State-O-Nomics: Exports to fuel the Madhya Pradesh growth engine

Textile Hub: From tourism to agriculture and from medicine to infra, Madhya Pradesh is becoming a secure investment destination for leading industries in the country. Building brick by brick, the state is running trial runs for its first metro rail network in Bhopal and Indore, right before the state assembly elections. An agri-based economy The economy of Madhya Pradesh is driven by a substantial contribution of agriculture. According to the Annual Soya Outlook Report 2022 released by PJT State Agricultural University, Madhya Pradesh accounts for 60 per cent of India’s total soybean production with 55.84 lakh hectares of area dedicated only to Soyabean. Agriculture provides the livelihoods of 58 per cent of Madhya Pradesh’s population | Image credit: UnsplashMadhya Pradesh also accounts for 36 per cent of gram production, 25 per cent of oil seeds production, and 24 per cent of national pulse production in the country. According to the Central Bank of India’s state profile of Madhya Pradesh, 35 per cent share of state GVA comes from the primary sector, especially agriculture and allied sector. However, the distribution of land-holding patterns in the report highlights the concerning gap between the marginal and medium farmers with more than 48.33 per cent of farmers falling in the marginal category. According to the World Economic Forum, agriculture provides the livelihoods of 58 per cent of Madhya Pradesh’s population and reducing the reliance on MSP by the government is a commendable step towards economic inclusivity for farmers. “Madhya Pradesh has recognised the importance of tapping into this resource, especially as this scheme allows convergence between various government policies and schemes. It is noteworthy that the state has the highest number of sanctioned proposals at 3609. Of the amount disbursed in the country, approximately 36 per cent of it came through Madhya Pradesh,” the report stated. Industries in Madhya PradeshMadhya Pradesh is working towards pivoting its agri-centric economy towards an industry without compromising on the traditional advantage that the state has leveraged to create an existing supply chain for agriculture. According to the government, Madhya Pradesh has abundant human resources to cater for the needs of industries entering the state. The report claims more than 2,00,000 technical professionals pass out every year in the state. Apart from that, the state also has a strategic location and can be reached from anywhere in the country within 24 hours by road. Madhya Pradesh has the Atal Pragati Path, the Narmada Expressway, and the recently approved Delhi-Nagpur Expressway. Here’s a brief breakdown of Madhya Pradesh’s most prominent industriesTextile IndustryMadhya Pradesh is known for its spinning and weaving mills. The state has a significant presence in the textile sector. According to the Invest MP report published in 2019, MP has more than 60 textile mills and produces more than 24 per cent of the world’s total organic cotton production. Image credit: UnsplashMadhya Pradesh's textile industry is diverse, producing a range of fabrics like cotton, silk, wool, and jute. The state is renowned for its handloom and handicrafts, with clusters specialising in Chanderi and Maheshwari sarees. These textiles not only cater to local needs but also have a thriving market nationally and internationally.Cement IndustryMP boasts a robust cement industry, being a significant producer in India. The state's strategic location and abundant limestone reserves fuel this sector's growth. According to the India Brand Equity Foundation, Madhya Pradesh is the largest cement-producing state in India, with a production capacity of over 100 million tonnes per annum (MTPA). MP’s most important centres of cement manufacturing are Katni, Jamul, Satna, Durg, and Maihar. Key players like UltraTech Cement and ACC have a notable presence in the state, contributing to the nation's cement production and meeting infrastructural demands.Automobile IndustryMadhya Pradesh is home to 30+ OEM manufacturers, 100+ engineering manufacturers, and 200 thousand+ technical automobile professionals, making it one of the most prominent centres of automobile manufacturing in the country. According to the InvestMP report, MP has developed world-class infrastructure including industrial parks, ICDs, industrial corridors, and testing facilities. Image credit: PexelsSpread across 2,000 hectares, Pithampur Auto Cluster has over 120 large units and 450 medium units with a combined investment of $11.3 billion. Volvo Eicher Commercial Vehicles and Tata Motors have prominent plants in the same auto cluster. IT IndustryIn recent years, Madhya Pradesh has been making strides in the IT sector, with Indore and Bhopal emerging as IT hubs. In 2022-23, the state's IT exports were estimated to be around Rs 10,000 crore. The state is home to over 1,000 IT companies, including some of the biggest names in the industry, such as Infosys, TCS, and Wipro. Madhya Pradesh is home to a number of IT parks and special economic zones (SEZs), which provide state-of-the-art infrastructure and facilities to IT companies.MiningMadhya Pradesh is the fourth-largest mineral-producing state in India, accounting for over 10 per cent of the country's total mineral production. The state has a rich mineral endowment, with over 40 different minerals found within its borders. The most important minerals produced in Madhya Pradesh include coal, iron ore, limestone, dolomite, and marble.Image credit: PexelsThe mining sector contributes around 3 per cent to the gross state domestic product (GSDP) of Madhya Pradesh and employs over 500,000 people in the state. In 2021-22, the state produced over 200 million tonnes of minerals, including:Coal 100 million tonnesIron ore 30 million tonnesLimestone 50 million tonnesDolomite 10 million tonnesMarble 5 million tonnesExports from Madhya PradeshMadhya Pradesh is targeting an 11 per cent increase in exports for the fiscal year 2022-23 compared to the previous year. The surge is expected to be driven by agricultural products, electronic equipment, engineering, and automobiles. Image credit: PexelsThe state aims to achieve export figures of Rs 65,000 crore in 2022-23, a notable rise from Rs 58,407 crore recorded in the fiscal year 2021-22. The past fiscal year already witnessed a record high in export value. These insights were shared during a session titled 'Fostering Exports from MP' on the concluding day of the Global Investors' Summit.Challenges in front of Madhya PradeshDespite a focus state’s infrastructure and increasing the per capita income of the farmers, the government needs to focus on some critical aspects of the economy where it lags behind. Poverty is still a major challenge in front of Madhya Pradesh with more than 42 per cent of the urban and 36.9 per cent of the rural population falling in the category of poor. The state's agriculture sector is highly dependent on rainfall. Droughts and floods can have a devastating impact on agricultural production and incomes. The government needs to have sound precautionary mechanisms and distribute the economic reliance on the other parts of the economy. The state's industrial sector is dominated by a few large industries, such as cement and steel. This makes the economy vulnerable to shocks in these sectors.Unemployment is another major concern for Madhya Pradesh. According to the data on joblessness presented in the monsoon session of the state assembly last year, there were over 25.8 lakh unemployed youths in the state as of April 1, 2022. MP’s future economic growth is likely to be driven by a good mix of domestic consumption and healthy export volumes on the back of sturdy infrastructure support.

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State-O-Nomics: Exports to fuel the Madhya Pradesh growth engine

Amid the ongoing stir of elections, freebies, and lucrative promises, Republic’s State-O-Nomics series analyses Madhya Pradesh’s current state of the economy.

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