17 January 2017 08:00:12 IST

Vibrant Gujarat — Brushing up the numbers

The eighth edition of the event got more MoUs than ever before

Vibrant Gujarat has come a long way since it was launched in September 2003. In its first edition, the biennial meet was held in Ahmedabad’s Tagore Hall that could seat 750 people. The meet saw 76 Memorandum of Understanding (MoUs) being signed with promised investment of about ₹66,000 crore. The event, which would prove to be path-breaking for the State and its leader Chief Minister Narendra Modi, had over 500 participants, including international guests representing 54 countries.

Fourteen years later, the eighth edition of the investment summit, which got over on January 13, saw over 55,000 registered visitors, including 6,000 delegates — equal to the capacity of the Mahatma Mandir’s convention hall in Gandhinagar where it was hosted — and had participants from 110 countries. The four-day event saw the Government signing 25,578 MoUs — 2,976 higher than the previous edition. The State refrained from announcing the value of the investment promised by these Understandings, as it feared that the amount might be beyond the realms of logic.

Prime Minister Narendra Modi, whose vision has driven the Summit even after he moved to New Delhi after the 2014 General Elections, inaugurated the event and referred to Gujarat as "the land of Gandhi and Patel, is also the land of business."

The numbers from Vibrant Gujarat summits have been impressive. Adding up the numbers from the seven editions,the State has signed 51,738 MoUs worth in excess of ₹84 lakh crore (India's GDP currently stands at ₹153 lakh crore). According to the Gujarat government, 58 per cent of the MoUs have been commissioned, an impressively high execution rate. But it has not revealed the value of these commissioned projects.

The numbers look all the more spectacular when compared to previous trends of industrialisation in the State. The industrial approvals given by the State in the form of Letter of Intent (LOI) and Letter of Permission (LOP) during 1983-2006 stood at 6,251 projects, which were completed with an investment of ₹2,75,880 crore; 4,033 were under implementation, promising an investment of ₹9,51,980 crore.

As per the Socio Economic Review of the Gujarat for 2015-16, in the nine years leading to October 31, 2015, a total of 3,75,130 MSME enterprises were registered with an investment of ₹1,78,863 crore, generating 28 lakh jobs.

Number check

As impressive as the numbers from Vibrant Gujarat might sound, not everyone is convinced about the State’s claims. "These investment figures are complete hogwash. The State government claims to have signed MoUs worth ₹84.85 lakh crore in the past seven summits since 2003. But the State government's own Industries Commissionerate's website states that from January 1, 1983 to August 31, 2016, investments worth ₹9,51,980 crore are under progress. Then where are the MoUs of ₹84.85 lakh crore?" questions Congress national spokesperson Shaktisinh Gohil.

While BJP’s main opposition party will have its own axe to grind, a few sets of data might well put a doubt on the Government’s claims. The State Industries Commissioner Data reveals that as on September 30, 2016, while 5,249 Industrial Entrepreneurs Memorandums (IEMs) were commissioned with an investment of ₹2,50,156 crore; 3,513 IEMs worth Rs. ₹9,48,391 crore were under implementation. This is nowhere close to the numbers claimed by the State. While IEMs are acknowledgements of industrial units, the MoUs are informal, non-binding agreements that have no legal standing.

Economists point out the mismatch between Vibrant Gujarat’s numbers and Gujarat’s Gross State Domestic Product (GSDP)’s not-so rosy picture. Its GSDP, which is a sum of consumption, investment (both government and private) and net exports, reveals a declining trend post 2011-12 at constant prices. The present base year for GSDP estimation at constant prices is 2011-12. The GSDP in 2014-15 has been estimated at ₹7,82,820 crore as against ₹7,26,831 crore in 2013-14, registering a growth of 7.7 per cent. That was slower than the GSDP growth rate for 2012-13 at 10.83 per cent.

Similarly, as on March 31, 2014, the net value added by the total number of factories — 22,876 — in the state stood at ₹1,27,863 crore (Provisional estimates), which represents a 14 per cent share of the country's overall net value added of ₹9,09,629 crore. Net value added is the resultant after subtracting total cost of inputs from the gross output, which reflect the real value addition with the capital employed. However this is a decline, though marginal,from the State’s share in all-India aggregate of 14.06 per cent in 2004-05.

So are the Vibrant Gujarat summits trying to paint a brighter picture of Gujarat than it really is?

"The Hardiks or the Mevanis from Dalits and Patidar communities wouldn't have emerged if all were rosy with the benefit of Vibrant Summits as claimed by the State government," points Gohil.

The political implication of a successful Vibrant Gujarat is unmistakable, as the BJP had found itself in a corner after the agitation by these communities last year. The resignation of Anandiben Patel, who had taken over as the Chief Minister after Modi moved to the national Capital, was a sign of the party losing its grip. A successful Vibrant Gujarat gives the BJP something to talk about when the campaigning for the next Assembly Elections begin later this year.

Big tickets

Government insiders give a technical explanation to counter the doubters. "The MoUs are merely intentions. They are non-binding agreement, which has no legal standing. Also, there can be an MoU for the technical knowledge sharing, which also gets considered during the Vibrant Gujarat Summits. This ultimately swells the number of MoUs and makes it appear a great achievement. Whereas the actual investment can be considered only of the industrial MoUs, which can potentially bring some investment," says a Gujarat bureaucrat, who has been associated with the Summit. He didn’t want to be named.

