent and is noted during the operation phase (at full 8.74 per cent of Gross State Domestic Product capacity) (Figure E4), which clearly indicates the (GSDP), respectively, during the construction positive economic effect the project will have on phase. Similarly, the tax and income contribution the economy of the State.

3 Economic Impact Analysis of the Proposed Refinery at West Coast of Maharashtra Implications for the State Economy

4 CHAPTER 1 INTRODUCTION

ndia’s economic growth has fuelled a steady This will make India a net importer. Similarly, more rise in energy consumption. However, despite than 45 per cent of India’s petrochemicals demand, this increase in the demand for energy, India’s valued at US$ 7 billion, is currently fulfilled through per capita energy consumption is one-third of imports and is expected to grow at a rapid pace in Ithe world’s corresponding average consumption. the coming years. Although India accounts for around 18 per cent of the world’s population, it consumes only around The five-year average growth rate of production 6 per cent of the world’s primary energy. It is and consumption of basic major petrochemicals, expected that the growing economy, urbanisation, intermediates and other petro-based chemicals and growth in energy-intensive sectors will during the period 2014-18 is also shown in continue to propel a strong energy demand in the Figure 1.1. It may be observed that the overall country. As a result, India’s fuel and petrochemical consumption growth of petrochemical products demand is expected to significantly increase during the five-year period (2014-18) surpassed over the next two decades. As per a study by the the growth in production (4.2 per cent against Petroleum Planning and Analysis Cell (PPAC), 2.8 per cent). Among the components, except India is expected to witness a shortfall of about 75 intermediates, the consumption growth of all million metric tonnes per annum (MMTPA) by 2030 the other components surpassed the production despite planned additions to its refining capacity. growth (Figure 1.2).

FIGURE 1.1: Five-yearly Average Growth Rate in Consumption and Production of LPG, MS and ATF and Others during 2014-19

16 14.2 14

12 10.6

10 8.9 8.6

8 6.8 6.2 Growth Rate Growth 6 5.1 4.7 4.9 4.1 4.1 4 3.4 3.2 2.3 2 1.3 0.5 0 LPG MS ATF HSD Naphtha Lubes Bitumen Petcoke

Consumption Growth Production Growth

Source: Petroleum Planning and Analysis Cell (PPAC).

5 FIGURE 1.2: Five-year Average Growth Rate of Production and Consumption of Basic Major Petrochemicals, Intermediates and Other Petro-Based Chemicals during 2014-18

5.9

4.7 4.2 3.8 3.5 2.8

2.0

Growth Rate Growth 1.1

Basic Major Intermediates Other Petro-based Overall Petrochemicals Chemicals Petrochemicals

Consumption Growth Production Growth

Source: Petroleum Planning and Analysis Cell (PPAC).

The Ratnagiri Refinery and Petrochemicals Ltd The successful and timely completion of the (RRPCL) has been conceptualised to meet the RRPCL project will deliver strong benefits to both growing demand for fuels and petrochemicals the State of Maharashtra and the country as a in the country. With a capacity of 60 MMTPA, whole, creating an immediate short-term impact including 18 MMTPA of petrochemicals, and fostering economic recovery and employment an investment of Rs 3.5 lakh crore (or US$ 50 generation, while also functioning as an engine Billion), RRPCL is envisioned to be the world’s for long-term socio-economic development. In largest greenfield integrated refinery and addition to the above, due to the presence of petrochemical project, and one that is critical for RRPCL, various downstream units will come up enhancing India’s energy security and reducing its under the Petro Park, which will lead to additional import dependence. investment and employment generation.

1.1. Maharashtra: The Location Context for RRPCL

The location of this refinery on the west coast port of India, which is connected to 34 Container of Maharashtra will be beneficial in terms of Freight Stations and 46 Inland Container Depots. providing ease of access to global markets; it The State has a total installed power capacity of would also offer high flexibility for the processing over 43,000 MW. of a wide variety of crude oil grades from diverse sources. Further, it would be easier to source The proposed refinery at Maharashtra will make crude oil from the Middle East due to the reduced significant economic contributions as an entity by distance from the Gujarat coast. The State also employing manpower and acting as a purchaser has other advantages. It is well-connected to all of goods and services both when the facility is set the major markets, with four international and up and when it begins to operate. Unparalleled in seven domestic airports. It has over 3,03,000 terms of scale and scope, the project will bring kilometres of road and 6,165 kilometres of railway together leading Indian and international players network. With a coastline of 720 kilometres and in a first-of-its-kind joint venture that would offer the presence of 55 port facilities, Maharashtra incomparable potential benefits. The project will accounts for about 22 per cent of the total cargo not only have a beneficial immediate impact but transportation of India. In addition, the Jawaharlal will also entail long-term socio-economic gains. Nehru Port Trust (JNPT) is the largest container

6 Setting up of the refinery will generate This NCAER study aims at providing an economic employment, incomes, and tax revenues. It will assessment of the proposed investment in refinery affect economic activity in other sectors also by infrastructure, in terms of the multiplier effect on creating a demand for their goods and services. output, income, labour inputs, and tax contribution. All these may lead to development of an industrial The Economic Impact Analysis tracks: (i) the city with all infrastructures like a smart city. The revenues generated by a business or economic overall economic impacts of the project have been activity and their disbursal as they flow through measured as a combination of three impacts: the economy at both the local and broader levels; direct impact, indirect impact, and induced impact. and (ii) jobs created, as well as any spending that supports local enterprises and generates new tax Whenever an investment accrues from the setting revenues at different levels of government. Thus, up of a new industry in the State or the country, this approach measures the benefits in terms of it has an effect on the economy in the form of the generation of output, incomes, employment, direct, and indirect impact, which translates and tax revenue. It quantifies the addition to output, further into an induced effect due to an increase employment, tax revenue, and income resulting in the consumption pattern by the citizens of from a proposed investment project. the country. Since the RRPCL project is a mega project with a huge investment, it is expected to This report has been prepared to estimate the have significant economic impacts in the form benefits of the project during both the construction of an increase in output, income, employment as well as the operation phases of the refinery. generation, and tax benefits to the State as During both the phases, the cascading consumption well as the country. It was in this context that effects of the direct, indirect, and induced benefits NCAER was entrusted by RRPCL with the task of of the project emanating from the circular economy estimating the economic benefits of this mega concept have also been established. Before we project for the economy of the State. move forward to the estimation section of this report, it is important to explain some of the important concepts used in this study.

7 8 CHAPTER 2 EXPLANATIONS OF A FEW CONCEPTS

2.1 Study Phases

2.1.1 Construction Stage: The construction of a refinery is a very labour-intensive phase. It is a major investment activity which requires large quantities of material, equipment, services, and technology. The construction period of the project is planned to be completed in five years. Assuming that the construction would start in 2021, it is expected to be completed in 2025. During this construction period, RRPCL will be injecting demand into the economy by incurring expenditures on the construction of structures, plant and machinery, and various services that would affect output, income, and employment. There will be tremendous employment generation worth lakhs of rupees during the peak construction period. The project will definitely increase the spending pattern of the people associated directly as well as indirectly with the project.

2.1.2 Operation Stage: The production of fuel and petrochemical products by the refinery will contribute directly to the output of the industry and indirectly to the rest of the economy by generating a demand for intermediate products. The economic impacts of production are based on the multipliers specific to this sector. During the operation phase, it is assumed that the full production capacity will be reached after two years of operation.

2.2 Benefits

2.2.1 Direct Benefits: The direct benefits from the project will be the result of increased activities within the sector in the form of a rise in: 1) the value of output; 2) additional incomes generated in the process; 3) the number of jobs created in the sector; and 4) the taxes that are paid due to the generation of these activities.

2.2.2 Indirect Benefits: The direct purchases of intermediate inputs and capital goods (backward linkages) by the refinery from producers in other sectors of the economy will boost a large number of other industries too. These businesses include equipment suppliers, construction services, management services, and many other types of services such as administrative, maintenance, banking, engineering, and R&D services that support refinery operations. These directly supported businesses, in turn, purchase goods and services from other sectors, thereby spurring additional economic activities in those sectors too. These effects that are likely to be generated indirectly across the economy due to the demand created by a new refinery are termed as “indirect effects”. The indirect impacts are measured in terms of indirect jobs, tax revenue, and output and value addition.

9 These impacts constitute a multiple of the direct impacts and are captured through four economic multipliers, viz., output, employment, income, and tax.1 An output multiplier indicates that if the revenue generation in a given sector increases by one rupee, then due to the direct and indirect linkages between this sector and other sectors of the economy, the overall revenue generation will increase by the multiplier factor. Similarly, the initial increase in employment, income and tax also have chain reactions on other sectors. Their total impact is ascertained by their respective multipliers.

2.2.3 Induced Benefits: These benefits arise when employees and business owners make personal purchases out of the additional income that is generated by this process, thereby generating new activities, employment, and tax revenue. While indirect effects are spillover effects of the production process, induced effects are consumption-induced. The economic impacts of petroleum refining are broader than those of most other sectors of the economy. This is because unlike the products from other sectors, alternative petroleum supplies or substitute products are not readily available in the case of an emergency. And, if petroleum prices go up, the effects are felt in the prices of food and other essential consumer goods, the cost of commuting, and the cost of moving goods to the market for businesses throughout the economy. Hence, from the economic perspective, the promotion of the refinery sector is an important component of the industrial promotion policy.

1Due to a change in the tax regime, the tax multiplier has not been explicitly used. Instead, the tax–GDP ratio has been used.

10 CHAPTER 3 THE MAHARASHTRA ECONOMY: A SYNOPTIC VIEW

aharashtra is one of the economically per capita income may be gauged by examining well-off states of India, and accounted the three-year average per capita income from for an over 14 per cent share of the 2016-17 to 2018-19. A relatively low per capita national GDP in nominal terms in income of less than Rs one lakh is observed M2018-19. Maharashtra’s per capita income grew in seven districts of the State, viz., Yavatmal, at a Compound Annual Growth Rate (CAGR) of Osmanabad, Beed, Buldhana, Hingoli, Washim, 9.6 per cent from Rs 99,597 in 2011-12 to Rs and Nandurbar; whereas a corresponding per 2,07,727 in 2019-20. Situated along the western capita income of more than Rs 2 lakh is observed coast of India, it is the third largest State of the in the districts of Mumbai, Thane, Pune, and country, comprising about 9.4 per cent of its total Nagpur (Figure 3.1). While Nandurbar has the geographical area. lowest per capita income of Rs 79,028, Mumbai has the highest of Rs 2,98,594. The ratio between The State has 35 districts, which are highest per capita income and lowest per capita characterised by huge economic disparity income is 1: 3.8 and the coefficient of variation amongst each other. The inter-district disparity of (CV) is 37 per cent, which is measured as the ratio of the standard deviation to mean.

FIGURE 3.1: Three-year Average per Capita Income by Districts (Rupees) (2016-17 to 2018-19) 298594 252355 236594 207695 198303 178374 177212 161361 155282 154608 151170 146794 143928 142161 138731 133568 125989 122301 119292 115818 115878 113329 109547 106380 105792 102136 99487 98961 97308 84729 83225 83176 80515 79028 Thane Nagpur Latur Jalna Dhule Kolhapur Satara Nashik Nanded Ratnagiri Buldhana Bhandara Gadchiroli Nandurbar Chandrapur Osmanabad Ahmednagar

Source: Economic Survey of Maharashtra, 2019-20.

