Maharashtra’s Economic Growth surges with Mumbai Airport

The GVK managed Mumbai International Airport Ltd. (MIAL) today released a research study report conducted by independent agency The National Council of Applied Economic Research (NCAER) and titled ‘Economic Impact Study of CSIA, Mumbai’ according to which the state of Maharashtra is expected to reap windfall gains on the economic front from the Mumbai Airport. The Airport is also predicted to generate as high as about $ 10 billion from total (direct, indirect & induced) value added revenues of airport operations by the year 2022-23 or about 4.02% of Maharashtra’s GSDP.

The Mumbai Airport directly generated revenues of $ 600 million in the year 2009-2010 from the aviation operations and thereby contributed 0.44% to Maharashtra’s GSDP. More importantly, the Chhatrapati Shivaji International Airport (CSIA) created 41,000 jobs directly comprising about 0.010% of Maharashtra’s employment and combined figures for direct & indirect employment being 460,000. CSIA’s operations services contributed $1.82 billion in income, both directly and indirectly to Maharashtra’s GSDP with over $ 1 billion from air transport and $379 million from airport services. The total economic contribution of CSIA operations is $ 4.45 billion in 2009-2010 i.e. relatively 3.29% of Maharashtra’s GSDP. In terms of employment, the total contribution of CSIA’s operations is 1,403,000 jobs or relatively 2.86% of Maharashtra’s employment in 2009-2010.

When considered from 2006, the year Mumbai Airport management was undertaken by GVK, MIAL spent over $ 2 billion on the construction of the CSIA and directly employed 20,000 people during the construction phase. The construction also induced related multiple sectors such as Basic Metal & Metal Products, Non-metallic Mineral Products, Trade, Land Transport, Mining & Quarrying, Banking.

While the study did not quantify the impact of Mumbai Airport in inducing the economy i.e. the performance of other industries (mainly through tourism, trade, investments & productivity), the consistent FDI inflows into Mumbai and nearby regions can be to a considerable extent be attributed to the presence of better infrastructure facilities such as the Airport. For instance, the state of Maharashtra now tops the table for most foreign tourists at 5.12 million. The study suggests that the visit of each foreign tourist creates one job.

Furthermore, the direct and indirect impact of GVK Skycity Activities that aims to develop a unique world-class destination for passengers and for the local populi of Mumbai, is expected to amplify in the coming years with MIAL proposing to invest over $ 3 billion for the Skycity project with over 27,000 jobs to be created.

The future looks even more promising with the Passenger traffic forecast for MIAL predicted to reach almost 50 million by the year 2022-23 (domestic 32.40 & international 16.6). The revenue projections are estimated to be $6.67 billion till 2022-23 with direct contributions itself contributing about $1.29 billion; relatively 1.61% of Maharashtra’s GSDP.

Note:

Economic impacts were measured under the following categories:

• Direct impact –reflected by jobs and income directly originating from construction or its operations
• Indirect –Indirect impact is measured through multiplier effect using customised Input-Output (I-O) methodology which is suitable approach to capture the inter-industry linkages or multiplier effects of investment in the airport sector.
• Induced – Income and employment generated by attracting other activities, such as new investment and tourism.

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