GIFT: Finance city director suggests market realities ignored while initiating project

By Rajiv Shah 

Is the BJP’s Prime Ministerial candidate Narendra Modi’s top dream project – Gujarat International Finance Tec-city (GIFT) -- all set to be scaled down?  Proposed as India’s premier financial hub for more than Rs 78,000 crore, questions began asked about its viability ever since it was first announced in 2007. If earlier only bureaucrats in the state capital Gandhinagar doubted it would be anything more than a real estate hub, now it transpires that the man who promised to make GIFT a big success has questioned its viability.

In what may prove to be major embarrassment of those seeking to promote Modi’s developmental image, GIFT director RK Jha, who had promised Modi to turning GIFT something like Singapore's or Shanghai's financial hub, has been quoted as saying that the plan to have GIFT “ignored market conditions”.

In a recent news article, The New York Times (NYT) has said, “RK Jha, director of the project since 2010, said it (GIFT) needed to be radically scaled down, and reduced the first phase of construction to two 29-story office buildings, the tallest structures in Gujarat.”

Pointing towards the plight of GIFT as of today, NYT has said, “So far, there are only four tenants, including the state electricity commission (Gujarat Electricity Regulatory Commission or GERC) and the development company behind the project (Infrastructure Leasing & Financial Services or IL&FS).”

Citing it an example of how Modi tries to build dream among people without seeking to answer the question whether it would be realized, NYT says, “One case study can be found around seven miles from the airport in Ahmedabad, the largest city in Gujarat, where two modern office buildings stand in the middle of a dry, empty field.”

“This GIFT City intended as an international finance centre. The project was introduced to fanfare in 2007, after Modi was inspired on a visit to Shanghai”, the NYT article, written by Ellen Barry, under the title “Policies Help an Indian Candidate Trying to Go National” (May 6), says, adding, “The initial plans, drawn up by a Chinese design institute, were grandiose, calling for the simultaneous construction of 125 glassy skyscrapers, the highest reaching 1,000 feet, with underground roadways and midair pedestrian bridges.”

It is not without reason that, nearly two years ago, Gujarat babus had sensed that GIFT would be a non-starter. A high-level meeting of state secretaries (click HERE to read) sharply criticized the GIFT project, following a presentation by Jha on how he proposed to turn it into a financial hub. They told Jha that GIFT's priorities had all gone awry. State bureaucrats particularly wondered what did GERC, whose job is to decide on fixing tariffs for different segments of consumers, had anything to do with a finance city.

Babus questioned the decision to shift the GERC office to the new GIFT site following an agreement, which finalized to sell GERC a 29,000 sq-feet floor space on the sixth floor of one of the two 29-storey towers. "There is a huge gap between what GIFT was visualized and what you are presenting it to us. Do you want GIFT to be a conglomerate of different types of offices? What would GERC do there? And, why do you want nationalized banks to open offices when it should be a hub for metal trading, stock trading, hedging and private sector insurance and banking?," they wondered.

About half-a-dozen top bureaucrats, including the then additional chief secretary (ACS) planning Varun Maira, the then ACS home and general administration Varesh Sinha, the then principal secretary, forests and environment, S K Nanda, principal secretary, and energy and petrochemicals D Jagatheesa Pandian, asked the GIFT director to work out priorities.

One of them told Jha, "You seem to have come here to sell GIFT to government-run corporations. First the PSUs were asked to contribute their corporate social responsibility funds for the world's proposed tallest building, Sardar Statue, overlooking the Narmada dam. Then it was the turn of Metro-link Express for Gandhinagar and Ahmedabad to demand money from PSUs. Now it is GIFT which wants PSUs to buy up office space. What's going on? When will everyone stop pulling PSUs in different directions like this?"

The babus were also unimpressed when the presentation which said that the height of the buildings in GIFT will reach up to 150 storeys when the international airport is shifted from Ahmedabad to Dholera, about 100 kilometres away. "You can't talk in just ifs and buts," said one official. On the issue of having a huge exhibition complex in GIFT, a second official wondered if this is its core activity.” On the issue of having call centres and IT firms in GIFT, another official wondered, "What is the difference between GIFT and the Infocity?"