11 The Gross State Value Added (GSVA) of Maharashtra has increased from Rs 11,440 billion in 2011-12 to Rs 18,020 billion in 2018-19 with a wide inter-district variation. The CV of the Gross District Value Added (GDVA) was 144 per cent. The lowest three-year average GDVA (2016-17 to 2018-19 at 2011- 12 constant prices) of Rs 76 billion was observed in Gadchiroli district, whereas the highest of Rs 3390 billion was observed in Mumbai (Figure 3.2).

FIGURE 3.2: Three-years’ Average Gross District Value Added (GDVA) (Rs. Billion) from 2016-17 to 2018-19 3390 2493 1968 858 845 591 566 540 464 452 419 371 366 303 299 254 240 231 212 210 211 194 181 168 169 154 139 123 114 116 112 87 82 76 Beed Pune Latur Jalna Akola Dhule Thane Sangli Satara Nashik Raigad Hingoli Gondia Nagpur Wardha Solapur Nanded Jalgaon Washim Mumbai Parbhani Kolhapur Amravati Ratnagiri Yavatmal Buldhana Bhandara Gadchiroli Nandurbar Sindhudurg Chandrapur Osmanabad Aurangabad Ahmednagar

Source: Economic Survey of Maharashtra, 2019-20.

Figure 3.3 presents the average growth rates of GDVA for a period of four years from 2015-16 to 2018-19. The lowest growth rate of 4.1 per cent was observed in Ratnagiri district and the highest of 11.7 per cent in Washim district. In some of the other economically weaker districts, viz., Nandurbar, Buldhana, Akola, Wardha, and Chandrapur, the growth rates were are much higher than the State average of 6.7 per cent.

FIGURE 3.3: Average Growth Rate of GDVA from 2015-16 to 2018-19 at Constant (2011-12) Prices 11.7 8.7 8.6 8.3 8.2 8.2 8.1 7.5 7.4 7.4 7.4 7.3 7.3 7.2 7.1 7.0 6.9 6.8 6.7 6.7 6.7 6.5 6.4 6.3 6.3 6.3 6.2 6.2 5.9 5.8 5.7 5.3 4.8 4.3 4.1 Beed Pune Latur Jalna Akola Dhule Sangli Satara Nashik Raigad Hingoli Gondia Nagpur Thanes Wardha Solapur Nanded Jalgaon Washim Mumbai Parbhani Kolhapur Amravati Yavatmal Buldhana Ahmedna Maharas.. Gadchiroli Ratanagiri Nandurbar Sindhudu.. Osmanab.. Bhandara.. Chandrap.. Aurangab..

Source: Economic Survey of Maharashtra, 2019-20.

12 Figure 3.4 presents the average growth rates of GDVA by divisions. The average growth rate was the lowest in Nasik division at 6.2 per cent and the highest in Amravati division, at 8.3 per cent.

FIGURE 3.4: Average Growth of GDVA from 2015-16 to 2018-19 (at 2011-12 Prices)

8.3 7.2 7.2 6.7 7.0 6.2

Nasik Division Pune Division Aurangabad Konkan Nagpur Amravati Division Division Division Division

Source: Economic Survey of Maharashtra, 2019-20.

There are variations among income shares of various divisions and among districts within the divisions in Maharashtra. The RRPCL investment will be undertaken in the Ratnagiri and Sindhudurg districts of the Konkan division, the two districts that have the lowest share of Gross State Domestic Product (GSDP) within the Konkan division, as seen in Figure 3.5. It may, however, be noted that Konkan has the highest income share among all the six divisions of Maharashtra.

FIGURE 3.5: GSDP Share (%) of Ratnagiri and Sindhudurg Districts in the Konkan Division

Mumbai Thane Raigad Ratanagiri Sindhudurg 51.0 50.9 50.8 50.7 50.7 50.7 50.6 50.8 37.5 37.5 37.5 37.5 37.5 37.4 37.4 37.3 6.9 6.9 6.8 6.8 6.8 6.8 6.8 6.8 3.4 3.2 3.2 3.2 3.2 3.2 3.1 3.0 1.8 1.8 1.8 1.8 1.7 1.7 1.7 1.7

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Source: Estimated using data from the Economic Survey of Maharashtra, 2019-20.

Note: The Mumbai district includes the city area and its suburbs, and the Thane district includes Palghar.

13 As has already been noted, Ratnagiri also had the lowest average rate of growth during the period 2015-16 to 2018-19. This, along with the lowest share of income in the division, suggests that the district is a suitable choice for making the proposed investment by RRPCL. In this context, it may also be pointed out that the State of Maharashtra accounts for an almost 18 per cent share of the approved projects and over 10 per cent of the proposed cumulative investment from August 1991 to August 2019 as compared to corresponding national level figures.2 However, there is a marked difference between the approved and commissioned projects, as depicted in Table 3.1 by the type of industries in Maharashtra.

TABLE 3.1: Approved and Commissioned Projects in Maharashtra by Industry Types

August 1991 to Commissioned Projects as a Approved Projects Commissioned Projects August 2019 Percentage of Approvals

Investment Investment Industry Type No. No. No. (%) Investment (%) (Rs Crore) (Rs Crore)

Information 571 3,98,912 337 61,706 59.0 15.5 Technology

Fuel 849 1,43,314 214 28,501 25.2 19.9

Metallurgical 1958 1,08,909 961 38,325 49.1 35.2

Chemical and 2939 71,557 1434 26,423 48.8 36.9 Fertilisers

Textiles 2096 60,211 978 19,108 46.7 31.7

Electrical and 1272 46,964 720 10,664 56.6 22.7 Electronics

Sugar 1604 41,670 263 9319 16.4 22.4

Transportation 437 33,401 296 25,236 67.7 75.6

Processed Food 1141 31,911 485 9032 42.5 28.3

Photographic Raw Film and 1010 30,306 581 14,366 57.5 47.4 Papers

Cement Gypsum 387 30,228 155 6876 40.1 22.7

Industrial 872 26,404 520 9743 59.6 36.9 Machinery

Pharmaceuticals 898 19,516 516 6980 57.5 35.8

Paper and Paper 572 18,226 287 8145 50.2 44.7 Products

Engineering 379 18,046 223 6245 58.8 34.6

Machine Tools/ Ceramics/ 546 17,789 338 7449 61.9 41.9 Miscellaneous Industries

Vegetable Oil and 391 16,964 214 2796 54.7 16.5 Vanaspati

Others 2579 1,88,190 577 15,948 22.4 8.5

Total 20,501 13,02,518 9099 3,06,862 44.4 23.6

Source: Economic Survey of Maharashtra, 2019-20.

2Economic Survey of Maharashtra, 2019-20, p. 7.

14 Table 3.1 shows that a little over 44 per cent of the approved projects are commissioned, and only about 24 per cent of the proposed investment actually materialises. It may also be observed that the share of industry in Maharashtra, which was 35.8 per cent of the Gross State Value Added (GSVA) in 2011-12, came down to 30.4 per cent in 2018-19 (Figure 3.6). In this backdrop, the RRPCL investment, with substantial backward and forward linkages, assumes critical significance.

FIGURE 3.6: Share (%) of Industry in Gross State Value Added (GSVA) of Maharashtra

35.8 35.1 34.4 33.8 33.4 30.7 30.9 30.4

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Source: Economic Survey of Maharashtra, 2019-20.

Among the components of industry in Maharashtra, the growth rate of manufacturing and construction was seen to have tapered off from 2016-17 (Figure 3.7). This has contributed to a significant decline in its share. Growth in the mineral and mining sector was observed to have been impacted as growth in output of iron ore, chromite, and coal was offset by a contraction in the production of natural gas, crude oil, zinc, and manganese ore.

FIGURE 3.7: Growth of Industry and Its Components (Mining and Quarrying, Manufacturing, EGW and Construction) in Maharashtra

M&Q MFG EGW CON Overall

0 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

-5

-10

Source: Economic Survey of Maharashtra, 2019-20. Note: M&Q =Mining and Quarrying, MFG=Manufacturing, EGW =Electricity, Gas, Water Supply and other utility services and CON=Construction.

15 In this backdrop, the RRPCL investment in the able to associate themselves with this project, refinery and downstream manufacturing industries thereby tremendously increasing the scope assumes a great deal of importance for the State for vendors and contractors to supply refinery in terms of improving the share of manufacturing and petrochemical components, construction production and also harmonising the share of and building material, and various tools and divisional/regional income. construction equipment for material handling, servicing, and warehousing related to the There will be plenty of opportunities downstream operation and maintenance of the proposed manufacturing industries and service providers. refinery along with provision of transportation Various sections of the business community like services. A broad linkage of RRPCL investment is suppliers, transporters, and industrialists will be narrated in Chart 1.

CHART 1: RRPCL Investment and Its Broad Linkages

RRPCL Investment

Downstream Suppliers Vendors and Service Manufacturing Transporters and Contractors Providers Industries Industrialists

Source: NCAER conceptualisation.

A project of such magnitude would require The proposed project will thus give rise to openings various subsidiary facilities such as food for local level participation during its construction supply, catering, medical services, horticulture, and operational phases. In addition, RRPCL would communication and courier services, banks and attract various technology and business partners commercial establishments, training agencies, both from other parts of the country and offshore skill development companies, security agencies, countries for setting up their branch offices in the office assistance and maintenance, among others. vicinity of RRPCL, which, in turn, would also help In the later stage, the investment would also enhance income shares of the neighbouring areas attract downstream petrochemicals producers, as in the long run. mentioned above.

16 CHAPTER 4 METHODOLOGY FOR ESTIMATION OF BENEFITS

he Input Output Transactions Table (IOTT) unincorporated sectors for Maharashtra. The has been used extensively for estimation of manufacturing sectors, which were estimated the economic benefits emanating from due by adding both the ASI and unincorporated to investment in an economy. NCAER has sectors, represented around 72 per cent of the Tused the 2015-16 IOTT for this study (Appendix A). total manufacturing GVA of the State. These GVA estimates of the disaggregated sectors have The Input-Output model is a quantitative economic finally been scaled up to the GVA of manufacturing model which represents the interdependencies of of Maharashtra. No separate organised and various sectors in an economy. A key use of the unincorporated data was available for services. input-output model is in computing the effects The estimation of disaggregated GVO and GVA of the change in demand of a sector on other services has been prepared by the State as well sectors in an economy. The Ministry of Statistics as national IO ratios. Here too, the GVA services and Programme Implementation (MoSPI) provides sectors have finally been benchmarked to the Supply and Use Tables (SUTs) for India, and the State GVA for the services sectors. This is how IOTT 2015-16 has been constructed using the GVO and DVA data for 81 sectors for Maharashtra latest publication of SUT 2015-16. The SUTs were estimated, which are finally benchmarked to show where goods and services are produced Maharashtra data for 2015-16. After preparing the and where they are used for intermediate and final outer boundaries for the Maharashtra I-O tables, consumption. Additionally, key macroeconomic we further estimated technology coefficients for aggregates can also be found in these tables, the State. Another data set used while estimating including the GDP, GVA, and trade (exports and Type II multipliers is NSSO data for household imports) data. consumption in Maharashtra.

