Opportunity to boost Maharashtra State GDP # 1



Basis statistics, establishing ground work

The state of Maharashtra has seen following change in state GDP (constant prices) has clocked a mere 5% CAGR from 2004-05.

Particulars 2004-05 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
 State GSDP (Constant) 6,10,192 6,66,944 7,42,042 7,75,610 8,35,929 8,96,767 9,47,550
GDP growth rate 11.26% 4.52% 7.78% 7.28% 5.66%


The tax revenue to GSDP (constant prices) is:

Particulars 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
State GSDP (current) 7,53,970 8,55,751 10,49,150 11,70,121 13,22,222 15,10,132
State GSDP (Constant) 6,10,192 6,66,944 7,42,042 7,75,610 8,35,929 8,96,767 9,47,550
Tax revenues 60,049 67,354 86,447 1,00,952 1,18,640 1,26,961 1,38,853
Total revenues 81,271 86,910 1,05,868 1,21,286 1,42,947 1,58,410 1,80,320
% of GSDP (constant)
Tax revenues 9.8% 10.1% 11.6% 13.0% 14.2% 14.2% 14.7%
Total revenues 13.3% 13.0% 14.3% 15.6% 17.1% 17.7% 19.0%
% of GSDP (current)
Tax revenues 10.8% 10.2% 10.1% 10.4% 10.8% 10.5% NA
Total revenues 10.8% 10.2% 10.1% 10.4% 10.8% 10.5% NA

GSDP : Amount in Rs. Crores

I will now not delve into analysis of the expenses pertinign to GDP etc., that will be a later section.

This current write up is aimed at creating growth in two areas:

  1. Education sector (~contributing 26% of total development expenditure and 38% of total social services expenditure)
  2. Power sector (current problem area for Power)




The following table shows basic statistics of expenditure

Particulars 2012-13 2013-14
Primary 15288 14552
Secondary 10720 12103
Higher Secondary 1763 1963
Total 27771 28618

Amount in INR cr.

Number crunching to certain operational statistics

Particulars Schools Exp. Enrolment Per School Per School / Per Month Per Enrol.
Primary 96,178 14,552 161,59,000 15,13,028 1,26,086 9,006
S SE 23,752 14,066 59,11,000 59,22,028 4,93,502 23,796
TOTAL 1,19,930 28,618 220,70,000 23,86,225 1,98,852 12,967


With an overall expenditure by the state to the tune of INR 28,618 cr., the average spend per school during the year including capex is INR 198,852 per school per month or INR 12957 per student (annually).

The question I am posed with today is:

  1. Is that enough
  2. Is that the best we can do
  3. Is that adequate to cater to the overall schooling requirement of the state
  4. Can we satisfied with the current state of affairs

According to ‘Elementary Education in India and Progress towards Universal Elementary Education Report (Flash Statistics 2013-14)’, the State ranks 13th at primary, 16th at upper primary & 13th at composite levels with EDI 0.63, 0.67 and 0.65 respectively. At composite primary and upper primary level, Karnataka, Kerala, Gujarat and Punjab rank 5th, 9th, 8th and 10th respectively.

These itself shows there is a lot to be achieved in terms of overall development.

EDUCATION and FOOD SECURITY are the two most important things needed to be achieved by a nation first. It is off utmost importance.

The above table and the quote from the Economic Survey leads me to believe that the overall spending by the state albeit at satisfactory level is inadequate to generate / give boost to overall education sector.

Two of the key projects I have observed are seeing a high expenditure i.e.

  1. Mid Day Meal Scheme
  2. Sarva Shikshan Abhiyan

Lets look at each one separately:

Mid Day Meal Scheme

As per Survey “During 2013-14, number of students benefitted for class I to V and class VI to VIII were 69 lakh and 40 lakh respectively and expenditure incurred was INR 1,151.49 crore”.

Particulars Unit of Measurement Amount
Total MDM expense INR crore 1152
% of total education spend % 4.03%
Beneficiaries No. of students 1,09,00,000
INR spent Per Beneficiary annual INR 1057
Assumed no. of school days Days 222
INR spent per student per day INR 4.76


My basic question is, “Is average spend of Rs. 4.76 / student / day” enough. “CLEARLY NOT”

Further, I believe the current system of local procurement of food products and then cooking it cannot be subjected to quality control. In fact, in absence of right agency or food audit structure, we cannot ensure right quality reaches.

