Vibrant Gujarat 2013: A saga of confusion and contradictions

With the dust settling down after the recent Vibrant Gujarat Summit, DNA's Bhavesh Shah takes a closer look at the labyrinth of numbers associated with the biennial event, as well as its impact on state’s industrial output & job scene

Yes, it’s really a chakravyuh
In Mahabharata, Abhimanyu was fortunate enough to gain entry into the chakravyuh formation of the battlefield. Despite being a brave warrior, he got killed, as he did not know about the exit. A similar situation has arisen in Gujarat. The figures on number of MoUs signed, prospects of employment generation and proposed investment in the past five events does not give a clear picture of the industrial activity in the state.

It surely is a chakravyuh, a confusing and contradicting set of figures which does not give a clear picture of the buoyancy in the state’s economy. On the contrary, it hides some facts which need urgent attention.

Gujarat is one of the most prosperous states of the country. The state is highly industrialised and attracts huge investments. It contributes 18% of total industrial output of the country. All these are statements of facts. However, despite all efforts to get an idea of investments (under implementation, stalled, dropped, completed) in the last decade, one does not get a clear answer. The figures are vague and do not tally.

Look at these numbers: In the last five Vibrant events, the MoUs for investments planned amounted to Rs39.54 lakh crore. According to the department of industries and mines, the total investments in the state (between January 1983 and June 2012) was Rs11.31 lakh crore. According to Centre for Monitoring Indian Economy (CMIE), the total industrial investment in Gujarat between January 2003 and January 2013 was Rs20.05 lakh crore. The Department of Industrial Policy and Promotion puts the total investment in the state at Rs9.09 lakh crore.

Is this the real reason why principal secretary of industry and mines, Maheshwar Sahu, evaded questions on investment proposals expected during the sixth edition of Vibrant Gujarat Summit? “Don’t get into numbers. It is a chakravyuh,” Sahu had said in response to a query on the size of MoUs to be signed at the event. “We have no expectations (about the MoUs). No targets for investment have been given to anyone,” Sahu added.

The state government claims to have an established system to monitor the investment proposals; however, its claim does not translate into reality. “Gujarat has continued to witness impressive industrial development. Since January 1983, the state has received 13,231 industrial entrepreneurial memorandums (IEM) with an estimated investment of Rs10.25 lakh crore,” claims ‘socio-economic review of Gujarat state 2011-12’. “With a view to attract investors to establish project in the state Vibrant Gujarat Global Investors’ Summit (VGGIS) has been organised at regular interval of two years,” it states in the subsequent paragraph.

Even here, the data does not match. According to the review, the total investment under VGGIS was Rs39.54 lakh crore compared to Rs10.25 lakh crore of IEMs the state has received between January 1983 and September 2011.

One of the arguments could be about the change in the base period (the year in which data collection started). Second, it could be that MoUs are just aspirations of doing business without concrete pre-feasibility study of the projects. Whichever way one looks at it, the wide difference - ranging from Rs19 lakh crore to Rs30 lakh crore - in the investments underway in the state, is confusing. It certainly is a chakravyuh than anything else.

Is Gujarat losing its leadership in industrial sector?
“At least 52 lakh jobs would be generated following these MoUs,” chief minister Narendra Modi had announced while delivering his speech at the ‘dazzling’ valedictory function of Vibrant Gujarat Global Investors’ Summit (VGGIS) 2011. However, a reality-check tells us a very sad story.

According to data available, the total employment generation in the industrial sector between 1983 and June 2012 is 16.78 lakh. The data is compiled by the department of industries and mines, government of Gujarat.

Despite being at the top in the country in providing jobs through employment exchanges, the total number of educated unemployed registered with the labour department is still high at 8.31 lakh. At the end of March 2011, the total employment by private (industry, services and all other sector included) sector in Gujarat is 13.07 lakh. If the total job creation in the state was just 13.07 lakh in 50 years, how could it create another 52 lakh jobs in just one year!

The total employment generated through all Vibrant summits was proposed at one crore. However, till date only 5.68 lakh people have been able to get employment. This is just 5.5% of the promised figure.

The story does not end here. In the last five editions of the event, MoUs for 18,029 projects with proposed investment of Rs39.54 lakh crore were signed. In reality, only 2,007 or 11.1% of the projects have been completed. Another 1,710 or 9.5% are under implementation. It means there is no information on 80% or 14,412 projects so far.

What emerges out of the discussion is that the state has seen tremendous growth, but it was neither unusually high, nor isolated growth. The country’s economy as a whole has also witnessed a surge. Secondly, growth in Gujarat is reaching a plateau - it is growing but not fast enough to generate ample employment opportunities.

This is evident from the ratio of projects announced and implemented in each of the summits. The ratio of implementation was as high as 60% in 2003, but fell to 20% in the 2011 summit. While implementation was estimated at 79% from Rs60,668 crore worth of investments promised in the first edition of the event in 2003, the figure declined to 13.4% of the total MoUs worth Rs20.83 lakh crore.

Surprisingly, the state’s contribution to the country’s industrial sector GDP is also coming down. The Gujarat government is busy promoting the state as a manufacturing hub or growth engine of the country. However, the data suggests a very different story. In 1993-94, the share of Gujarat’s industrial sector (mining, manufacturing, electricity put together) was 7.99% in the country’s industrial sector GDP of Rs1.64 lakh crore. It increased to 14.03% in 2003-04. Thereafter, it is showing a steady decline. It stood at 9.27% in 2007-08.