The IOTT for Maharashtra has been synchronised It is worth mentioning here is that it hardly matters with the national IOTT and 132 sectors of whether we use the national I-O table or the State the national IOTT vis-à-vis 81 sectors of the I-O table for estimating multipliers. The national I-O Maharashtra IOTT have been mapped either table better represents the technology coefficient, individually or broadly. While designing the which captures the median values of any activity sectors for Maharashtra, activities specifically originating at the sub-national or State boundaries. originating in the State have primarily been taken On the other hand, the advantage of using the into consideration. For example, while considering regional or State I-O table is that it represents the the agricultural sectors, we considered sectors sector or activities originating in that specific State. that primarily account for a higher share in Further, using the State I-O table is useful as it can Maharashtra’s economy. In the case of livestock, estimate the size of the specific sector/s being forestry, and fishery, the sectors have been broadly analysed analysing in terms of the GVA. Finally, grouped. In the case of mining and minerals, the under both the national and State I-O tables, an output of the State sectors has been primarily effort was made to undertake the final analysis considered. Since no direct data was available for through a precise matching of 37 sectors. crude petroleum, an effort was made to estimate the output of the sectors based on other sources. The IOT models provide multipliers related to These sectors were scaled up with the respective output, income, and employment that can be used mining GVA of the State. to estimate the economy-wide effects of an initial change in economic activity on a regional economy. Accordingly, while estimating the IOTT for the State The initial change involves a change in final of Maharashtra, the sectoral mapping followed demand, such as a new construction project, an while aggregating the sectors from 81 to 37 has increase in government purchases, or an increase been given in Appendix A. in exports.

The disaggregated sectors for manufacturing have been estimated using the Annual Survey of Industries (ASI) data and include the

17 4.1 Estimation of Employment Contribution

While explaining the employment contribution employment numbers for 2015-16. The estimates of the RRPCL project, NCAER used the unit level are derived from the National Sample Survey data of the Periodic Labour Force Survey for (NSS) employment status (UPS+USS) data, along 2017-18. NCAER interpolated this data for 2015- with data on the multiple workers, which become 16 by employing suitable population weights. numbers of jobs. The employment numbers estimated for 2015- 16 have been taken from the latest numbers A detailed note on the employment contribution provided for this year. A suitable concordance link has been provided in Appendix C of the report. has been prepared between NIC 2008 and the 132-sector I-O Table of 2015-16. Type I multipliers account for the direct and indirect impacts based on how goods and In case of employment, NCAER used job criteria services are supplied within a region. Type II for estimating the employment numbers. The multipliers account for not only these direct and concept entails adding multiple workers into indirect impacts but also for induced impacts the NSS definition of Usual Status workers, based on the purchases made by employees. that is, Usual Principal Status (UPS) and Usual The Type I multiplier is estimated by dividing the Subsidiary Status (USS). The methodology for sum of the direct effects (change in final demand) estimating the workforce numbers is explained along with indirect effects, which captures in Kohli, Sharma and Sinharay (2008). We used additional economic activities emanating from the labour input numbers for broader categories the direct effects. for these two rounds for extrapolating the

18 CHAPTER 5 ESTIMATION OF ECONOMIC IMPACT USING TYPE I MULTIPLIERS FROM THE MAHARASHTRA IOTT FOR THE CONSTRUCTION PHASE

lthough the cost of the project is expected The contribution of the RRPCL investment to the to be Rs 3,50,000 crore, the amount to be State economy out of the I-O analysis has been spent on domestically produced goods determined on the basis of the following findings: and services (excluding land) is expected Ato be around Rs 2,68,050 crore at the national level • As per the Economic Survey 2016-17, the inter- and around Rs 1,86,777 crore in Maharashtra, state trade data of Maharashtra for the financial accounting for 69.68 per cent of the total). year 2015-16 reveals that the State imports 30.32 per cent of its Gross State Domestic NCAER has estimated that the contribution of Product (GSDP) from the other states. Maharashtra to the national economy is 14 per cent, based on MoSPI data. Further, NCAER • Since the trading pattern does not alter much, has estimated the contribution of the RRPCL the above observation implies that there will be investment to the State economy on the basis of leakage and the value of the multiplier will be the inter-state trade data of Maharashtra and the reduced by the same proportion mentioned resulting leakage due to State imports, including above, that is, 30.32 per cent. services which account for 30.32 per cent. Accordingly, the proportion of benefits accruing to • Accordingly, the proportion of benefit accruing Maharashtra will be 69.68 per cent, that is, 100- to Maharashtra will be 69.68 per cent, that 30.32 in terms value added and taxes. is, 100-30.32) in terms of income (as explained in Appendix D).

The calculation is explained in Table 15.1.

TABLE 5.1: Inter-State Trade Data of Maharashtra

S. No. Description Values

Total Inter-firm Import of Maharashtra 1 2,94,904 (Rs Crore) in 2015-16

Total Intra-firm Import of Maharashtra 2 3,01,144 (Rs Crore) in 2015-16

Total value of Inter-firm and Intra-firm Import 3 5,96,048 (Rs Crore) [(1)+(2)]

4 Maharashtra-GDP in 2015-16 (Rs Crore)* 19,66,147

5 Ratio (Total Import/Maharashtra-GDP) [(3)/(4)] 0.3032

6 Net Balance [=1-(5)] 0.6968

Note: * Appendix E.

19 5.1 Economic Benefits during the Construction Phase

The expenditure on domestic goods and services The imported machinery and equipment will can be segregated into seven broad groups, have an indirect effect on income by raising the classified according to the 37 x 37 Maharashtra transport demand, which has been captured I-O table as follows: in the expenditure incurred on the relevant component of the service sector. The table (i) Non-electrical machinery, displays the output and income multipliers and (ii) Electrical machinery, their effects. In addition, the likely generation of tax revenue has also been presented in the table. (iii) Construction,

(iv) Transport, Table 5.2 indicates that the multiplier effect of (v) Storage and Communication, the investment on the economy in terms of an (vi) Knowhow and Consultancy and increase in output is Rs 4,13,615 crore and in terms of an increase in income or value-added, (vii) Insurance and Finance. it is Rs 1,67,361 crore, over a five-year period. The year-wise calculation has been done on the The expenditure incurred on each of these items basis of the yearly capital phasing of expenditure. is depicted in Table 5.2. This project expenditure The major increase in both output and income will have direct and indirect effects (through will however take place in the third year and multipliers) on the economy of Maharashtra. The fourth years, as delineated in Table 5.3. Further, impact of each sector’s expenditure on the State it will generate a tax revenue worth Rs 14,962 economy has been estimated separately and is crore. The year-wise increase in output, income, also presented in Table 5.2. employment, and tax revenue due to Type I multipliers has been presented in Table 5.3.

TABLE 5.2: Output, Income, Employment and Tax Multiplier Effects of Construction due to Type I Multiplier: Total Direct and Indirect Effects

Direct and Direct and Direct and Employment Direct and Domestic Indirect Indirect Indirect Output Income Multiplier indirect Sectors Expenditure Increase in Increase in Increase in Multiplier Multiplier per Rs Lakh increase in Tax (Rs Crore) Production Income Employment Expenditure (Rs Crore) (Rs Crore) (Rs Crore) (Numbers)

Non-electrical 52,260 2.49 0.85 0.13 1,29,871 44,306 6,81,356 3,961 Machinery

Electrical 18,814 2.70 0.87 0.17 50,776 16,376 3,24,689 1,464 Machinery

Construction 74,035 2.23 0.90 0.26 1,64,729 66,993 19,59,870 5,989

Transport 9558 2.02 0.92 0.24 19,309 8749 2,29,247 782

Storage and 4349 2.04 0.92 0.11 8887 4004 49,142 358 Communication

Knowhow, 8724 1.40 0.96 0.07 12,255 8392 65,332 750 Consultancy

Insurance and 19,037 1.46 0.97 0.08 27,789 18,542 1,44,275 1,658 Finance

Total 1,86,777 2.21 0.90 0.18 4,13,615 1,67,361 34,53,911 14,962

Source: NCAER estimates. Note*: The conventional tax multiplier could not be used because of the change in the tax regime. The estimation of tax revenue is based on the tax-GSDP ratio of 8.94 per cent in 2019-20 for the State of Maharashtra.

20 TABLE 5.3: Year-wise Increase in Output, Income, Employment and Tax Revenue due to Type I Multipliers

Percentag Output Income Employment Tax Year Share (Rs Crore) (Rs Crore) (Number) (Rs Crore)

2021 7.50 31,021 12,552 2,59,043 1122

2022 22.50 93,063 37,656 7,77,130 3366

2023 25.00 1,03,404 41,840 8,63,478 3741

2024 30.00 1,24,085 50,208 10,36,173 4489

2025 15.00 62,042 25,104 5,18,087 2244

All 100.00 4,13,615 1,67,361 34,53,911 14,962

Source: NCAER estimates based on the information provided by RRPCL.

5.2. Estimation of Economic Impact Using Type II (Economic Effect due to Direct, Indirect and Induced Benefits) Multiplier for the Construction Phase

The project expenditure will have direct indirect most of the domestically produced goods and and consumption-induced effects (multipliers) services purchased are taxed as per GST, that on the State economy. The impact of each of is, only on the value added component of the the seven sectors’ expenditures on the State products (and thus, it has an inbuilt mechanism economy has been estimated separately and is of giving a tax offset for the intermediate inputs presented in Tables 5.4 to 5.7. used, for which the tax has already been paid).

In this context, it may be noted that the total The same concept may be retained for Type direct and indirect tax collection of Maharashtra II multipliers. As mentioned above, the tax on during 2019-20 was Rs 2,57,455 crore, and the output is not applicable here, and only the tax corresponding GSDP value stood at Rs 28,78,583 on GVA or income is applicable. The tax revenue crore at current prices. This amounts to a tax- due to a consumption-induced increase in GSDP ratio of 8.94 per cent in 2019-20, and the income is estimated to be Rs 12,831 crore. same has been applied on the income multiplier The consumption-induced increase in income (not on the output multiplier) to estimate tax worth Rs 1,43,529 crore, has been estimated by revenue (Appendix F). subtracting the Type I multiplier effect from the Type II multiplier effect (Tables 5.4 and 5.5). A point that needs to be noted at the outset is that while comparing the tax benefit in our Table 5.4 shows that the multiplier effect of computation, we have not accounted for import the investment on the economy in terms of an leakages. Further, it should also be noted increase in output is Rs 7,05,520 crore and in that while estimating the tax revenue in the terms of an increase in income, it is Rs 3,10,890 operation phase, we have used tax collection as a crore, over a five-year period. The major increase proportion to the output or revenue because in the in output and income will start in the second year, case of petroleum products, tax rates are imposed reaching a peak in the third and fourth years, as primarily on output, not on income (that is, value- depicted in Table 5.5. added). In the case of construction, however,

21 TABLE 5.4: Output, Income, Employment and Tax Multiplier Effects of Construction due to Type II Multipliers: Total Direct, Indirect and Induced Effects

Employment Direct, Direct, Direct, Direct, Multiplier Indirect Indirect and Indirect and Indirect and Domestic (Number and Output Income Induced Induced Induced Sectors Expenditure of Persons Induced Multiplier Multiplier Increase in Increase in Increase in (Rs Crore) Employed Increase in Production Employment Tax per Rs Lakh Income (Rs Crore) (Numbers) (Rs Crore) Expenditure) (Rs Crore

Non-electrical 52,260 3.96 1.57 0.44 2,07,000 82,302 23,21,058 7358 machinery

Electrical 18,814 4.22 1.62 0.49 79,313 30,420 9,30,737 2720 machinery

Construction 74,035 3.80 1.68 0.60 2,81,218 1,24,447 44,39,214 11,126

Transport 9558 3.61 1.70 0.58 34,533 16,252 5,53,026 1453

Storage and communi- 4349 3.65 1.71 0.45 15,862 7437 1,97,310 665 cation

Knowhow and 8724 3.17 1.79 0.43 27,640 15,590 3,75,925 1394 Consultancy

Insurance and 19,037 3.15 1.81 0.44 59,954 34,443 8,30,478 3079 Finance

Total 1,86,777 3.78 1.66 0.52 7,05,520 3,10,890 96,47,747 27,794

Source: NCAER estimates.

