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Can Maharashtra be India’s California?
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India’s transformation into a USD 5 trillion economy by 2025 will depend critically on development of its sub-national entities, which can act as regional powerhouses triggering such growth. Maharashtra, the richest state in India, is one such contender to the position of a regional powerhouse, akin to California in the United States and Guangdong province in China. Indeed, the state is looking at transforming itself into a USD 1 trillion economy by 2025. This paper looks at the challenges to such transformation of Maharashtra into a USD 1 trillion economy using theoretical constructs of the Harrod-Domar rule, and Domar’s rules of fiscal sustainability. It posits that private sector investment, public debt sustainability and unbalanced regional development will be the three key constraints to such transformation.
Keywords
India, Maharashtra, Private Sector Investment, Public Debt Sustainability, Regional Powerhouses.
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