Chronicle Of A Death Foretold

Updated: Nov 28 2002, 05:30am hrs
Since I dont have access to any independent study, its difficult to argue with the predictions made by top newsmagazines and market research firms about the Bharatiya Janata Party sweeping the Gujarat assembly polls next month. A lot of people Ive met from the state, though, including bureaucrats posted there, do say the poll looks excessively optimistic. But whether Narendra Modis political fortunes are on the rise or not, one thing can be said with a great deal of certainty that Gujarat as an investment destination is looking increasingly dead. But lets not speculate on whether the states relative economic decline will get the shrewd Gujarati to vote against Modi since political science, much less psephology, is not my area of work.

According to data collated by the Centre for Monitoring Indian Economy (CMIE), the states income growth has been fluctuating wildly, but declining each time, over the past several years net state domestic product grew by 20 per cent in 1994-95 in real terms, fell to around 3 the next year, rose to 15 subsequently, and ended up just marginally over 1 per cent in 2000-01. Nor was this solely due to the decline in agricultural growth even industrial growth fell from a healthy 17 per cent in 1994-95 to under 4 per cent in 2000-01.

The CMIE data on investments depicts a similar sad story. While the level of investments announced by corporates has risen from Rs 85,000 crore in 1993-94 to Rs 1,69,000 crore in 2001-02, the figure for projects under implementation has been hovering around Rs 78,000 crore over the past few years indeed, the rate of implementation has fallen from 66 per cent to under 50 in this period. In other words, firms announce grandiose projects, the Gujarat governments data proudly adds up the thousands of crores of fresh investments, but the companies are not actually putting in any money into the projects. And why should they Would you as a General Motors want to invest more in your Halol plant after the unit was attacked during the post-Godhra riots

But why even talk of foreign firms like General Motors and blame it all on the communal situation in the state Long before Godhra began, even well-entrenched locals were having difficulty steering their projects past the various factions in the ruling party. The case of Nikhil Gandhis proposed Special Economic Zone (SEZ) at Positra is well-known. In early 2000, he managed to get the government to clear his project in the usual quicksilver speed the state was known for, and within a few months, after the then chief minister wrote to commerce minister Maran, even the central government okayed the proposal.

Then the fun began, and the project got caught up between various factions within the government. There were even loud whispers of exceptionally huge payoffs being asked for, though no one could really substantiate this and as a result of this, the Gujarat government never allotted land for the project for a full 27 months.

Gandhi moved the project to Maharashtra where he got clearance for his project from the government just a few days ago. The loss to Gujarat is not just the Rs 6,000-odd crore he would have spent to develop the SEZ, but the thousands of crores that would have come in with all manner of industrial units setting up shop in the SEZ that was supposed to be 80 per cent the size of Chinas Shenzen typically, a Re 1 investment in a Shenzen-type SEZ brings in Rs 40 of additional investment.

Or take the case of Gautam Adanis proposed SEZ. Its been over a year since he wanted to develop the 5,000 acres he owns around his port into an SEZ. Again, for reasons known best only to chief minister Narendra Modi, the SEZ has not been cleared. Adanis case is even more curious since hes held the land since the mid-90s, and various proposals to develop an industrial park among others on this land have not been cleared. Since Adani, unlike Gandhi, has already bought the land, the saving grace of course is that he wont move to Maharashtra, but the loss to Gujarat is there for even the blind to see.

Wholl Gujarat vote for on December 12 Governance or Godhra Either way, itll tell you whether its a first-world state or just another third-world one.