‘Vadhavan, data hub will help boost MMR’s growth’

MUMBAI: Praveen Pardeshi, the chief economic advisor to Maharashtra chief minister Devendra Fadnavis and the CEO of Maharashtra Institute for Transformation (MITRA) says the Mumbai Metropolitan Region (MMR) will see spurt in the growth, thanks to new projects such as the Vadhavan port, as the state’s own efforts to make MMR a hub for data centre industry among others. In an interview with Shailesh Gaikwad and Surendra P Gangan, Pardeshi also threw light on key sectors, automobile and software development, that generate revenue and employment; and also the growth in artificial intelligence.

What are the challenges you are likely to face as chief economic advisor?

There are three challenges.

First, CM Fadnavis wants to know how we can push public investment led growth. The government can invest in sectors such as dams, roads, power and ports. We have to mobilise additional resources without increasing tax cuts. We are trying to get a $10 billion loan from foreign funding agencies for 15 years.

The second is futuristic thinking. We have significant revenue as well as employment in the software-IT and automobile sectors. Given that the world is moving to artificial intelligence (AI), we need planning in areas such as quantum computing, which increases speed of computers by many million times, or else our software industry will be at a standstill and some new country will take over. We are working with CDAC, Tata Institute of Fundamental Research and other institutions to achieve this. We have also suggested to appropriately enhance the curricula at engineering colleges.

The same goes for the automobile industry, in which Maharashtra is a leader. Pune exports about 70 percent of automobile parts. What will happen in everybody moves to electric vehicles (EVs)? How will we plan the transition – an EV policy is required.

The third challenge is in evidence and data based decisions – it’s not a small thing; while the government does a lot of work in that area, accuracy is not always on point.

Considering the financial crunch in the state, how are you planning to raise funds?

We are working with Asian Infrastructure Bank (AIB; headquartered in Beijing) for support. Our ambitious projects like the Marathwada water grid or river linking will require massive funding for which we have tailored a specific policy.

We are adopting policies to mitigate climate change: covering parts of irrigation reservoirs with floating solar panels to generate clean energy, recycling waste water and using fly ash and other green material in the road construction, are some measures. Once the policy is in place, AIB will provide us ₹8000 crore.

Will this loan not add to the state’s debt burden?

It’s not a high burden – our capital expenditure is between 1 and 1.5 percent of our gross state domestic product (GSDP). The permissible limit is 2.5%.

This fiscal space will allow us to borrow. We should use it for capital expenditure and not revenue (routine) expenditure. The fund should be used to build concrete roads in villages or treat non-communicable diseases among the poor. That would improve human development.

Today, diseases such as heart attack, cancer and diabetes-related complications lead to 54% of our mortality. The poor cannot afford screening. They learn about it when it is too late for treatment. The funds can be used to for early detection which will enhance better human capital, and increase gross domestic product with a healthier population.

Is there any thinking about resolving two perennial problems affecting Maharashtra – farmers not earning enough from their produce and unemployment?

We are working on a project for onion farmers. Their problem is that whenever their production is high, prices crash and they suffer. We have proposed seven sites where large onion storage banks can be built, that can hold stocks for up to one year. This will help in stabilise prices by regulating supply.

Private parties can run these storage banks. Farmers’ cooperatives can also come forward to run them; we will give them land at concessional prices.

Is there any strategy for unemployment?

We are working with the Gokhale Institute of Politics and Economics to map employment elasticity of different sectors, such as if there is a 10% growth in steel production in Maharashtra or IT services, how will it translate into growth in jobs? This way, we will know which sectors have high employment elasticity. We already have some intuitive answers. Like, jobs from tourism are far higher with the same amount invested in automobile production. So, now if you want to push for jobs, the state has to enable those sectors that are job intensive with supporting infrastructure.

We also have to look at reforms in Industrial Disputes Act, Apprenticeship Act etc to make it easier for employers to create formal jobs.

How is MMR faring in growth?

MMR will witness a spurt in growth considering the infrastructure that is being built.

The Mumbai Coastal Road will be extended till Virar and beyond, which is significant. The Vadhavan port will also boost growth. It is one of the main components of the plan for the MMR. Mumbai as well as JNPT (Raigad) ports cannot hold more capacity. Vadhavan will be 10 times bigger than JNPT. Chief minister Fadnavis is planning road link from Vadhavan to Nashik, among other connecting infrastructure for the port. The CM’s war-room is also working on bringing in private industry, especially port-based industries. All of this will cluster around Vadhavan.

With other states competing in secondary or manufacturing sector, is Maharashtra looking at the service sector for growth?

It is our priority. We have developed a policy for data centre, thinking ahead for MMR. We are expecting an investment of $22 to $25 billion in the sector. Data centers would need up to 1.8 gigawatts of power.