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Vijay Kelkar panel bats for balanced industrial development in Maharashtra

A high level committee headed by economist Vijay Kelkar on ”Balanced Regional Development Issues in Maharashtra” has recommended a 2% rebate in sales tax and a 1% cut in interest rates on capital borrowed from banks.  This, the committee said, will boost the manufacturing activity and help in drawing greater private investments into the state, especially to the underdeveloped Vidarbha region. 

The committee was set up by the Congress-NCP government in 2011 and submitted its 593-page report in October 2013. It was tabled by the BJP-Shiv Sena government in the state legislature on Tuesday. 

The committee has also suggested declaring the entire Parbhani-Hingoli-Washim region a ‘Textile Zone’ with a special policy package for these districts to promote industry in the backward Marathwada area. 

Similarly, Aurangabad-Jalna should also be developed as industrial corridor with an industrial township between Shendra and Jalna and an independent Aurangabad Regional Development Authority for long-term development, the panel recommended.

The report observed that the design of the policy should evenly handle local specific needs and supportive infrastructure, pointing out that a one-size-fits-all approach would be counterproductive. State Finance Minister Sudhir Mungantiwar told lawmakers that the report would be discussed during the budget session after which the government would implement the committee’s recommendations.

The Kelkar Committee report also points out that industrialization has been uneven in the state with Rest of Maharashtra (RoM) leading Vidarbha and Marathwada in growth performance. While the state’s average industrial growth rate was 9.8% per year for 2001-2011, RoM grew at 10.9% annually while Vidarbha and Marathwada grew at 8.5% and 8.1%, respectively. 

”Taking a 5-decade perspective, today, one can clearly see the emergence of industries beyond the Mumbai-Thane-Pune belt. Many new industrial centers have emerged steadily, such as – Nashik, Kolhapur, Nagpur, Aurangabad, Ratnagiri. However, barring these few growth centers, the situation has not changed much in terms of either the inter district and inter-regional imbalance,” the committee said. Further, of the total number of industrial units set-up in the Maharashtra Industrial Development Corporation area was 33,355 of which 74.3% are located in the RoM region while the proportions of industrial units set-up in Marathwada and Vidarbha were 13.4 %and 12.3% respectively. The committee noted such pattern of concentration of industrial activity is bound to lead to regional imbalance in the industry sector .

The total amount of investment made in these industrial units was Rs 53792 corers. Of this, RoM got 74.6%, Marathwada 8.0%, and Vidarbha 17.4%.As for jobs created in these industrial units, total employment created was about 8.80 lakh, with the maximum 83.8% in RoM region. The shares of Marathwada and Vidarbha were 6% and 10.2%, respectively.

The committee also noted the need for creation of MSME Credit Guarantee Corporations to improve access to capital for the sector, setting up of Free Trade Warehousing Zone (FTWZ) in multi-modal international cargo hub and airport at Nagpur, and development of forest produce-based small and medium scale industries.

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