The canonization has begun. Ratan Tata says investors not yet in Gujarat are “stupid”. Anil Ambani and Sunil Bharti Mittal hope to see Gujarat’s chief minister, Narendra Modi, as India’s prime minister. Kumar Mangalam Birla, Mukesh Ambani and Shashi Ruia have joined the chorus of approval.
Businesses like Modi because he has rejuvenated Gujarat. Under his watch, the state has upgraded ports and improved the quality of roads dramatically. He is credited with reducing corruption, eliminating red tape, providing uninterrupted electricity to all villages and harnessing rainwater. The number of girls attending and staying in schools has risen. Gujarat’s bureaucracy swears by Modi. At last week’s Vibrant Gujarat Global Investors’ Summit, investors promised projects worth Rs12 trillion, or $247 billion. That dwarfs commitments for the entire country.
You might think that Gujarat is outracing and outpacing India, and Modi is singularly responsible for the boom. In fact, according to the Centre for Monitoring Indian Economy, Gujarat commanded a huge lead over other states: In September 1995, the state’s share was 14.45% of all projects under implementation in the country. At 9.43%, its nearest rival, Maharashtra, was a poor second. Maharashtra overtook Gujarat, but in December 2001 its lead over Gujarat was less than a percentage point.
Then something happened, and by September 2002, Gujarat’s share fell to 8.78%; three years later, it was down to 7.67%, with Orissa ahead of Gujarat, and Karnataka close behind. Since then, Gujarat has recovered, but only slowly, and today commands 9.57% of investments in India. It is behind Orissa and Andhra Pradesh. Maharashtra is only half a per cent behind, and Haryana, West Bengal and Karnataka are trying to catch up.
That “something” is the post-Godhra violence. From 2002, smart money began investing elsewhere. It has since started returning, but despite Modi’s administrative skills, his state no longer leads the inward investment tables.
This is not to undermine Gujarat, but last week’s planned investments are only memorandums of understanding (MoUs). A study of foreign direct investments in China in the 1990s showed that China’s claimed foreign direct investment was typically six-eight times larger than actual inflow. The statistics included the cost of land the government was giving; most projects included loans from financial institutions, as well as other in-kind contributions. The figure of $247 billion should be seen in this perspective.
The MoUs raise more questions. For example, a 10,000MW coal-fired thermal power plant costs Rs40,000 crore, but one such investment is claimed to be worth Rs87,000 crore. Granted, the project includes a 5,000-acre special economic zone (SEZ), but an SEZ does not have to cost more than a major power plant. Infrastructure analysts say the figures for megawatt generation and power project costs don’t add up. Expansion plans for some ports and proposed townships appear significantly more than the cost of similar projects elsewhere in India. We must remember, then, that what were signed last week were MoUs, not cheques.
The sobering reality is that Gujarat had the lead in 1995 which it lost after the post-Godhra violence, and is trying to regain its erstwhile pre-eminent position. The fundamentals to attract investments—industrial peace, great infrastructure and ancillary industries—preceded Modi’s tenure. The Narmada dams were already under construction, workers polished diamonds in Palanpur, petrochemicals and cars were made in Vadodara, milk flowed from Anand, yarn churned out in Hazira and a refinery was being built in Jamnagar, much before Modi took office. Gujarat’s rural prosperity is substantially, though not entirely, due to significant remittances from overseas Gujaratis.
It is odd, therefore, to credit Modi with Gujarat’s vibrancy. And it is hard not to blame his government for the colossal failure to protect civilians during the anti-Muslim violence in 2002. That alone disqualifies him from holding office. But Gujaratis have continued to elect him. Fair enough; but the rest of India does not have to do so.
The story of the drop in Gujarat’s share of projects under implementation is not widely known; Modi’s governance hasn’t helped the state overcome the damage that massacre caused. Money went elsewhere and it is returning only now. Modi’s supporters say he has shown Muslims their place in India. He can probably make trains run on time as well. But at what cost to the nation?
Anil Ambani quoted his father, the late Dhirubhai, who called Modi “lambi race ka ghoda”, or the horse for the long race. The eyes of a champion thoroughbred are covered to prevent distractions and the jockey whips him, making him run faster. Such a horse only thinks of the destination, not how to get there.
Another Gujarati—Mohandas Karamchand Gandhi—saw it differently: “Our progress towards the goal will be in exact proportion to the purity of our means… As the means, so the end.”
He did not rush headlong; he walked alone.
Salil Tripathi is a writer based in London. Your comments are welcome at email@example.com