Note *: The conventional tax multiplier could not be used because of the change in the tax regime. The estimation of tax revenue is based on the tax-GDP ratio of 8.94 per cent in 2019-20.

22 TABLE 5.5: Year-wise Increase in Output, Value Added, Employment and Tax Revenue due to Type II Multiplier

Percentage Output Income Employment Year Tax (Rs Crore) Share (Rs Crore) (Rs Crore) (Numbers)

2021 7.5 52,914 23,317 7,23,581 2085

2022 22.5 1,58,742 69,950 21,70,743 6254

2023 25.0 1,76,380 77,722 24,11,937 6948

2024 30.0 2,11,656 93,267 28,94,324 8338

2025 15.0 1,05,828 46,633 14,47,162 4169

All 100.0 7,05,520 3,10,890 96,47,747 27,794

Source: NCAER estimates based on the information provided by R.

TABLE 5.6: Year-wise Increase in Output, Income, Employment and Tax Revenue due to Consumption Induced Multipliers (Type II – Type I)

Percentage Output Income Employment Tax Year Share (Rs Crore) (Rs Crore) (Numbers) (Rs Crore)

2021 7.50 21,893 10,765 4,64,538 962

2022 22.50 65,679 32,294 13,93,613 2887

2023 25.00 72,976 35,882 15,48,459 3208

2024 30.00 87,571 43,059 18,58,151 3849

2025 15.00 43,786 21,529 9,29,075 1925

All 100.00 2,91,905 1,43,529 61,93,836 12,831

Source: NCAER estimates based on the information provided by RRPCL.

23 The summarised Type I and Type II multipliers are shown in Table 5.7.

TABLE 5.7: Type I and Type II Multipliers

Employment Multiplier (Number of Persons Sectors Output Multiplier Income Multiplier Employed per Rs Lakh Expenditure)

Type I Type II Type I Type II Type I Type II

Non-electrical 2.39 4.89 0.88 2.16 0.20 0.71 Machinery

Electrical 2.16 4.75 0.91 2.23 0.19 0.75 Machinery

Construction 2.21 4.86 0.93 2.28 0.15 0.95

Transport 2.04 4.72 0.94 2.3 0.12 0.83

Storage and 2.07 4.76 0.94 2.31 0.38 0.69 Communication

Knowhow and 1.40 4.19 0.98 2.40 0.27 0.67 Consultancy

Insurance and 1.48 4.27 0.98 2.41 0.08 0.69 Finance

Total 2.13 4.76 0.92 2.26 0.17 0.81

Source: NCAER estimates based on the information provided by RRPCL.

The effect of Type I and Type II multipliers on the construction phase is presented in a graphical form in Figure 5.1.

FIGURE 5.1: Effect of Type I and Type II Multipliers effect on the Construction Phase

Production Income Tax Employment

12752

217

172

7040

6059 5712

3591

2468

46 1153 470 683

Type I Consumption Induced Type II

Source: NCAER estimates based on the information provided by RRPCL.

24 CHAPTER 6 ECONOMIC BENEFITS DURING THE OPERATION PHASE

6.1 Impact of the Multiplier across Major and Downstream Activities in the State

The impact of RRPCL on the State economy throughout its lifetime. We shall, however, confine in terms of generating output, value added, our estimates of the multiplier effects to twelve employment, and tax during operation phase is years beginning with 2025, when the refinery will depicted in Tables 6.1 to 6.5. In the operation start operating. However, its operation will attain phase, the tax estimation is based on the nature the maximum or full capacity in 2027. Table 6.1 of output. shows that despite capacity utilisation being 100 per cent after 2027, the values of inputs, particularly Unlike construction, which has one shot multiplier crude and other feedstocks, and outputs, that is, effects on the economy, the operation of the revenues, would rise over the years, which would refinery will continue to generate multiplier effects necessitate inflationary adjustments.

TABLE 6.1: Feedstock, Operational Efficiency and Total Revenue from Petroleum and Petrochemical Products

Operational Total Revenue from Total Revenue from Crude Efficiency Feedstock Total Revenue Year Petroleum Products Petrochemicals (Rs Crore) (% Capacity (Rs Crore) (Rs Crore) (Rs Crore) Products (Rs Crore) Utilisation)

2025 1,34,995.0 60% 1,39,962.8 2,05,240.5 1,31,742.6 73,497.9

2026 1,87,461.2 80% 1,94,315.3 2,85,476.1 1,81,906.4 1,03,569.8

2027 2,41,343.0 100% 2,50,165.2 3,68,712.8 2,33,424.5 1,35,288.4

2028 2,52,256.1 100% 2,61,432.7 3,84,620.8 2,43,035.1 1,41,585.7

2029 2,68,163.6 100% 2,77,803.9 4,05,590.6 2,56,799.8 1,48,791.0

2030 2,79,902.9 100% 2,89,872.4 4,21,746.1 2,67,243.1 1,54,502.9

2031 2,86,940.4 100% 2,97,196.7 4,32,290.9 2,73,733.7 1,58,557.4

2032 2,93,977.2 100% 3,04,503.6 4,42,925.8 2,80,282.5 1,62,643.3

2033 3,01,142.3 100% 3,11,923.9 4,53,873.6 2,87,022.9 1,66,850.7

2034 3,08,344.9 100% 3,19,391.6 4,64,714.2 2,93,721.1 1,70,992.9

2035 3,15,924.1 100% 3,27,238.9 4,76,153.6 3,00,762.7 1,75,391.6

2036 3,24,118.3 100% 3,35,728.6 4,88,405.8 3,08,369.3 1,80,036.5

Source: Information provided by RRPCL. Note: Full capacity, that is, 100 per cent capacity utilisation is slated to be reached by 2027.

25 Table 6.2 shows that the annual income generated round of multiplier effects on production, income, due to operation of the refinery would steadily and employment, as depicted in Table 6.4. The rise from Rs 1,42,841 crore in 2025 to Rs 3,39,915 consumption-induced effect on income or value crore in 2036. Employment generation would added would be Rs 1,05,043 crore in 2025 and Rs be around 21,33,815 persons in 2027, and it will 2,49,968 crore in 2036. Similarly, there would be remain constant throughout the operation phase an additional employment generation of 45,37,929 from 2025 to 2036. This would lead to generation persons in 2025, which would go up to 81,52,350 of total tax revenue worth Rs 31,224 crore in 2025, persons in 2027, and remain stable at that level which would steadily rise to Rs 73,756 crore in 2036 till the end. The consumption-induced increase in (Table 6.3). This rise in income would have its ripple income would result in an additional tax revenue effects on the overall economy, as a major part of worth Rs 40,615 crore in 2025 and Rs 96,103 crore it would be spent on the consumption of various in 2036 (Table 6.5). goods and services, thereby generating another

TABLE 6.2: Effects of Petroleum and Petrochemical Production on the State in Terms of Output, Value Added (Income) and Employment

Indirect Output Income Direct Income Employment Income (Rs Year (Rs Crore) (Rs Crore) (Rs Crore) (Number) Crore) (1) (2) (3) (5) (4)

2025 3,68,274 1,42,841 65,472 77,369 11,87,768

2026 5,12,245 1,98,682 91,067 1,07,616 16,52,107

2027 6,61,601 2,56,613 1,17,619 1,38,993 21,33,815

2028 6,90,145 2,67,684 1,22,694 1,44,990 21,33,815

2029 7,27,772 2,82,278 1,29,383 1,52,895 21,33,815

2030 7,56,761 2,93,522 1,34,537 1,58,985 21,33,815

2031 7,75,682 3,00,861 1,37,901 1,62,960 21,33,815

2032 7,94,765 3,08,263 1,41,293 1,66,969 21,33,815

2033 8,14,409 3,15,882 1,44,786 1,71,096 21,33,815

2034 8,33,861 3,23,427 1,48,244 1,75,183 21,33,815

2035 8,54,387 3,31,388 1,51,893 1,79,495 21,33,815

2036 8,76,372 3,39,915 1,55,801 1,84,114 21,33,815

Source: NCAER estimates based on information provided by RRPCL.

Note:

1. Total Output = Total Revenue (provided by RRPCL) * Output Multiplier for Petroleum Products (2.14) obtained using the Maharashtra I-O table to be adjusted for leakage as 30.32 per cent of the intermediate inputs would come from outside Maharashtra. = Total Revenue * [1 + {(2.14 – 1) * 0.6968}]

2. Total Value Added = Total Revenue (provided by RRPCL) * Income Multiplier for Petroleum Products (0.86) obtained using Maharashtra I-O table. There will, however, be a leakage for Maharashtra as a large share of the 30.32 per cent of the intermediate inputs would come from outside Maharashtra. =Total Revenue * [0.319 + {(0.86 – 0.319) X 0.6968}]

3. Value added has two parts: Direct Value Added obtained from direct activities of petroleum production, and Indirect Value Added, which is the sum of Valued Added by other industries while supporting petro production by directly or indirectly providing intermediate goods and services, net of purchases from other States.

i. Direct Value Added = Total Revenue (provided by RRPCL) * Gross Value Added per unit output (i.e. GVA/GVO=0.319) obtained from the Maharashtra I-O table

ii. Indirect Value Added = [Total Value Added (above point 2) – Direct Value Added (above point 3.i)] * (1 – 0.3032, leakage, provided by NCAER)

4. Employment = Total Revenue (provided by RRPCL) * Employment Multiplier for Petroleum Products (0.07) obtained by using the Maharashtra I-O table and NSSO Employment estimates * (1 – 0.3032, leakage, provided by NCAER). = Total Revenue * [0.03 + {(0.07– 0.03) * 0.6968}].

26 TABLE 6.3: Effect of Petroleum and Petrochemical Production on Tax Revenue (Figures in Rs Crore)

Direct plus Tax Tax Total Indirect Direct Tax on Indirect Tax Total Tax on (Indirect) (Indirect) Tax on Year Direct Income on Indirect POL+PCP on POL on PCP Direct Output POL+PCP (4) Income (6) (1) (2) (POL+PCP) (3) POL+PCL (5)

2025 19,747 3184 22,931 1376 6917 31,224

2026 27,266 4487 31,753 1914 9621 43,288

2027 34,988 5861 40,849 2472 12,426 55,748

2028 36,429 6134 42,563 2579 12,962 58,104

2029 38,492 6446 44,938 2720 13,669 61,326

2030 40,057 6693 46,751 2828 14,213 63,792

2031 41,030 6869 47,899 2899 14,569 65,367

2032 42,012 7046 49,058 2970 14,927 66,955

2033 43,022 7228 50,251 3043 15,296 68,590

2034 44,026 7408 51,434 3116 15,661 70,211

2035 45,082 7598 52,680 3193 16,047 71,920

2036 46,222 7800 54,021 3275 16,460 73,756

Source: NCAER estimates based on information provided by RRPCL.