The better approach would be:

  1. Identify key vendors F&B related companies such as Taj, Oberoi, M&M, Infosys, etc.
  2. Identify key agencies engaged on food quality control

I will get in the operational mechanics later, however, I believe the spending per student needs to be increased on a fast forward and immediate basis. In fact, the need of hour is also enhancement in overall school infrastructure. We cannot be happy with probably 1 or 2 computers in the school; the need is to ensure that there is at least 30 computers in each school.

In fact, these computers should double as information agents for Farmers as well for understanding cropping patterns, filling in farm related information.

Accordingly, without getting into much details let me bring out a CAPEX & OPEX plan for overall Educational sector in the state

School Modernization Program

Particulars Schools Gov Schools Expect schools
Primary 97,072 80% 77,658
Secondary & Higher Secondary 24,463 80% 19,570
Total 1,21,535 97,228


Building a modern Public School and ensuring overall cost:

Particulars Remarks Per School Per Unit Amount (INR cr.) Nature of expense
Schools to be consider 97228 schools        
No. of large screens (40 inch screen in each class) 10 screen/school costing Rs. 25,000/sch. 10 25,000 2,431 Capex
No. of computers 30 comp./school costing Rs. 35,000/sch. 30 35,000 10,209 Capex
Electronic equipment * Cameras, Biometric attendance, etc. 1 10,00,000 9,723 Capex
Library Books 1000 books per school costing average Rs. 300 per book 1,000 300 2,917 Capex
Books Notebooks & stationery for students for the year costing Rs. 100 per child 100 110 Opex
Uniforms Dress and shoes per student costing Rs. 750 per child 750 828 Opex
Internet Internet cost for connecting each school at Rs. 5000 per month per school which shall be Recurring in nature 5,000 60,000 583 Recurring
Mid day meal scheme Spending Rs. 40 per meal per beneficiary student costing annually Rs. 9799 cr. 40 9,799 Recurring + Capex
Total Cost   36,600
Construction Making each school better, habitable, increasing classrooms, getting power fittings right, painting, etc. 20,00,000 20,00,000 19,446 Capex
Total cost   56,045.3


All the above cost are important for each school to ensure that quality education and setting is provided. In fact, I would urge the government to consider not jut Mid Day Meal, but All MEAL for kids and ensuring that the kids come to school twice a day. Plus, the uniform should be provided to each

Financing Expansion


Particulars Notes Recurring

(INR cr)


(INR cr.)


(INR cr.)

Total 6,421 49,624 56,045
Funded By
Budgetary support By way of state government support 6,421 20,408 26,829
Balance cost 29,216
Full filled by
 – Corporate bonds Tax free bonds bearing interest (10% of balance cost) 2,922 2,922
 – ADB / WB Tax free bonds bearing interest (40% of balance cost) 11,686 11,686
 – Central support Budgetary grant (40% of balance cost) 11,686 11,686
 – Public Bonds Tax free bonds bearing interest (10% of balance cost) 2,922 2,922
Total   29,216 29,216
Current state GDP 9,47,550
Boost to GDP 56,045
% Boost 5.9%


This one time expenditure shall create long term growth initiative with educated students and parents willing to send them to the schools.

In fact, the primary conditions for giving such high orders for:

No. Item Amount Remarks / Benefits to Maharashtra
1 Computers INR 10209 cr. so computer manufacturer either in India or Maharashtra under “MAKE IN INDIA “ or “MAKE IN MAHARASHTRA”. This should be proper PC like a DELL PC or HP PC or LENOVO PC which is bought by companies like INFOSYS, TCS, etc.
2 Electronic Equipment INR 9723 cr Electronic equipment manufacture against this order to start as “MAKE IN INDIA “ or “MAKE IN MAHARASHTRA”

Target quality similar to

  1. Large screen like a 32 inch to 40 inch screen from a manufacturer such as LG, Samsung, etc.

In fact, for such order, cost can be reduced to huge level due to large scale procurement.

This one time large scale capex planned will take the education sector in Maharashtra to a different level.

A proper revenue / financial model can be designed as well to ensure that the state will not be in deficit. However, one thing important is you will raise overall EDUCATION in the state to a huge level.

