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REAL ESTATE: Chief Minister Vilasrao Deshmukh wants to transform Mumbai into another Shanghai and has put key people in charge of the makeover

Spectre of people wading in neck-deep water exposed the state's apathy towards Mumbai's infrastructure and the failure of successive governments to give the city its due. Though the municipal corporation and the state Gover-nment tried playing the blame game, the people were in no mood for excuses. The chief minister's vision of transforming Mumbai into Shanghai became the butt of many jokes. It was clear that the Democratic Front (DF) Government had to drag itself out of its state of stupor if it had to clock a growth that was higher than the national average of 8.3 per cent. In order to do this, addressing the issue of infrastructure and investment climate in the state became mission critical.

STATS OF THE STATE
97 million is the state's population; 9.4% of the nation's total	77.27% is the state's literacy rate; ranked 10th in the country	43% of the population live in urban areas, highest in the country
Rs 2,95,191 cr is the state's GDP; contributes 13% to the national GDP	19% is its contribution to the nation's total FDI	1,843 is the number of farmer suicides in the year 2005-06

PICTURE SPEAK

The state has been unable to stem suicides by farmers. even a Rs 3,750-cr package from the centre has failed to check the tide of such tragic deaths.

Cleaning up the decade-old decay is turning out to be quite a task. This period has seen the state slump to number three from being the number one investment destination. But from a power surplus state, it went on to become a power deficit state and the debt burden ballooned to Rs 1.15 lakh crore. But a turnaround came when the Reserve Bank of India Bulletin in August 2006 announced that Maharashtra was the state with maximum corporate investment, surpassing Gujarat. In 2005-06 Maharashtra has out performed the competition with a total investment of Rs 26,947 crore (20.1 per cent of the total investment) followed by Gujarat (Rs 24,531 crore) and Tamil Nadu (Rs 12,160 crore). Even in FDI, the state has received 3,893 proposals with investment of Rs 56,628 crore while in 2005-06 the state attracted 126 proposals involving investment of Rs 3,974 crore. Even as the investment climate in the state started looking up, urban infrastructure was collapsing.

KEY POLICY DECISIONS
SEZ POLICY: This policy proposes to exempt SEZs from state and local taxes or levies under various state Acts, full freedom to developers to plan world-class infrastructure at competitive costs. At present, there are 72 SEZs which have been cleared with an investment of Rs 60,000 to Rs 70,000 crore.	AGRICULTURE POLICY: Factories Act will be not be applicable to greenhouses and cold storages used for horticulture, nurseries and tissue culture labs. Amendment to APMC Act will permit private markets and contract farming. Under the accident insurance scheme, introduced in 2005, over 100 lakh farmers have been insured.	DRAFT HOUSING POLICY: In its draft housing policy, the state has decided to focus on making housing more affordable by providing higher floor space index. The policy aims at declogging Mumbai. It provides for Dharavi slum makeover that will allow land to be used for private residential and commercial complexes.
TOURISM POLICY: Tax exemption of up to 100 per cent has been granted to tourism-related projects. Major focus will be on development of Sindhudurg, medical and Bollywood tourism. Mumbai Haat will also be developed on the lines of Dilli Haat apart from starting night cruises along the coastline.	MEGA PROJECT POLICY: The policy intends to put on fast track projects with investments in excess of Rs 500 crore or with an employment potential of 500 to 1,000 persons. Customised packages for industry have been evolved and a single window clearance is being offered to ensure fast-track project approvals.

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The state government is trying to decongest Mumbai. The redevelopment of Asia's largest slum Dharavi is expected to ease the land crunch.

One of the first things that Deshmukh did on assuming power in 2004 was to give the industries department a clear mandate to turn around the state's fortune in a year's time. The first step in this direction was the introduction of Mega Project Policy in June 2005, under which projects with investments in excess of Rs 250 crore or Rs 500 crore or with the potential to generate employment for 500 or 1,000 persons depending on the location, are granted "mega project status." These projects are put on the fast track through a single window clearance offered to them.