Note: Tax estimation involves the following three stages: i. Indirect tax on (a) POL, and (b) PCP

(a) Tax on POL = Revenue from POL (provided by RRPCL) * (relevant) Tax to Revenue Ratio (0.15, provided by RRPCL) ii. Tax on PCP = Revenue from PCP (provided by RRPCL) * (relevant) Tax to Revenue Ratio (0.04, provided by RRPCL) iii. Direct Tax on RRPCL Value Addition = Direct Value Added (3.i above) * Direct Tax to GSDP Ratio (0.021, provided by NCAER) iv. Tax (Direct and Indirect) on production and value addition by supporting activities for RRPCL production = Indirect Value Added * Tax to GSDP Ratio (0.0894, provided by NCAER

TABLE 6.4: Consumption-Induced Effects of Petroleum and Petrochemical Production

Output Income Employment Tax Year (Rs Crore) (Rs Crore) (Numbers) (Rs Crore)

2025 2,12,594 1,05,043 45,37,929 9391

2026 2,95,704 1,46,108 63,11,960 13,062

2027 3,81,923 1,88,709 81,52,350 16,871

2028 3,98,401 1,96,851 81,52,350 17,598

2029 4,20,122 2,07,583 81,52350 18,558

2030 4,36,857 2,15,851 81,52,350 19,297 (Contd.)

27 TABLE 6.4: Consumption-Induced Effects of Petroleum and Petrochemical Production (Contd.)

2031 4,47,779 2,21,248 8152,350 19,780

2032 4,58,795 2,26,691 81,52,350 20,266

2033 4,70,135 2,32,294 81,52,350 20,767

2034 4,81,364 2,37,843 81,52,350 21,263

2035 4,93,214 2,43,697 81,52,350 21,787

2036 5,05905 2,49,968 81,52,350 22,347

Source: NCAER estimates based on information provided by RRPCL.

Note:

1. Total Output = Total Revenue (provided by RRPCL) * [Type II Output Multiplier for Petroleum Products – Type I Output Multiplier for Petroleum Products] (1.49) obtained using the Maharashtra I-O table * (1 – 0.3032, leakage, provided by NCAER)

2. Total Value Added = Total Revenue (provided by RRPCL) * [Type II Value Added Multiplier for Petroleum Products – Type I Value Added for Petroleum Products] (0.73) obtained using the Maharashtra I-O table * (1 – 0.3032, leakage, provided by NCAER)

3. Total Employment = Total Revenue (provided by RRPCL) * [Type II Employment Multiplier for Petroleum Products – Type I Employment Multiplier for Petroleum Products] (0.32) obtained using the Maharashtra I-O table and NSSO Employment estimates * (1 – 0.3032, leakage, provided by NCAER)

4. Total Tax = Total Value Added (above point 7) * Tax to GSDP Ratio (0.0894, provided by NCAER).

Consumption-induced effects are the results other things). The beneficiary households will, in of increased personal income caused by the turn, increase spending at local businesses. The direct and indirect effects linked to the business induced effect is a measure of this increase in activities of RRPCL. The corresponding increased household-to-business activity. In addition, dynamic revenue from the direct and indirect effects will effects are caused by geographic shifts over time subsequently increase payroll expenditures in populations and businesses (Weisebrod and (through hiring of more employees, increase Weisebrod, 1997). in payroll hours, and raising of salaries, among

TABLE 6.5: Year-wise Total of Direct, Indirect and Consumption-induced Effects of Production

Output Income Employment Tax Year (Rs Crore) (Rs Crore) (Numbers) (Rs Crore)

2025 5,80,868 2,47,884 57,25,697 40,615

2026 8,07,949 3,44,790 79,64,067 56,350

2027 10,43,524 4,45,321 1,02,86,164 72,618

2028 10,88,546 4,64,535 1,02,86,164 75,702

2029 11,47,895 4,89,861 1,02,86,164 79,884

2030 11,93,618 5,09,374 1,02,86,164 83,089

2031 12,23,461 5,22,109 1,02,86,164 85,146

2032 12,53,560 5,34,954 1,02,86,164 87,221

2033 12,84,544 5,48,176 1,02,86,164 89,357

2034 13,15,225 5,61,269 1,02,86,164 91,475

2035 13,47,601 5,75,085 1,02,86,164 93,706

2036 13,82,277 5,89,883 1,02,86,164 96,103

Source: NCAER estimates based on information provided by RRPCL.

28 CHAPTER 7 CONCLUDING REFLECTIONS

his NCAER study estimates job creation, State economy is linked to the overall RRPCL earnings, and value of output (total investment activities. It has been observed economic activity) accruing from the that the complete impact of the investment is proposed refinery along the west coast considerable. If the national level backward, Tregion of Maharashtra, based on project-specific forward, and induced linkages are used, the inputs from RRPCL. refinery activities are seen to have a cumulative impact of 8.7 per cent on Maharashtra’s GSDP, The estimated impact includes direct, indirect, accounting for around a one per cent tax and induced economic impacts on the national contribution to the State economy, while also and State economies associated with the generating over 9.6 million jobs during the construction and operation phases of the construction phase itself. refinery. The project cost and job data used in the model are derived from the most current cost During the operation phase also, a cumulative estimations available from official sources. The impact of 8.7 per cent is noted on Maharashtra’s State-level direct and indirect economic impacts GSDP, with 100 per cent capacity utilisation have been estimated using economic multipliers commencing from year 2027, and resulting in for both the national as well as State levels using a tax contribution of around 1.42 per cent to the relevant I-O tables. the State economy [Figure 7.1 and Appendix N (Tables N1 and N2)]. The interpretation of the output, income, employment, and tax contribution to the

FIGURE 7.1: Income and Tax Contribution to the GSDP of Maharashtra during the Construction and Operation Phases of the Refinery

8.74 8.69 Percentage

1.42 0.78

Construction Operation Maharashtra

Income/GSDP (%) Tax/GSDP (%)

Furthermore, given the fact that the investment is going to take place in one of the economically backward districts of Maharashtra, it will help improve the income levels both within the district and in its surrounding areas by creating the demand for goods and services from establishments that will be set up due to the broad linkages of downstream activities resulting from the operation of the refinery. In essence, therefore, this mega project will provide a major boost to socio-economic development in the region and India as a whole while also benefiting other countries by facilitating exports of petrochemicals and other allied products from India.

29 Appendices

30 Appendix A: Input Output Transaction Table (IOTT) and Mapping and Calibration

A Procedural Outline of the IOTT

The input-output (I-O) framework is an economic the commodity x commodity I-O Table, the model which represents the linkages between columns represent the commodity, and the rows the outputs of different sectors of an economy. represent the main commodity produced by the An I-O matrix, A, is a square table with elements corresponding commodity in the column. The aij, representing the amount of input i required values of a row show where the total output of a to produce one unit of output j. A column of the commodity goes through either an intermediate matrix represents the inputs needed for or final consumption. The values of a column the production of a specific output and, show what goods and services are used as therefore, the entire matrix is represented as inputs for the industry. At the bottom of the a constellation of techniques. column are given the total inputs, Net Indirect Taxes (NIT) on inputs, GVA, and total output. The IOTT shows the values of inter-industry Beyond The additional columns given beyond the transactions in basic prices, in the form of intermediate consumption columns account for a commodity x commodity (C x C) matrix. final consumption (household and government), The I-O Table may also be constructed as an net exports, and capital formation. In the balanced industry x industry (I x I) matrix, where there is I-O Table, the column total for a commodity a demand for a mixed range of outputs of an (which includes the NIT and GVA) will be equal to industry rather than for a particular commodity, the same commodity’s row total (which includes as in the commodity x commodity matrix. In intermediate and final consumption).

TABLE A1: Simplified Input-Output Framework

Industry 1 ………… Industry n Final use Total Output

Industry 1

Supply …. Intermediate Use

Industry n

NIT

Value added

Output

The basic equation of the material balance outputs, x, that are required to sustain the is x = Ax + y, where x is the vector of gross production of final demands, y. The solution outputs, Ax is the vector of intermediate is obtained by applying the so-called Leontief inputs, and y is the vector of net outputs. The inverse, (1 – A)-1 = 1 + A + A 2 + ..., to the latter comprises the commodity components equation:x = (1 – A)-1 y = y + Ay + A2y + .... The of household and government consumption, total output equals the final demand itself plus investment, and net exports. The material the direct input requirements given by the I-O balance can be solved to determine the gross matrix plus the indirect requirements.

31 Uses of the Input-Output Table

The main uses of the I-O Table are as follows:

• Facilitating economic assessment in the case of a change in the final demand of a commodity—the I-O Table can be used to predict the investment and production requirements for meeting an increase in the demand for a commodity;

• Assessment of the impact of changes in the output of the economy on individual sectors and on the economy as a whole;

• Enabling preparation of satellite accounts;

• Usage in forecasting models and Computable General Equilibrium (CGE) models; and

• Enabling preparation of State-level IO Tables.

Supply Use Tables (SUT) and their Transformation to IOTT

The I-O framework consists of the following the use of goods and services by products and three types of tables: (i) Supply tables, (ii) Use by the type of use, namely, intermediate and tables, and (iii) Symmetric Input-Output tables. final consumption, gross capital formation, and The SUTs provide the accounting framework to exports (Sharma and Kolli, 2011). The Report include the three major approaches of measuring of the Sub-Committee on the System of Indian the Gross Domestic Product (GDP) of a nation, National Accounts recommends a compilation viz., production, income, and expenditure. This framework using SUT for each of the sectors further enables the balanced estimate of GDP at and later for its aggregate compilation. The both current prices and constant prices. These compilation framework of SUT showed that the two tables provide the circular flows of goods SUT framework enables one to make appropriate and services in the economy. The supply table adjustments in the weak areas of estimation, details availability of individual commodities either on the supply or on the use sides, to allow of goods and services, usually valued at basic for reconciliation of the supply and use of each prices. The use table, on the other hand, shows sector (MoSPI, 2015).

32 This further calls for a transformation of the SUTs, first as a uniform I-O Table before using it for any statistical analysis. Before explaining the method for transforming SUT into the IO Table, it is essential to understand the broad framework of the SUTs, as depicted in Tables A2 and A3.

TABLE A2: Supply Table, Rs Billion

Taxes Less Total Imports Total Total Industry/ Agri- Subsidies Industry Services Domestic (fob) Supply at TTM4 Supply at Product culture on Supply BP3 PP5 Products

1 2 3 4 5=2+3+4 6 7=5+6 8 9 10=7+8+9

Agri- 28,463 0 0 28,463 464 28,926 8571 -52 37,446 culture

Industry 0 82,877 0 82,877 26,488 1,09,365 20,404 8851 1,38,620

Services 452 5611 1,35,016 1,41,078 4879 1,45,958 -28,975 1126 1,18,109

Total industry 28,914 88,488 1,35,016 2,52,418 output at BP

Source: Adapted from SUT 2015-16.