"The MoUs signed for the infrastructure projects, SEZs or export oriented units do not get counted as the IEMs. Therefore, they do not get considered into the Annual Survey of Industries (ASI)," adds the official. The ASI is the principal source of industrial statistics in India.

Some of the biggest names from corporate India have come out in the State’s support. "As against₹1 lakh crore worth of investments promised in the previous two Vibrant Summits, Reliance Industries Ltd has invested ₹1.25 lakh crore, including ₹92,000 crore for the Jamnagar refinery and ₹9,000 crore for Jio," Parimal Nathwani, Group President (Corporate Affairs), Reliance Industries Ltd, told media persons a few days before the eighth edition of Vibrant Gujarat took off. "RIL has made investments worth ₹2.37 lakh crore in Gujarat, providing permanent employment to 55,000 people and indirect employment to 1.5 lakh people," Nathwani stated. Joining Nathwani was Adani Group's Pranav Adani who claimed implementation of projects worth in excess of ₹50,000 crore in various sectors such as power, ports, infrastructure and solar, since 2013. The Essar Group too claimed completion of projects to the tune of ₹80,000 crore of the ₹1.1 lakh crore it had committed. Similarly, the Ahmedabad-based Torrent Group, which has been one of the corporate groups to have participated in the Vibrant summits since its first edition, said most of the ₹2,000 crore worth MoUs signed by the company in past two editions, have been implemented.

But not all projects have taken off. The Government has revealed that 14,165 projects have been dropped. These include some of the marquee ones. Noticeable among them were NRI businessman Prasoon Mukherjee's over ₹80,000 crore-worth projects in sectors like shipping, ports, power and Special Investment Region (SIR); Hindustan Construction Company’s water front city project of ₹40,000 crore and Sabeer Bhatia-promoted Nano Works Developer's 'Nano City' that would have brought an investment of ₹30,000 crore (see the table).

Government sources claimed that non-availability or delay in obtaining land, or lack of viability on the operational or financial part were among the primary reasons for these projects failing to take off.

Employment generation

But this hasn’t stopped many from crediting Modi for making a success of the Summit. Even his detractors would agree that these meets are a great marketing avenues, as many other states in the country have followed suit.

"These summits helped Gujarat build its brand image among investors across the country and the world. Gujarat has overtaken even Maharashtra in attracting industrial investment in the country, and has come on top in industrial production as well. These are confidence building measures and provide a sense of security to the industry to make their investments," says Sunil Parekh, industry expert and advisor to Zydus Cadila Group. Not many might agree with this claim, as recent reports have shown Maharashtra getting higher foreign direct investment than Gujarat.

To his credit, Modi has managed to rope in Japan, Canada and the United States, among others as global partners of the Vibrant summits. Japan has been one of the prominent countries to have been associated with the Vibrant Summits since its initial editions as the partner country. Japan External Trade Organisation (JETRO) was assigned to provide a bridge between the investors from Japan and Gujarat to explore investment potential.

Crediting Modi for turning Gujarat into an economic powerhouse, John Kerry, the then US Secretary of State stated, "I know it is because of his reputation for what he achieved in the course of his leadership here in Gujarat, that the people of India have now given him this very special mandate." In his address at the Vibrant Summit he added that Modi had already made the name Gujarat synonymous with possibilities, with change, with energy.

Summing up the MoU-magic of Modi, Sunil Parekh says, “there is a dis-belief that all MoUs are junk MoUs. They create a positive sentiment about investments in Gujarat. Since 2003, we have seen Gujarat evolve as a brand and with this year’s Summit, it continues to be top destination." The key differentiator of a 'real' and 'fake' MoUs is whether the agreement is industrial or not. An industrial MoU is the one which would bring all four factors of production together — land, labour, capital and enterprise.

Gujarat chief secretary, J N Singh adds that “These summits are built on the promise of employment generation besides building Gujarat’s brand."

Singh explains the employment generation in the State after the impetus from Vibrant Gujarat Summits. "At least 3.13 lakh jobs were provided by private companies, while about 1.07 lakh were given government jobs in Gujarat during last three years. Gujarat tops the charts across the country in providing employment," he says. Through 48 employment exchanges across the State, over 9.25 lakh youths were given jobs in last three years. "In all, over 13.45 lakh were given employment in last three years," he adds.

These are again spectacular numbers, much higher than historic trends. A look at the Government's data in the Socio Economic Review reveals that as on March 31, 2005, total employment at public sector stood at 8,32,000 including Central, State and quasi-government postings, while in the private sector 8,61,000 were employed.

As on March 31, 2013, total employment in the industries stood at 13,63,628 with 22,587 factories. This was a marginal decline from 2011-12, when 22,220 factories gave employment to 13,83,773.

As per the Socio-Economic Review of Gujarat, total number of working factories in the state has increased from 18,880 in calendar year 2001 to 30,192 in 2014 (P). The employment in these factories more than doubled from 7,77,597 in 2001, to 15,97,899 in 2014 (P).

On the concluding day of the eighth Vibrant Summit, the Gujarat Chief Minister, as a custom set by Modi, invited guests for the next edition. Vijay Rupani added: "In the times, when no-body is bothered to inquire of one or two projects, there are people who are asking for accounts of our thousands of MoUs. I think that’s a good thing for the Government." The validation, or rebuttal, would come later this year when the people elect a new government.