Expected growth in JOBS and further CONSUMPTION BOOST

Jobs created in MH per cr of capital investment 2.75 jobs per Crore of investment
Total jobs created 1,36,222
Average salary per job Rs. 12,000
Total salary generated per year Rs. 1962 cr.

This salary will be used to boost overall economic growth, boost demand and kick start consumption cycle. Plus, new jobs in MAKE IN MAHARASHTRA remain additional boost.



India is a power starved nations, and I will not get into statistics. In fact, I am happy that the government has huge focus on SOLAR. The government has drafted a great policy  on Renewable Energy. However, more is needed and in fact with the deep pockets of IFC, Softbank, etc., the government should rather create a separate SOLAR POWER COMPANY. (I will not get into land acquisition, it is addressed in the attached report).


Just to give you an example of Maharashtra:


Following is land utilization statistic of Maharashtra:

Land analysis 1986-87 2012-13 Absolute 27 Area for solar % used Land allocated
(area in ‘000 hectares)
Total area 30758 30758 0.00% N/A
Forest Area 5350 5207 -143 -0.10% N/A
Land not available for cultivation
– Barren uncultivable land 1679 1722 43 0.09% Y 1% 17.22
– N/A Land 1152 1456 304 0.87% N
Other uncultivated Land
  – cultivable waste land 1044 916 -128 -0.48% Y 1% 9.16
– permanent pastures / grazing land 1367 1245 -122 -0.35% Y 1% 12.45
– land under misc trees & groves 196 251 55 0.92%
Fallow Land
– Current fallows 909 1418 509 1.66% Y 1% 14.18
– Other fallows 1057 1200 143 0.47% Y 1% 12
Cropped Area
– area sown 18004 17344 -660 -0.14% N
– area sown more than once 2320 5772 3452 3.43% N
Gross cropped area 20324 23116 2792 0.48% N
TOTAL             65


Setting up SOLAR power plant

Total land available (‘000 HA) 65
Acres available 1,62,525
Acre for 1 MW of solar plant 5
Total MW of solar possible 32,505
GW Possible 33
Cost per MW of solar (Rs. in crore) 6
Total cost of project (Rs. in Crore) 1,95,030


Solar SPV company financed by:

Financing INR in cr.
State 10% 19,503
Foxcon/Softbank 20% 39,006
Centre 10% 19,503
Long term debt * 60% 1,17,018
Total 1,95,030

(ECB borrowing at LIBOR plus all in cost, from IFC, World Bank, etc.)


Amount pledged by Softbank & Foxconn
In USD BN 20
In INR Cr (@ Rs. 65/USD) 1,30,000


Boost to GDP:

Current state GDP 9,47,550
Boost to GDP 1,95,030
% Boost 20.6%

Amount in Rs. Crore



Expected growth in JOBS and further CONSUMPTION BOOST

Jobs created in MH per cr of capital investment 2.75 jobs per Crore of investment
Total jobs created 442,523
Average salary per job Rs. 12,000
Total salary generated per year Rs. 7709 cr.

This salary will be used to boost overall economic growth, boost demand and kick start consumption cycle. Plus, new jobs in MAKE IN MAHARASHTRA remain additional boost.



Lets start small say tap the unutilized MIDC land as under:

Hectares 7,952
Acre 19,880
Acre for 1 MW of solar plant 5
Total MW of solar possible 3,976
Cost per MW of solar (Rs. in crore) 6.00
Total cost of project 23,856
Total GW of SOLAR possible 3.9 GW
RE Current Installed Capacity 5,207
Growth vs. Existing Capacity 76.4%


Now, given the niche of the industry, better to award to contract to Solar City, Yingli, etc., with the commitment to MAKE IN INDIA. In fact, better to award to professionals and employ LOCALs. This is Rs. 200,000 cr., order book, the world will come running to give set up in India. One may argue this is large. Lets take a 5 to 7 year horizon and implement this, explore option to make this HAPPEN, rather than discuss how it cannot happen.

And, along with Solar, the same land should have a agriculture development possibility within SOLAR premise; like Horticulture that can happen in shade or pathways, etc.

We can work a detailed financial model to see what the burden of power cost will be; how new  technology adoption can come into play, etc or how to make it profitable only to such extent that government can buyback Foxcon stake at a committed IRR.

– END –

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