In Table A2, the rows depict the commodities/ form of intermediate consumption, and final use in products, which are essentially goods and services, the form of consumption, gross capital formation, produced by the industries, and the columns depict and exports at free on board (f.o.b.) price). The the industries and other sources of supply of goods table provides the valuation of commodities at and services. The sum of the domestic supply purchaser’s prices. These are converted to basic and imports at c.i.f. becomes the total availability prices through the row-wise distribution of two of goods and services at basic prices. Table A3 column vectors, namely, the Trade and Transport provides the framework of the Use Table. Here, the margin (TTM), and the net product tax, including rows show the products used by industries in the tariff given in the supply Table.

3BP = Basic Prices; 4TTM=Trade and Transport margin 5PP= Purchaser Prices The relationship between these prices is as follows: Gross Value of Output (GVO) at basic prices = GVO at purchaser prices –TTM – [Net Product taxes {product taxes –Subsidy} +tariff].

33 Conversion of SUTs into IOTT

There is a vast literature on the compilation and use As explained earlier, SUTs are rectangular tables of IOTT. However, the rectangular nature of SUTs, in where the columns represent the industries and particular, the dimensions of products and industry rows represents products. Before using SUTs for level are not uniform, which makes direct usage of further multiplier analysis at a uniform product x the SUTs for multiplier analysis less than optimum. product or industry by industry level, they need Besides, the industry output and product use, which to be transformed into square SUTs, where the are valued at basic prices and purchasers’ prices, number of rows and columns in the intermediate need to be made uniform. quadrant should be squared.

TABLE A3: Use Table, Rs Billion

Total Industry/ Agri- Inter- Exports Total Use Industry Services PFCE GFCE GCF Product culture industry (Fob) at PP Use 1 2 3 4 5=2+3+4 6 7 8 9 10=5+6+7+8+9

Agriculture 3,426 10,520 5990 19,935 16,867 0 156 488 37,446

Industry 1,881 47,697 25,091 74,669 28,339 0 18,990 16,622 1,38,620

Services 1,353 6097 24,696 32,147 36,229 14,278 25,278 10,177 1,18,109

Total IC at 6,660 64,314 55,777 1,26,751 81,435 14,278 44,423 27,286 2,94,174 PP

GVA at BP 22,254 24,173 79,239 1,25,666

COE 3,390 5791 32,210 41,391

OS/MI 18,047 14,334 37,601 69,982

Other taxes on -753 124 420 -209 Production

CFC 1570 3924 9008 14502

Total Industry 28,914 88,488 1,35,016 2,52,418 Output at BP

Source: Adapted from SUT 2015-16.

Note: Fob: free on board, BP: basic prices, PP: purchasers’ prices, TTM: trade and transport margins, IC: intermediate consumption, OS: operating surplus, MI: mixed income, COE: compensation of employees, CFC: consumption of fixed capital, PFCE: private final consumption expenditure, GFCE: government final -con sumption expenditure.

34 Therefore, the following two major steps are needed the two options described here further depends to transform rectangular SUTs into square SUTs: on the size of the IO table to be compiled from the SUTs. • Disaggregate or aggregate the products included in the SUTs so that they represent the NCAER used the I-O Table of 2015-16 for 131 characteristic products of industries shown in x 131 sectors prepared by Chadha, Saluja, and the columns; and Sivamani (2019). The I-O Table 2015-16 has been transformed from SUT 2015-16 prepared • Disaggregate or aggregate the industries by the Central Statistics Office (CSO). We further included in the columns of S UTs so that they bifurcated ‘petroleum products’ and created one correspond to the products shown in the rows. more sector, namely ‘gas’ for our present work. This increased the total number of sectors to 132. Following either of the above two steps, the The 132 sectors have been further aggregated into resultant square SUT will show in the rows, and 37 RRPCL model sectors for multiplier analysis. the characteristic products corresponding to the industries in the columns. The choice of either of

TABLE A4: Sectoral Mapping of I-O Table for Maharashtra

S. No. RRPCL-MH Sectors MH8 1 to 37

1 Agriculture 1-14

2 Mining and Quarrying 15,17-22

3 Food Beverage and Tobacco 23-28

4 Textiles and Garments 29-30

5 Paper and Paper Products; Printing and Publishing 31-32

6 Leather and Leather Products 33

7 Rubber Products 34

8 Plastic Products 35

9 Crude Petroleum 16

10 Petroleum Products 36

11 Gas 37

12 Coke and Coal Tar Products 38

13 Basic Heavy Inorganic and Organic Chemicals 39

14 Fertilisers 40

15 Pesticide 41 (Contd.)

35 TABLE A4: Sectoral Mapping of I-O Table for Maharashtra (Contd.)

16 Paints, Varnishes and Lacquers 42

17 Synthetic Fibres and Other Material 43

18 Other Chemicals 44

19 Drugs and Medicines 45

20 Cement 47

21 Other Non-metallic Mineral Products 46-48

22 Ferrous and Non-ferrous Basic Metal 49-52

23 Hand Tools and Miscellaneous Metal Products 53

24 Non-Electrical Machinery and Parts 54

25 Electrical Machinery 55

26 Transport Equipment and Parts 56

27 Other Miscellaneous Manufacturing 57,58

28 Construction 59

29 Electricity 60

30 Water Supply 61

31 Land, Air, Water Transport and Auxiliary Activities 62-66

32 Storage and Communication 67-68

33 Trade, Hotel and Restaurants 69,71

34 Financial & Insurance Services 72,73

Real Estate, Ownership of Dwelling and Professional 35 Services 74,77-79

36 Community, Social and Personal Services 70,75-76,80

37 Rest of the Services 81

Source: NCAER estimates.

36 Appendix B: Regional Input Output Configuration: A Review of Literature on Methodology

Preparing a regional I-O table is a challenge but it is not new in India. It may be noted that generating a regional I-O table using non-survey methods is not very common. Internationally, a number of non-survey methods have been used for making a regional I-O table. The present study has used a method that is widely used and tries to generate a regional I-O table for the State of Maharashtra to evaluate the specific impact of the RRPCL investment for deciphering the output, income, and employment multiplier. The results have been compared with the national level results derived for this purpose.

Studies on regional input output in India started in the early 1960s. Since then, there have been a number of studies dealing with the construction of regional input-output in India. Prominent among them are Mathur and Hashim (1967), Mathur (1971), Venkatramaih (1979) and Prasad (1992). The non-survey method can be categorised into three groups—the quotients approach, the commodity balance, and the iterative procedure. The current approach attempts to generate a regional I-O table for the State of Maharashtra by mostly following the quotient approach that uses location quotients (LQs). All these methods use the national I-O table to arrive at the regional table

The basic assumption in all these methods is that the national technical relationships hold good at the regional level (Saluja and Sharma, 1991, 1992). The regional trade coefficients are different from the national technical coefficient to the extent to which goods and services are imported from other regions. This suggests that the national technical coefficient is equal R R to the regional input coefficienta ij plus regional import coefficientm ij . Therefore, the regional trade flows are estimated by assuming that:

R N aij = LQi aij where LQi is less than or equal to unity.

The LQi gives a measure, which depicts the relative importance of the regional industry with respect to its national counterpart, and it is calculated as the ratio of regional output to the national output share of each industry/sector.

The process includes the following two main stages:

• Generating the regional coefficients and the regional inter-sector flow matrix; and

• Firming up of the final demand vector with the break-up of personal consumption expenditures, investments, state and local government, as well as exports, both abroad and to the rest of the country.

The first method refers to the simple LQ or SLQ, which has been formulated as follows:

SLQi = (ROi/TRO)/(NOi/TNO)------(1)

Here, the subscript i signifies the sectors in the economy, for example, agriculture, industry, etc.;RO i refers to the regional output of sector ‘i’; TRO is the total regional output; NOi refers to the national output of sector ‘i’; and TNO is the total national output.

If SLQi > 1, it means that the regional sector’s output is greater than the national average. Thus, the regional sector is more specialised than its national counterpart and is, therefore, self-sufficient.

On the other hand, if SLQi < 1, it implies that the regional industry has less output than its national average. Therefore, it means that the regional sector’s output is less than the national average, it is less than self-sufficient, and thus needs to import from other regions to meet the demand requirements of the region.

In practice, when SLQi ≥ 1, then it is considered as 1, that is, assuming that the regional sector will be able to meet all the local demands, implying that the regional coefficient is equal to national coefficient.

But, if SLQi < 1 it is considered as it is.

R R N R N Thus, when SLQi ≥ 1 the regional input coefficienta ij is estimated as aij = 1 aij , that is, aij = aij . But, when SLQi < 1, R N N aij = SLQi aij . Here aij is the national technical coefficient. Thus,

37 R N aij = SLQi aij ------(2)

In this approach, only the size of the selling industry is considered in determining the extent of regional imports. However, researchers felt that since the relative size of the purchasing industry may also be

crucial in determining the extent of regional imports, SLQj can also be used as the LQ. But, the impact of this method on the results was only marginal.

Hence followed the Cross Industry Quotient. This LQ compares the share of ith selling industry’s output of the region to the national with that of the jth purchasing industry in the region to the national. Denoted as

CILQij, it is formulated as

CILQij = SLQi/SLQj = (ROi/NOi)/(ROj/NOj)------(3)

where

SLQj = (ROj/TRO)/(NOj/TNO) = (ROj/NOj)/(TNO/TRO)

Here also, the ijth cell of the national technical matrix is adjusted in the same manner as done in case

of the SLQi that is, where CILQij ≥ 1, it is considered as 1, and where CILQij < 1, the coefficient is taken as it is. Thus,

R N aij = CILQij aij ------(4)

However, this technique takes into account the selling and purchasing industry; it does not take into account the size of the region or the nation. Thus, efforts were made to take into account the size of the region as well.

To overcome this problem, Round (1978) came up with a location quotient which has considered the selling and purchasing industry as in the case of the CILQ, but, also adds the relative sizes of the region and nation. Thus, Round’s LQ is denoted as follows:

RLQij=SLQi/[Log2(1+SLQj)------(5)

=[(ROi/NOi)/(TNO/TRO)]/[ Log2{1+( ROj/NOj)/(TNO/TRO)]

R N Thus, aij = RLQij aij ------(6)

Here, the subscript i represents the sectors in the economy, for example, agriculture, industry, etc., ROi

refers to the regional output of sector ‘i’, TRO is the total regional output, NOi refers to the national output of sector ‘i’, and TNO is the total national output. Here too, the trade coefficients are scaled down such that R R N R N when LQs ≥ 1, the regional input coefficienta ij is estimated as aij = 1 aij , that is, aij = aij . But, when R N LQs < 1, aij = LQs aij .

Round suggests that the size of any trading coefficients, ijt (0≤ tij ≤ 1) is likely to be a function of: i) the

relative size of the supplying sector, which is measured as ROi/ NOi, ii) the relative size of the purchasing

sector, which is measured as ROj/ NOj, iii) the relative size of a region, which is measured as TRO/TNO, and iv) some other additional unspecified factors.