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The state has built up an electricity generation capacity of 7,000 mw, but it is still to get over the Dabhol power company disaster

After losing some high-profile investments like Nokia's special economic zone (SEZ), BMW's car assembling unit and the Tata Small Car Project, the state's policy started yielding returns. Ever since it bagged Mahindra's Logan car project in 2005, there has been no looking back (see box). Explains Deshmukh, "We have cut the red tape and rolled out the red carpet" (see interview). Over the past 18 months, Maharashtra has reclaimed its number one position. A pat on the back has come from IMD Switzerland's World Competitiveness Report 2006 which has ranked it at 37, an improvement from 42nd position in the previous year. According to this ranking, the state is ahead of developed nations like Italy, Korea, South Africa, Russia and Indonesia. It is the only state from India which has been evaluated by IMD in addition to India, in its report.

Maharashtra has attracted 33 mega projects involving investments of over Rs 42,000 crore during 2005-06. Says Jairath, "Maharashtra is developing clusters around which development will take place. The large projects will feed the smaller ancillaries." Over half a million cars are expected to roll out from its new factories-for both the domestic as well as the export market. The additional capacity created by these car makers is expected to add 10,000 direct jobs in skilled positions and at least 15,000 indirect ones in associated ancillary and service industries. The idea is to follow a hub and spoke model, where large industrial facilities create a network of smaller suppliers and vendors. So while the Chakan area would be the auto district, with the likes of M&M, Bajaj and General Motors setting up shop there, Vidarbha would attract agro and food processing units.

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The construction of a trans Harbour link and the commissioning of the metro are expected to ease the woes of Mumbai's commuters

The SEZs fall perfectly in place with the state's policy of promoting industrial clusters. With 72 approved SEZs, the state leads the race with the maximum hassle-free industrial enclaves. Since most of the SEZs are either promoted by Maharashtra Industrial Development Council (MIDC) or private parties which have their own land, the controversy over land acquisition is unlikely to impact them. The state's it policy too has been well received with 25 per cent of the top 500 it companies being based here. However, an incentive-driven investment is not the way forward, which is why the thrust area for the Industrial Policy of 2006 is infrastructure and employment. The state has built up the largest installed electricity generation capacity of 7,000 MW. The Mumbai Makeover, expected to be completed by 2020, is another thrust area which will see an investment of $60 billion (Rs 2,64,000 crore). The state is trying out a pilot project with Microsoft, which has set up three training centres across Maharashtra to train people in it skills.

5 BIG HITS

1 BOEING The company is investing $118 million (Rs 520 crore) to set up a maintenance, repair and overhaul (MRO) facility in Nagpur following a Rs 35,000-crore deal with Air-India. This venture will serve as an MRO facility to the Boeing family of airplanes for the entire South-East Asia. 2 GENERAL MOTORS The auto major is setting up its second manufacturing facility in Talegaon, apart from its existing plant at Halol in Gujarat. The company will invest more than $300 million (Rs 1,300 crore) in the greenfield facility, which will have an initial production capacity of 1.40 lakh vehicles annually with the capability for significant expansion and will provide employment to 1,000 people. 3 VOLKSWAGEN Volkswagen, the world's fourth largest car maker, will invest over $300 million (Rs 1,300 crore) in a new factory and create 2,500 new jobs. The factory will roll out a small car model by the second half of 2009. It will be set up on 500 acres of land in Chakan, near Pune. 4 MICO BOSCH Motor Industries Company Ltd (MICO), the flagship company of the Bosch Group in India, is committed to invest Rs 550 crore in the state over the next three years on common rail injectors and expansion of DSLA injectors at its Nashik plant. 5 RELIANCE MAHA MUMBAI SEZ Reliance Industries, in association with the state Government, is going to set up two massive SEZs across 14,000 hectare in Navi Mumbai and Maha Mumbai. The company is planning to invest Rs 25,000 crore in these SEZs which will export goods to other parts of India.

