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'Rs 9-billion FDI set to flow into Maharashtra'

Our Correspondent in Bombay

Maharashtra Chief Minister Vilasrao Deshmukh has said his recent visit to the United States and other Western countries to attract foreign direct investment would result in investments valued at Rs 9 billion.

On Monday, the state government, traders and industrialists agreed to work together to regain the lost glory of the most developed and industrialised state in India. Deshmukh participated in an interactive session with industry captains organised by the Indian Merchants' Chamber in Bombay on Monday. He said the state government is determined to reverse the recent trend of Maharashtra conceding the initiative to states like Andhra Pradesh and Karnataka in attracting foreign investments.

(Click here to listen to Deshmukh's plans to transform Maharashtra into an economic superpower.)

He told an audience comprising the likes of Adi Godrej, chairman of the Godrej group, and Shekhar Bajaj, chairman, Bajaj Electricals, that the state government is keen on promoting the new economy sectors like Information Technology and telecommunications even as it tries to strengthen infrastructure areas like ports.

Industry stalwarts said they are optimistic Maharashtra would regain its top position among the states, thanks to the positive attitude and leadership of young leaders like Deshmukh and the Finance Minister Jayantrao Patil.

M N Chaini, president, corporate affairs, Reliance Industries, and chairman, Privatisation Study Group (instituted by the state government) made a presentation on how privatisation could be pursued. He urged the government to play the role of a facilitator and not a business entity. Chaini said the government should restrict its enterprises to fields like environment, health, primary education, revenue, land, rural development, law and order, regulatory bodies, employment and safety.

Finance Minister Jayantrao Patil said the government is considering setting up a Settlement Commission to address sales tax issues. There is some confusion and delay in the implementation of uniform floor rates of sales tax agreed upon by states in 1999, he conceded. "The common man is not affected by these rates," he observed.

He agreed the government has no business to be in business. "Some people even term the water supply service as a business. Fair enough. The state government is willing to come out of areas like water supply, provided others agree to take up the responsibility," he said.

The chief minister said the proposal to set up a permanent exhibition-cum-convention centre in Bombay on the lines of Pragati Maidan in New Delhi is under active consideration. He also said the government was trying to get the Urban Land Ceiling and Registration Act repealing at the earliest.

When a participant suggested that the government-industry interactions should be held every six months, Deshmukh interjected: "Why six months? Why not every two months? Let's do that. You invite me and I will be here. I want to do away with red-tape and replace it with red carpet."

However, Deshmukh ruled out abolition of octroi saying that local bodies need funds and it is not always possible for the state government to sustain them through grants etc. He said a commission has been set up to evolve a transparent and practical method of fixing tariffs for public utilities like power. "We are also looking at different ways of restructuring the Maharashtra State Electricity Board and other public utilities," he said.

Soon after the meeting, Deshmukh spoke to rediff.com's Y Siva Sankar. Excerpts:

On the response he evoked among investors during his recent visit abroad.

Deshmukh: People in the US were under the impression that we don't have a progressive outlook. But we changed all that. We are expecting a lot of investors to foray into Maharashtra. Our estimates are that close to Rs 9 billion will be invested in due course of time. This is the bare minimum.

Once the doors are opened, the investors will see the infrastructure that has already been created and spread the word among their counterparts.

On whether Maharashtra has any specific strategy to square up against Tamil Nadu in attracting foreign investments.

Deshmukh: Tamil Nadu is have got two major projects. Otherwise, they lag behind us.

On what the state government would do to strengthen the old economy sectors even as it focuses on the new economy.

Deshmukh: I agree with Prime Minister Atal Bihari Vajpayee that we should not lose sight of the old economy in the euphoria over the new economy. Industries like sugar, garments, engineering, automobiles, consumer goods - their position will remain intact. But tomorrow's age is the age of IT.

On the competition from Andhra Pradesh Chief Minister Chandrababu Naidu and Karnataka Chief Minister S M Krishna.

It keeps me on my toes.

On whether his three visits to the BSE in four months have helped him to learn anything about the capital market.

No. It will take more than that to understand the goings-on in the capital market. Besides, it is always better not to understand much.

Money