In some cases, the estimates of regional industry output obtained through these SLQ coefficients may exceed the actual output for some industries. As such, there could be complications. To overcome such complications or see that these sector outputs do not over-estimate the regional output, we need to balance the equations, as may be noted in Miller (1985). For example, let us calculate the estimated sector i’s output by using the actual regional industry outputs (the available data), and the SLQ estimated regional input coefficients (and regional final demand purchase coefficients), that is, for sector ‘i’ this is as follows:

R R Xi =∑ja ijXj + ∑jc ifyf

where Xi = estimated regional output of sector i, yf = total regional final demand of final demand R sector f, and c if = estimated regional final demand purchase coefficients of regional final demand secto R f from industry i. The c if elements, show purchases of regionally produced output i by regional final demand sector f. It is known that the regional final demand sectors relate to personal consumption

38 expenditures, investments, state and local government, as well as exports, both abroad and to the rest of the country. Now, after framing of the whole I-O matrix, next follows the balancing procedure. This is done by calculating the ratio of the estimated regional output to the actual regional output with suitable adjustments.

In order to calculate the output LQ for the State of Maharashtra, the State’s sectoral output is divided by the State’s total output. This ratio is calculated by using the Gross State Domestic Product at factor cost at current prices. This is taken from, the State Domestic Product (State Series) data, reported in the CSO reports and publications available in the net. The sectors under manufacturing are divided into 37 sectors, by using the share of these sectors in the ASI data for Maharashtra. The national sectoral ratios are calculated by dividing the national sector-wise data by the national output, using the Gross Domestic Product by Economic Activity at current prices brought out by the National Accounts Statistics (NAS). Here also, the sectors under Manufacturing are divided into 37 sectors, by using the share of these sectors in the all-India ASI data. The private final consumption expenditure of the final demand is calculated by using the rural–urban Population Census 2011, and the monthly per capita consumption expenditure given by the relevant NSS Round. This is allocated sector-wise at the national rate of sectoral allocation. Similarly, the government’s final consumption expenditure is collected from ‘State Finances’ published by the RBI and allocated sector-wise at the national rate of sectoral allocation. The gross fixed capital and changes in stock are collected from the ASI and adjusted to the respective industries.

Appendix C: A Note on Maharashtra Employment for 2015-16

In the explanation for the employment contribution and less than 183 days during the last 365 days of the RRPCL project, employment numbers have preceding the date of survey, s/he is considered to been calculated by analysing unit-level data from be employed under the USS category. the Periodic Labour Force Survey (PLFS) for 2017- 18. We have interpolated this data for 2015-16 While estimating the employment multiplier based by employing suitable population weights for the on the refinery project, one needs to address the relevant years. A suitable concordance has been question as to the kind of employment the refinery prepared between NIC 2008 and the 132-sector project is going to generate. We first need to Input-Output Table of 2015-16. We had used the understand that multiplier numbers are based on 132-sector I-O as the reference I-O table. The base-year employment numbers. Following is the NIC 2008 five-digit employment numbers derived argument about the kind of employment that will from 2017-18 were aggregated to the I-O 132 be generated by the refinery project: sectors and later to 37 sectors for studying RRPCL impacts on the economy. Table C1 shows the share of each of the three constituent categories of labour inputs, viz. UPS, In the case of employment, labour input or number USS, and multiple workers. We can see that in of job criteria for estimating employment numbers Maharashtra, multiple workers are mainly present of Maharashtra has been used. The concept entails in sectors like agriculture, miscellaneous metal adding multiple workers into the NSS definition of products, and construction sectors. The remaining Usual Principal Status (UPS) and Usual Subsidiary refinery sector, which caters to multiplier activities Status (USS). The methodology for estimating the at the construction or operation stages is largely workforce numbers is explained in Kolli, Sharma, concentrated among the UPS category of workers, and Sinharay (2008). The estimates are NSS who can be considered as a kind of regular workers. employment status (UPS+USS) data along with the multiple workers, which represent the total number It may be noted that construction stage of jobs. multipliers are static in nature and may last till the refinery construction activities continue. The The concept of usual activity status refers to the construction sector largely employs unorganised activity status of a person during the last 365 days workers, which is observed by looking at a preceding the date of the survey. The activity status higher share of multiple workers. The remaining on which a person spent a relatively longer time sectors, which majorly contribute to the refinery (at least 183 days or more) in years in called UPS. construction, viz. non-electrical machinery, Similarly, if a person is engaged in an economic electrical machinery, transport and auxiliary activity for a period of minimum 30 days or more transport activities, storage and communication,

39 financial and insurance services, largely backward linkages. As regards those sectors, one predominate in providing direct employment under can firmly say that one unit of direct employment the UPS category in base year numbers. generates total direct and indirect employment in terms of the multiplier analysis. An assessment of the employment generated in a particular sector in the I-O framework We can contend that the refinery and its indicates that most of this employment is downstream petrochemical segment are classified generated in sectors which supply inputs either under the organised sector. Hence promoting this for construction activities or for the operation segment may stimulate both direct as well as total stage activities. We cannot firmly say that the employment, as most of the input industries for the type of employment in a particular sector is also refinery feature under the UPS categories in terms generated in other sectors through forward and of employment.

TABLE C1: Labour Inputs and Their Share (%) in Three Constituent Categories in Maharashtra: 2015-16

Share in Labour Inputs (%)

Principal Subsidiary Multiple Total Labour RRPCL Model Sector Workers Workers Workers Inputs

Agriculture 92.0 1.7 6.3 2,31,33,662

Mining and Quarrying (minus crude petroleum) 100.0 0.0 0.0 45,603

Food Beverage and Tobacco 96.6 0.3 3.1 5,37,501

Textiles and Garments 96.5 1.3 2.2 12,98,774

Paper and Paper Products; Printing and Publishing, 98.0 0.0 2.0 5,26,542 Furniture

Leather and Leather Products 100.0 0.0 0.0 1,31,695

Rubber Products 100.0 0.0 0.0 33,724

Plastic Products 100.0 0.0 0.0 1,12,171

Petroleum Products 100.0 0.0 0.0 29,147

Gas 100.0 0.0 0.0 4581

Coke and Coal Tar products 0

Basic Heavy Inorganic and Organic Chemicals 98.0 0.0 2.0 1,05,216

Fertilizers 100.0 0.0 0.0 24,920

Pesticide 100.0 0.0 0.0 6964

Paints, Varnishes and Lacquers 100.0 0.0 0.0 15,078

Synthetic fibres and other material 0

Other Chemicals 100.0 0.0 0.0 1,16,457

Drugs and Medicines 100.0 0.0 0.0 1,33,932 (Contd.)

40 TABLE C1: Labour Inputs and Their Share (%) in Three Constituent Categories in Maharashtra: 2015-16 (Contd.)

Cement 100.0 0.0 0.0 18,784

Other Non-metallic Mineral Products 98.5 0.0 1.5 2,27,726

Ferrous and Non-ferrous Basic Metal 100.0 0.0 0.0 4,09,726

Hand Tools and Miscellaneous Metal Products 92.0 0.0 8.0 2,17,930

Non-Electrical Machinery and Parts 99.4 0.6 0.0 1,85,913

Electrical Machinery 99.6 0.4 0.0 4,46,739

Transport Equipment and Parts 96.2 3.8 0.0 5,57,687

Other Miscellaneous Manufacturing 100.0 0.0 0.0 3,49,206

Construction 95.4 0.6 4.0 26,95,797

Electricity 97.0 3.0 0.0 1,13,851

Water Supply 100.0 0.0 0.0 30,651

Land, Air, Water Transport and Auxiliary Activities 97.0 0.9 2.0 23,18,692

Storage and Communication 100.0 0.0 0.0 2,79,713

Trade, Hotel and Restaurants 96.9 0.7 2.4 51,07,215

Financial and Insurance Services 98.9 0.5 0.6 8,14,439

Real Estate, Ownership of Dwelling and 99.4 0.5 0.1 17,49,053 Professional Services

Community, Social and Personal Services 99.1 0.4 0.4 31,94,305

Rest of the Services 98.0 0.2 1.8 19,31,321

Crude Petroleum 100.0 0.0 0.0 15,195

Total 94.8 1.2 4.0 4,69,19,912

Source: Authors’ estimation from NSSO PLFS 2017-18.

It may be observed that unlike the all-India picture, where construction activities were characterised by a significant presence of multiple workers, (that is, 15 per cent of total labour inputs), in Maharashtra, this figure stands at only 4 per cent and more than 95 per cent of the workers engaged in the construction sector fall in the UPS category. The remaining part of the refinery sector, which caters to multiplier activities at both the construction and operation stages, is also largely characterised by a concentration of UPS category of workers, who can be considered as a kind of regular workers.

5 12 55 23 14 48 161 279 223 231 162 331 150 145 449 195 871 951 187 Assam

0 0 54 35 90 34 308 271 120 188 216 969 129 Goa 1,276 4,945 3,403 1,057 1,126 7,038

59 82 96 464 726 724 137 968 852 416 1,457 1,535 1,102 1,991 1,214 2,957 1,882 6,632 2,172 Jharkhand

85 72 967 555 342 608 Bihar 1,536 1,187 1,047 1,136 1,958 3,629 2,020 2,141 4,670 3,137 1,574 1,265 7,006

15 89 90 692 726 347 911 311 158 8,105 2,776 1,414 1,782 1,786 1,560 4,873 1,183 4,006 6,729 Haryana

32 21 106 330 421 160 174 807 4,378 2,113 1,794 1,158 2,655 7,137 1,490 3,488 8,227 1,008 6,642 Pradesh Himachal

96 69 73 243 236 4,799 2,897 1,185 7,783 1,014 3,146 1,385 1,657 2,374 2,042 3,101 6,832 1,511 4,929 Chhattisgarh

59 266 646 518 338 347 188 Delhi 3,871 1,138 5,646 2,388 6,583 3,368 2,879 5,848 9,469 2,117 2,086 1,399

267 108 743 208 933 266 Uttar 6,464 1,728 1,228 3,191 4,380 3,149 2,136 2,733 6,380 2,218 3,006 8,791 1,516 Pradesh

85 121 221 302 169 Odisha 6,487 1,288 1,265 5,438 1,531 4,385 6,901 1,796 2,898 3,332 1,450 2,659 1,377 8,442

3 22 697 972 678 297 309 412 357 Kerala 1,778 5,291 6,764 1,514 2,195 1,219 12,336 10,618 19,856 13,589

67 33 265 472 481 687 575 2,231 4,761 2,201 1,497 1,859 1,628 3,559 2,194 18,793 11,643 10,614 19,300 Tamil Nadu Tamil

Rs Crores) 35 Importing States Rs Crores) 417 919 405 421 West West 9,664 8,540 5,686 1,777 5,058 6,520 4,664 4,133 1,635 2,885 7,390 9,359 3,083 Bengal 11,409 10,930

136 386 541 326 1,174 8,229 4,868 7,923 4,514 5,983 5,923 2,684 7,049 1,630 3,146 4,066 2,090 Madhya Madhya Pradesh 22,534 23,634 : Arms-length Trade Flows between States (C-forms, FY2015-16 in Trade : Arms-length