The current dispensation is aware that incentive-driven industry is not the long-term solution. If the state has to retain its position as the premier investment destination, it has to address the issue of infrastructure on a war-footing. Unchecked population explosion, migration and vehicle growth has put the existing infrastructure in the state's premier city under severe pressure. The clean-up drive has started from near home. The state Government is looking at beautifying the Marine Drive situated outside the main Secretariat. A special task force has been set up to enforce the Mumbai Makeover Project, the cost of which will be jointly borne by the state, the Centre and the World Bank. Similarly, the Mithi River, the prime factor behind the floods of July 2005, would undergo development and beautification. The entire state woke up to the existence of the river after the floods.

The second in line is the task of expanding the railway and road network through Mumbai Urban Transport Project (MUTP), and Mumbai Urban Infrastructure Project (MUIP), respectively. This is being done by the Mumbai Metropolitan Regional Development Authority (MMRDA). The two projects aim at developing eastern and western freeways, Mumbai Trans Harbour Link, Metro Rail and introduction of high capacity bus transit system would enable easy commute between the island city and its suburbs.

5 BIG MISSES

1 BMW PROJECT The world's largest luxury car-maker BMW AG decided to start its Indian operations in Chennai, despite a large auto hub in Maharashtra. The plant will import and assemble BMW cars in India. The project may have been small, but it was a much hyped one. 2 TATA SMALL CAR PROJECT Even though Tata Sons is headquartered in Mumbai and Maharashtra has been the auto hub, the company chose West Bengal for its ambitious small car project, which has run into rough weather over land acquisition in Singur. 3 VEDANTA UNIVERSITY Due to dithering over allotting huge tracts of land to Vedanta Resources, the company decided to set up its proposed Rs 5,000-crore university in Orissa. The multi-disciplinary university will be set up in phases. Enrollments will start from 2008. 4 NOKIA SEZ The telecom giant chose Tamil Nadu for its SEZ worth Rs 675 crore. Spread over 210 acres, this facility houses not only Nokia's handset manufacturing facility but also its partner vendors, generating employment for thousands of people in the state. 5 DABHOL POWER COMPANY The company, promoted by Enron, ran into rough weather in 2001 following disputes with the government over a power project and Enron decided to sell its stake in DPC due to payment disputes with Maharashtra State Electricity Board, its sole buyer.

As for Mumbaikars who find it impossible to afford a house in the land of booming real estate, the plan envisages release of vast tracts of salt pan lands, relaxation of Coastal Regulatory Zone regulations and redevelopment of dilapidated buildings. The redevelopment of Asia's largest slum Dharavi is also expected to ease the land crunch. To complete the makeover, BMC, MMRDA and the state will be jointly implementing the sewage disposal project and BRIMSTOWAD (Brihanmumbai Storm Water Drains) report to enhance the capacity of these drains to avoid another deluge in the city.

The state is also trying to boost its agriculture calibre. The dimpled agriculture graph of Maharashtra is the epitome of ironies. From being a surplus producer and pioneer of several welfare schemes, it has come to be known for its high decibel farmer suicides, floods and droughts. The current cotton crisis is a result of the years of neglect and the stepmotherly treatment meted out to Vidarbha. The state is still to spend Rs 527 crore allotted for irrigation purposes over the years in many development schemes. Domestic cotton prices have also lost out to the heavily subsidised cotton from the US in the international market. Over the next three years, the state will invest Rs 4,500 crore in irrigation projects in the district, but it may be a case of too little and too late.

