Wednesday, April 01, 2015

Industrial investment in Gujarat: Chief minister "contradicts" Narendra Modi's claims

By Satyakam Mehta
Latest Government of Gujarat figures, released in the state assembly by none other the state’s chief minister, Anandiben Patel, go a long way to show that there is something fundamentally wrong with huge claims of a mind-boggling Rs 76 lakh crore during the biennial Vibrant Gujarat business investment summits, starting with 2003.
During the last summit alone, in January 2015, the state government claimed a whopping Rs 25 lakh crore as proposed investment, though no breakup has yet been provided on who invested where. At the earlier summit in 2013, when an investment of Rs 10 lakh crore was announced, the officialdom again refrained from giving detailed figures of who all wishes to invest in Gujarat.
While Prime Minister Narendra Modi called the 2015 summit “Davos in action”, and United Nations secretary-general Ban Ki-moon supported him by saying, "Vibrant Gujarat made the whole world vibrate with dynamism", others too following suit by showering accolades in their own way .
But clearly, as many critics say, statistics are adequate enough to make one sit up and think. Already, many critics have suggested that the cumulative foreign direct investment (FDI) of the entire country through April 2000 to March 2013 added up to Rs 8,96,000 crore, according to figures from the Department of Industrial Policy and Promotion (DIPP).
However, now the Gujarat chief minister herself has let the cat out of the bag. The number thrown up by her as the state's full-time industries minister in an answer to a written question to the just-ended Gujarat assembly session offers a very different picture.
If Patel is to be believed, Gujarat attracted investments of worth Rs 17,100 crore during the financial year 2013-14, which is down by 20 per cent over the previous year’s Rs 21,500 crore.
In fact, official Gujarat figures put together by this correspondent suggest that the cumulative investment over the last five financial years, between 2009-10 and 2013-14, was just Rs 1,03,864 crore. Interesting though it may seem, this investment includes those made by large companies in Gujarat as also micro, small and medium enterprises (MSMEs).
There is nothing to suggest that the investment rose by geometrical proportions. In fact, the figures suggest that there was only a marginal increase in investment in the MSME sector over the years. At the same time, they suggest, there was a sharp fall in investment by large industries. This happened despite huge claims of Gujarat being the most industry-friendly state. In fact, none other than Modi has flagged Gujarat as “the country’s growth engine.”
The chief minister’s figures show that the large units attracted an investment of Rs 4,146 crore in 2013-14 m which was nearly 50 per cent less than 2012-13, when the investment figures were to the tune of Rs 9,165 crore.
A simultaneous perusal of the data released by the DIPP further suggests that the number of investment proposal figures have gone down over the years. Thus, the number of industrial entrepreneur memorandums (IEMs) and letters of intent (LoIs) of Gujarat went down from 544 in 2011 to 354 in 2013, which is a whopping decline to the tune of 35 per cent.
As for the proposed investment in value terms, they came dewn from Rs 1,42,000 crore in 2012 to Rs 94,259 crore.
The DIPP figures also reveal that the trend has been continuing: According to figures available up to July 2014 vis-à-vis the same period in 2013,the investment proposals declined from 223 to 205, and in value terms, the decline was from Rs 61,842 crore to Rs 21,979 crore (64 per cent).

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