85 285 157 183 940 1,316 3,465 7,227 1,491 4,984 9,769 5,569 2,866 7,089 2,181 2,910 35,627 15,965 10,215 Rajasthan TABLE D1 TABLE -

Appendix D: Trade Flows between States between Flows Appendix D: Trade 75 110 177 505 261 3,846 7,714 1,750 3,430 2,650 1,783 1,337 2,410 2,092 khand Uttara 11,717 14,124 22,679 16,912 26,900

38 552 212 1,388 8,665 3,252 3,225 3,644 5,556 2,642 1,383 4,550 2,890 4,301 1,060 Andhra Andhra Pradesh 19,679 30,734 26,217 20,777

42 203 1,347 2,267 2,995 2,426 1,368 1,817 4,037 3,501 2,421 4,519 3,820 4,007 12,882 11,534 40,253 18,941 40,075 Karnataka

44 716 695 9,828 6,843 6,667 3,498 2,385 1,571 6,345 8,521 4,265 9,898 1,029 1,041 Gujarat 15,327 85,679 14,463 33,743 121 602 9,716 8,691 7,294 3,295 2,756 8,203 2,092 2,830 25,267 32,519 11,181 82,044 40,113 25,071 10,849 11,307 11,062 Maharashtra

Maharashtra Gujarat Nadu Tamil Haryana Karnataka Andhra Pradesh Uttar Pradesh Rajasthan Delhi Bengal West Madhya Pradesh Uttarakhand Odisha Chhattisgarh Jharkhand Himachal Pradesh Kerala Goa Assam Bihar The total value of exports and imports of the States reported in these tables are restricted to the set of States considered within the balanced dyad table. The actual value of trade is higher table. The actual value within the balanced dyad to the set of States considered restricted of exports and importsThe total value in these tables are of the States reported convenience. this table for presentational from been excluded that have other States and Union Territories because of flows from

2 0 0 1 0 0 0 0 0 4 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 Punjab

1 0 0 0 0 0 0 0 0 2 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0 39 273 Mizoram

1 0 0 1 0 4 0 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 92 275 Manipur

9 0 0 0 0 0 0 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 24 12 62 22 84 103 637 135 Nagaland

1 0 5 1 0 2 0 0 0 0 0 1 3 0 0 0 0 0 46 25 72 14 13 10 72 48 99 37 176 134 171 145 605 Chandigarh

9 6 1 0 1 0 7 0 8 0 0 0 0 0 0 0 0 0 0 0 76 67 54 18 31 19 61 27 58 245 163 Diu 1,854 2,008 Daman and

3 8 3 1 1 0 0 0 0 0 4 0 0 0 0 3 0 62 48 60 20 90 33 11 17 92 725 529 563 305 454 Pudu Pudu 6,693 1,301 cherry

2 2 8 0 0 0 0 2 4 0 0 0 2 0 83 83 69 18 26 14 62 162 481 171 481 415 177 172 Goa 4,390 1,066 1,135 1,429 1,248

8 2 0 8 0 0 0 0 0 0 58 11 11 46 861 446 519 644 511 155 278 103 256 114 797 405 Uttar 5,353 3,189 1,177 1,374 1,032 3,670 1,026 Pradesh

4 2 3 0 0 0 0 0 0 74 94 28 10 50 880 152 113 551 638 999 423 168 629 456 726 327 248 2,477 1,265 5,865 1,302 1,144 6,188 Odisha

4 0 0 1 1 0 0 0 0 90 25 53 35 65 19 17 222 633 604 888 459 946 298 187 692 644 1,596 1,450 1,202 3,340 2,386 8,108 1,023 Jharkhand

2 0 3 0 1 0 2 0 0 0 1 0 0 0 0 27 10 53 28 23 45 14 148 328 847 156 582 154 307 5,449 1,024 Dadra Haveli 14,232 11,615 and Nagar

0 0 2 0 0 0 1 0 0 0 52 93 61 42 37 451 110 851 897 868 848 133 158 516 1,684 5,204 2,346 2,684 7,930 5,760 1,176 5,040 2,086 Chhattigarh

0 0 0 0 0 0 0 0 68 34 34 87 64 543 870 579 606 650 152 2,293 1,780 3,405 1,746 1,413 8,429 1,193 7,072 1,213 2,672 3,578 1,319 7,725 1,495 Nadu Tamil Tamil

1 0 0 0 0 9 0 0 58 17 44 149 529 151 599 753 223 124 225 126 191 684 307 3,376 7,144 2,288 2,772 4,461 3,643 1,267 1,576 Delhi 20,889 13,809

0 0 0 0 0 7 6 1 0 0 11 32 29 52 384 997 236 140 696 930 1,828 2,344 7,762 1,162 2,937 1,285 1,087 7,312 1,394 9,133 1,364 1,600 26,102 Kerala

0 8 0 0 0 0 4 0 0 0 18 49 28 501 468 633 390 790 354 740 1,164 1,272 1,524 1,674 5,848 4,816 4,144 1,712 4,295 2,763 1,332 1,210 36,044 Gujarat

0 0 0 0 0 3 0 0 0 78 19 31 89 597 196 963 994 236 182 3,839 2,148 7,415 4,342 1,891 2,701 2,896 8,406 2,250 1,464 4,050 14,138 12,272 10,019 Rajasthan

0 8 0 6 0 0 64 74 : Intra-firm Trade Flows between States (F-forms, FY2015-16 in Rs Crores) 36 Importing 36 States Crores) FY2015-16 (F-forms, Rs in States Flows between Trade Intra-firm : 111 563 389 430 571 343 303 5,247 6,896 2,289 1,375 5,671 5,015 3,718 2,842 2,867 2,999 8,753 3,450 7,889 6,099 West West 11,807 15,009 10,142 23,304 Bengal

2 0 6 0 1 0 0 0 0 64 161 734 255 364 260 8,677 6,764 2,992 1,285 7,748 2,688 1,887 2,992 5,593 9,954 4,381 3,107 1,529 1,309 2,026 23,814 25,173 21,273 Karnataka TABLE D2 TABLE

0 0 0 0 0 0 0 53 82 12 37 963 211 601 4,765 3,867 1,720 6,772 3,704 2,544 2,949 1,052 1,386 1,317 3,051 1,105 1,102 14,833 13,997 13,229 23,173 27,506 10,346 Andhra Andhra Pradesh

1 1 0 0 0 0 0 0 15 482 769 425 633 653 276 845 236 127 190 2,365 1,554 1,987 4,672 6,088 2,669 6,440 2,214 4,203 2,470 4,509 4,085 25,693 99,736 Madhya Madhya Pradesh

3 1 0 0 0 0 0 0 17 318 318 4,538 1,221 5,334 3,747 6,818 1,643 2,556 1,292 9,604 2,013 4,402 23,638 14,987 23,665 13,211 12,724 14,664 27,107 16,109 11,260 10,176 Maha- rashtra 1,01,038

Gujarat Maharashtra Nadu Tamil Haryana* Pradesh Andhra Uttar Pradesh Karnataka Bengal West Uttarakhand * Delhi Punjab Pradesh Madhya Jharkhand Odisha Assam* Kerala Nagar Dadra and Haveli Chhattisgarh Rajasthan Goa Puducherry Sikkim* Bihar* and Diuw Daman and Jammu Kashmir* Chandigarh Meghalaya* Tripura* Nagaland Lakshadweep* Arunachal Pradesh* Mizoram & Andaman Islands* Nicobar Manipur Note: * indicates States with no corresponding import information. Note: * indicates States with no corresponding

43 Appendix E: The Gross State Domestic Product of Maharashtra (GSDP) and Its Growth Rate (%)

TABLE E1: Actual and Projected GSDP of Maharashtra at Current Market Prices

Financial Year GSDP at Current Market Price (Rs Crore) Growth Rate (%)

2012-13 14,59,629 14.0

2013-14 16,49,647 13.0

2014-15 17,79,138 7.8

2015-16 19,66,147 10.5

2016-17 21,88,532 11.3

2017-18 24,11,600 10.2

2018-19 26,60,318 10.3

2019-20 28,78,583 8.2

2020-21 29,39,290 2.1

2021-22 31,80,444 8.2

2022-23 34,98,656 10.0

2023-24 38,48,707 10.0

2024-25 42,33,781 10.0

2025-26 46,57,383 10.0

2026-27 51,23,368 10.0

Source: NCAER estimation using data compiled from MoSPI.

44 Appendix F: Receipts of Maharashtra Governments and Maharashtra GDP

TABLE F1: Receipts of Maharashtra Governments and Maharashtra GDP at Current Market Price (in Rs Crore: 2004-05 to 2019-20)

Total Direct Total Indirect Maha-rashtra-GDP at Rs. Crore Total Taxes Taxes Tax Current Prices

2017-18 (Accounts) 51,961 1,53,190 2,05,151 24,11,600

2018-19 (Revised 54,194.8 1,76,787 2,30,982 26,60,318 Estimates)

2019-20 (Budget 60,509 1,96,946 2,57,455 28,78,583 Estimates)

Direct Tax Indirect Tax Total Tax

Contribution Contribution Contribution

2017-18 (Accounts) 2.15 6.35 8.51

2018-19 (Revised 2.04 6.65 8.68 Estimates)

2019-20 (Budget 2.10 6.84 8.94 Estimates)

45 TABLE F2: State Share in Petrol

State Share in the Total Year Centre State Total Contribution (%)

2014-15 1,72,065 1,60,554 3,32,620 48.3

2015-16 2,54,297 1,60,209 4,14,506 38.7

2016-17 3,35,175 1,89,770 5,24,945 36.2

2017-18 3,36,163 2,06,863 5,43,026 38.1

2018-19 3,48,041 2,27,591 5,75,632 39.5

2019-20 3,34,315 2,21,056 5,55,370 39.8

Source: PPAC (Petroleum Planning and Analysis Cell).

https://www.ppac.gov.in/content/149_1_PricesPetroleum.aspx.

Appendix G: Income (Value Added) and Tax Contribution to Maharashtra GSDP

TABLE G1: Income (Value Added) and Tax Contribution to Maharashtra GSDP during the Construction Phase

Maharashtra Maharashtra Tax/ Maharashtra Income Tax Year Income/Maharashtra Maharashtra- (Rs Crore) (Rs Crore) -GSDP (%) GSDP (%)

2021 23,317 2085 0.79 0.07

2022 69,950 6254 2.20 0.20

2023 77,722 6948 2.22 0.20

2024 93,267 8338 2.42 0.22

2025 46,633 4169 1.10 0.10

Sum 3,10,890 27,794 8.74 0.78

Source: NCAER estimation.

TABLE G2: Income (Value Added) and Tax Contribution to Maharashtra GSDP during the Operation Phase

Maharashtra Maharashtra Tax/ Maharashtra Tax (Rs Year Income/Maharashtra- Maharashtra- Income (Rs Crore) Crore) GSDP (%) GSDP (%)

2025 2,47,884 40,615 5.85 0.96

2026 3,44,790 56,350 7.40 1.21

2027 4,45,321 72,618 8.69 1.42

Source: NCAER estimation.

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47 48 49 NATIONAL COUNCIL OF APPLIED ECONOMIC RESEARCH NCAER India Centre, 11, Indraprastha Estate, New Delhi–110 002, India Tel.: +91-11-2345-2657, 6120-2698 Email: [email protected] www.ncaer.org