INTERVIEW: VILASRAO DESHMUKH

"The Next Five Years Will Be Big For Maharashtra" Running a coalition government with an unfriendly partner is not a cakewalk, for most of the time is spent on managing the marriage than running the state. This is true for Maharashtra Chief Minister Vilasrao Deshmukh, who has managed to push through key policy decisions and bring the state back on the investment radar in his turbulent second term. He spoke to Associate Editor Malini Bhupta on his priorities and agenda. Excerpts: Q. What are the top three issues on your mind? A. First, the state has to remain the No. 1 investment destination in the country. In the last year or so, the state has been successful in garnering investments worth Rs 8,000 crore in the automobile sector alone. Chakan is slated to be the next Detroit. The second issue on my mind is employment. The new manufacturing facilities will require manpower-both skilled and unskilled. Finally, infrastructure for Mumbai is another top priority. We have already started widening the roads, building new flyovers and a parallel transport system like waterways. In three years we are committed to make this mode of transport functional. Q. Talking of infrastructure, Maharashtra is in the grip of a power crisis. How are you addressing this? A. In the last 10 years, we have not generated any power. However, MSEB has decided to generate more than 7,000 MW by 2010. The projects have been tied up and we are also looking at alternative energy resources like wind and biogas. Q. On paper, Maharashtra has taken some key policy decisions. But what about their implementation? A. There are limitations of running a coalition government, I admit, as the pace of implementation is affected. We have worked on industrial clusters that are coming up across the state, which will provide employment opportunity to the population living in rural areas. A cargo hub and SEZ are coming up in Nagpur while a textile park is coming up near Amravati and Yavatmal. Also a couple of food parks are coming up around Vidarbha. The next five years will be big for Maharashtra. Q. While millions of dollars come in as FDI, farmer suicides continue. Why has the government neglected areas like Vidarbha? A. Some parts of the state have been historically backward. Western Maharashtra has been at the forefront, thanks to the great leaders it produced, who paved the way for cooperative societies and Green Revolution. We have asked the Planning Commission to sanction funds to complete irrigation projects in backward areas like Vidarbha and Marathwada. Q. Do you feel that escalating real estate prices will become a deterrent for people to come to Mumbai? A. In this respect, the draft housing policy, which will be finalised in March 2007, is a key measure. The policy will facilitate the city's vertical growth. Also we are going to invest $50 billion (Rs 2,20,000 crore) in the Mumbai Metropolitan Region, which will include Thane and Raigad. We have to decongest the city by providing good infrastructure so that people can come in to work from distant suburbs.

But the state has been successful in implementing micro-irrigation scheme. It receives over Rs 173 crore from the Centre as horticultural aid. The state is the largest exporter of alphonso mangoes and now Marathwada is aggressively growing another variety called Kesar which has a big export market. In a couple of years, it may well pip Kerala as the biggest cashew producer. While micro-irrigation has helped the rain-fed state in facing water shortage, the fruit plantations have helped generate employment for 15.51 lakh people and increase fruit production up to Rs 6,300 crore. Despite problems of water shortage and shallow soil, the state is trying to boost productivity and reduce production costs through a campaign called Maharashtra Agriculture Productivity Improvement Campaign launched in 2005. The primary components of this are providing improved quality of seeds and technical know-how to farmers. The Government has been pumping in fresh seeds in the market every year.

MIDC is setting up specialised food parks to provide infrastructural support for the promotion of food processing industry and cash in on Maharashtra's agricultural and farming resources. Another objective will be to ensure a steady and superior income for farmers. The state has decided to set up its first park at Butibori in Nagpur spread over an area of 60 acres and process orange, sweet lime, pineapples, lemons and tomatoes. It would be propelled with facilities like warehousing, packaging and food testing laboratories.

After facing highs and lows in industry and agriculture, the state finally seems to have put a finger on the right pulse. "Like a model developing economy, the services sector contributes 61 per cent to Maharashtra's GDP, industry 26 per cent and agriculture contributes 13 per cent," says Sarangi. With a nearly perfect team of lieutenants, Maharashtra is now ready to march forward into the future, but its true test lies in translating words into action.

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