gË`_od O`Vo REPORT OF THE HIGH LEVEL COMMITTEE ON BALANCED REGIONAL DEVELOPMENT ISSUES IN MAHARASHTRA GOVERNMENT OF MAHARASHTRA PLANNING DEPARTMENT OCTOBER 2013 Preface Achieving the Balanced Regional Development of Maharashtra is one of the important Policy Goals of the State of Maharashtra. This Report seeks to bring out complexities of the issues involved and also proposes a multi-dimensional approach to achieve the Balanced Regional Development on a sustainable basis. Important elements of our approach are: 1. Increasing the shares of lagging regions such as Marathwada and Vidarbha in the Plan Funds, 2. Institutional reforms required towards capacity building for efficient use of Public Sector resources and for reducing costs of doing business for promoting private investment flows for achieving growth acceleration, and 3. Governance Reforms aimed at greater empowerment and accountability at regional level and local level so as to achieve balanced development on a sustainable basis. We believe that the Report covers all the Terms of Reference assigned to the Committee. In fact, in some sense, we have gone further by introducing an innovative approach of covering water-stressed Talukas and Tribal Areas of our State as “Virtual or Imagined” Regions and proposing special measures to ameliorate the development challenges of these “Virtual or Imagined” Regions. Equally, we have proposed policy measures for ensuring drinking water security for all and universal health care that will take the development policy of Maharashtra at a very cutting edge. We hope that this report will shift the focus of development policies debate away from “backlog” to growth acceleration and governance reforms. While we have fully discharged the task assigned to us, it is perhaps necessary to recognize that for our analysis and studies, we had to depend on the data provided by official agencies and which were not always comparable. Yet other limitation of our report is that it does not deal in detail the political dynamics of the regional development. Similarly, emerging development issues such as environment, employment generation and urbanization have only been flagged and not fully dealt due to constraint of time and availability of reliable data. It is noteworthy that each Member of the Committee gave tirelessly enormous amount of their time and efforts towards completion of the Report and it was done entirely onpro bono basis, i.e., without any financial or pecuniary benefits. I salute them for their deep sense of commitment to achieve accelerated and inclusive development of Maharashtra. i High Level Committee for Balanced Regional Development Finally, on behalf of the Committee and on my behalf, I want to thank two outstanding professionals. First is Prof. Pradeep Apte, a leading Development Economist, who assisted the Committee in all its phases and the other is Shri K. P. Bakshi, our Member Secretary. The Committee and I want to place on record our deep gratitude to Shri K. P.Bakshi for his outstanding support and for his unique role as our friend, philosopher and guide. He is truly an exceptionally able and versatile Civil Servant and the GoM is fortunate to have his services available to our State. Vijay Kelkar Chairman ii CONTENTS Summary : Major Findings and the Recommendations 1 Chapter 1: Introduction 21 1.0: Introduction 21 1.1: Composition of High Level Committee 24 1.2: Terms and References of the Committee 25 1.3: Details of the Visits 25 1.4: Meetings of the Committee 27 1.5: Intra Committee Sub-Groups 27 1.6: Committee Report and its Terms of Reference 28 Chapter 2: Stakeholders' Perspectives 31 2.0: Introduction 31 2.1: Vidarbha Region 31 2.2: Marathwada Region 48 2.3: Rest of Maharashtra 55 2.4: Interaction with Representatives of Tribals 63 2.5: Representations Received by the Committee 63 2.6: Learnings from the Visits 64 Chapter 3: Regional Development: Trends and Patterns in the Recent Past 65 3.0: Introduction: Backdrop 65 3.1: Geography and Demography 67 3.2: Macro Economic Development of the Regions in 76 Comparative Perspective 3.3: Economic Development: Sectors 85 3.4: Convergence 95 3.5: Human Development Index 97 3.6: Concluding Remarks 98 Chapter 4: Towards Balanced Regional Development: A Multidimensional 101 Policy Approach 4.0: Introduction 101 4.1: Policies Towards Regional Imbalance: A Retrospective Summary 104 4.2: FFC and I&B Committee: A Brief Review 106 4.3: Major Methodological Issues and Considerations 111 4.4: Indicators and Backlog Committee 113 4.5: Globalization of Indian Economy and Policy Framework 115 4.6: Our Vision and Approach 118 iii High Level Committee for Balanced Regional Development Contents 4.7: Resource Mobilization for Achieving Regional Balance 132 7.9: Excise Policy 