Economy and State Budget of Madhya Pradesh: Facts and PYQs

Madhya Pradesh sits at the centre of the country, without a coast and without a port, and its economy rests on land: black soil for soyabean and wheat, forests over a very large area, and a long list of minerals including the only diamonds mined in India. The state was the largest in the country by area until Chhattisgarh was carved out of it on 1 November 2000, after which Rajasthan became the largest and Madhya Pradesh the second largest. For MPPSC, MP Police, patwari, vyapam and SSC papers, two things are asked from this chapter: the economic geography, that is which crop, mineral or plant belongs to which district, and the budget, which is a constitutional procedure with its own articles. The note keeps to facts that hold from year to year.

Agriculture, forests and the farm economy

Madhya Pradesh is the largest producer of soyabean in India and is called the soya state, the crop growing on the black soil of the Malwa plateau and the Narmada valley around Indore, Ujjain, Dewas and Sehore. It also leads the country in gram, in pulses taken together, in garlic and in coriander, and stands second in wheat after Uttar Pradesh, for which it has won the national Krishi Karman award several times. Legal opium cultivation under licence is confined to a few districts, Mandsaur, Neemuch and Ratlam, a fact asked on its own. The state has the largest forest cover of any Indian state, so tendu leaves, timber and other forest produce support a large rural economy, and tourism at Khajuraho, Sanchi and Bhimbetka, each a world heritage site, adds to it. Wheat, soyabean, gram, maize and cotton make up most of the cropped area, and canal and tube well irrigation from the Narmada projects and the Chambal command decide how much of it is irrigated.

Minerals, industry and power

The mineral list is the heart of the chapter. Panna has the only working diamond mine in the country at Majhgawan; Malanjkhand in Balaghat holds the largest copper ore reserves in India; Balaghat and Chhindwara have manganese; Singrauli, Shahdol, Umaria and Anuppur have coal; Satna, Katni, Damoh and Neemuch have limestone, which has made cement the state’s biggest heavy industry; Jhabua has rock phosphate; and the state leads in diaspore and pyrophyllite. Industry grew around these minerals and around planned townships: Nepanagar in Burhanpur for newsprint, the Bank Note Press at Dewas for printing currency notes and the Security Paper Mill at Hoshangabad, now Narmadapuram, for making the paper, the heavy electricals plant at Bhopal, ordnance factories at Jabalpur, and Pithampur near Indore, the largest industrial estate of the state and its automobile cluster. In power, the Vindhyachal super thermal station in Singrauli district is among the largest thermal plants in India, the Indira Sagar and Omkareshwar projects on the Narmada are the main hydro stations, and the Rewa Ultra Mega Solar Park of 750 megawatt at Gurh in Rewa district became known as the first renewable project in the country to sell power to an institutional buyer outside its own state, the Delhi Metro.

The state budget and the Constitution

Madhya Pradesh has a unicameral legislature, the Governor and the Vidhan Sabha of 230 seats, so the budget is laid before one House only. Article 202 requires the Governor to have the annual financial statement of estimated receipts and expenditure laid before the legislature for each financial year, which runs from 1 April to 31 March. Article 203 keeps expenditure charged on the Consolidated Fund, such as the emoluments of the Governor and the judges and the debt charges, out of the vote, while the demands for grants are voted. Article 204 provides the Appropriation Bill, the only authority for withdrawing money from the Consolidated Fund of the State; Article 205 covers supplementary and excess grants and Article 206 the vote on account. Article 199 defines a money bill for a state and Article 207 requires the Governor’s recommendation for a financial bill. Article 266 creates the Consolidated Fund and the public account, Article 267(2) the Contingency Fund of the State, and Article 293 governs borrowing, which needs the Union’s consent while a central loan is outstanding. The Comptroller and Auditor General’s report on the state goes to the Governor under Article 151(2) and is examined by the Public Accounts Committee of the Vidhan Sabha.

Where the money comes from, and the fiscal rules

Mineral royalty and forest receipts matter more here than in most states, and liquor excise, unlike in a prohibition state, remains an own tax head. The state’s fiscal responsibility and budget management law, framed in the middle of the 2000s after the central Act of 2003, requires the fiscal deficit to stay within three per cent of the gross state domestic product, the revenue deficit to be eliminated and a medium-term fiscal policy statement to be laid with the budget. An Economic Survey of the state is published around the budget, and under Article 243-I and Article 243-Y a State Finance Commission recommends how state revenue is shared with panchayats and municipalities. Madhya Pradesh was also the first state to set up a department of happiness, an administrative first worth remembering with the economic facts.