230 4.8: Indicators For Restoring and Sustaining Regional Balance 134 7.10: Jobs Reserved for the Tribals 230 4.9: Allocation Formulae and Computational Procedure 135 4.10: Review Caveat 141 Chapter 8: The Role & Challenges of New Agriculture 231 4.11: Flagging An Emerging Issue: Urbanization 141 8.0: Introduction 231 4.12: Early Actions: Quick Wins for Restoring Trust 144 8.1: Regional Development Potential in Agriculture Sector 232 4.13: Summing Up 145 8.2: Water Resources in Agriculture 232 8.3: New Command Area Development Agency 233 Chapter 5: Regional Strategies for Growth Acceleration 147 8.4: Compulsory Micro Irrigation for High Water Consuming Crops 234 5.0: Introduction 147 8.5: Regional Water Budget for Agriculture 236 5.1: Growth Strategies for Vidarbha 148 8.6: Crop Specific Initiatives 237 5.2: Growth Strategies for Marathwada 155 8.7: Crop Development 239 5.3: Growth Strategies for Rest of Maharashtra 160 8.8: Horticulture Development 240 5.4: Growth Perspective for Vidarbha and Marathwada 170 8.9: Animal Husbandry and Fishery Development 242 5.5: Concluding Remarks 170 8.10: Maharashtra Agricultural Mechanization Mission 243 8.11: Custom Hiring Centres for Agriculture Machinery and Implements 245 Chapter 6: Governance: Towards Greater Regional Empowerment and Accountability 171 8.12: Agro-Industries Development Program (AIDP) 245 6.0: Introduction 171 8.13: Regional Agro-Industries Development Corporation - A New Role 246 6.1: Major Milestones in Regional Governance 171 8.14: Agriculture Credit and Inputs 247 6.2: Estimation of Divisible and Non-divisible Outlay 178 8.15: Agriculture Labour Training School (ALTS) 248 6.3: Distribution of Divisible Outlay Among Three Regions 180 8.16: Agricultural Education 248 6.4: District Sector Outlay 183 8.17: Recommendations 249 6.5: Role of the State Finance Commission 186 8.18: General Recommendations 260 6.6: Region as the Unit of Planning and Development 187 8.19: Policy Initiatives and Reforms: Summary 262 6.7: Optimization of Regional Resource Pool 189 8.20: Some General Recommendations and Observations 265 6.8: Region as the Unit of Governance and Administration 190 8.21: Risk Proofing Instruments 267 6.9: Major Recommendations 194 8.22: Fertilizers and Fertilizer Use 267 6.10: Recommendations Regarding the Role of Central Government 204 8.23: MGNAREGA for Farm Roads and Structures 267 Chapter 7: Tribal Areas: Redeeming the Promise 209 8.24: Group Farming 267 7.0: Introduction 209 Chapter 9: Spreading the Industrialization 269 7.1: The Present Status of Tribal People in Maharashtra 209 9.0: Introduction 269 7.2: Causes of Deprivation 214 9.1: Promoting Industries in Lagging Regions 269 7.3: Recommendations 222 9.2: Impact of Incentives on Shares of Industrial Output 272 7.4: Administrative Reforms 225 9.3: Policy - Reforms 276 7.5: Rights and Endowments 226 9.4: Emerging Avenues for Future Industrialization 288 7.6: Development Deficit and the Necessary Programes 227 9.5: Opportunities for "Knowledge-Based" Industries 292 7.7: Education 228 9.6: Concluding Remarks 292 7.8: Health 229 iv v High Level Committee for Balanced Regional Development Contents 4.7: Resource Mobilization for Achieving Regional Balance 132 7.9: Excise Policy 230 4.8: Indicators For Restoring and Sustaining Regional Balance 134 7.10: Jobs Reserved for the Tribals 230 4.9: Allocation Formulae and Computational Procedure 135 4.10: Review Caveat 141 Chapter 8: The Role & Challenges of New Agriculture 231 4.11: Flagging An Emerging Issue: Urbanization 141 8.0: Introduction 231 4.12: Early Actions: Quick Wins for Restoring Trust 144 8.1: Regional Development Potential in Agriculture Sector 232 4.13: Summing Up 145 8.2: Water Resources in Agriculture 232 8.3: New Command Area Development Agency 233 Chapter 5: Regional Strategies for Growth Acceleration 147 8.4: Compulsory Micro Irrigation for High Water Consuming Crops 234 5.0: Introduction 147 8.5: Regional Water Budget for Agriculture 236 5.1: Growth Strategies for Vidarbha 148 8.6: Crop Specific Initiatives 237 5.2: Growth Strategies for Marathwada 155 8.7: Crop Development 239 5.3: Growth Strategies for Rest of Maharashtra 160 8.8: Horticulture Development 240 5.4: Growth Perspective for Vidarbha and Marathwada 170 8.9: Animal Husbandry and Fishery Development 242 5.5: Concluding Remarks 170 8.10: Maharashtra Agricultural Mechanization Mission 243 8.11: Custom Hiring Centres for Agriculture Machinery and Implements 245 Chapter 6: Governance: Towards Greater Regional Empowerment and Accountability 171 8.12: Agro-Industries Development Program (AIDP) 245 6.0: Introduction 171 8.13: Regional Agro-Industries Development Corporation - A New Role 246 6.1: Major Milestones in Regional Governance 171 8.14: Agriculture Credit and Inputs 247