Gujarat glittering, but is it gold? | india | Hindustan Times
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Gujarat glittering, but is it gold?

india Updated: Dec 17, 2012 01:39 IST
Sitaraman Shankar

Gujarat's economy is growing at a healthy clip, the state leads the way in exports and industrialists gush about a reduction in red tape. Narendra Modi clearly sees business and industry as his strong suit as he seeks a third term.

Probe a little deeper, though, and a more nuanced picture emerges. It's clear that Modi has managed to let the state's entrepreneurial culture express itself, and sold the state to foreign investors like few chief ministers before him.

Few would argue with the numbers: Gujarat's economy has grown at above 10% per year on an average over the past eight years compared with 6.5% in the decade before that. Gujaratis are the sixth richest among inhabitants of major states. Superb highways crisscross the state and well-equipped ports keep busy.

But it's impossible to say how much of all this would have been possible without Modi. It's also true that other states - similar in size - are doing similarly well. "Following the economic reforms, other states have also shown higher growth rates," says IIM-Ahmedabad professor Sebastian Morris.

Industrialists and those familiar with the government's working say that Modi isn't beyond window-dressing some of the state's natural progress as his own doing and has centralised power in an unprecedented way.

"He is a master of packaging. If two car companies come to Gujarat, he'll sell the state as an auto hub," says an industrialist.

"There have also been cases where he has called up people asking them to sign MoUs even when they're already half-way through their projects, just to bolster his numbers," says the industrialist, who asks not to be named.

Fear of Modi is commonplace, and "vindictive" is a word often used to describe the administration. He runs an unusual government in that his ministers are usually powerless, and some decision-making is vested with a dozen or so government officials.

"There needs to be more of a collectivisation of decision-making and creation of a decision support system," says a bureaucrat.

There is also resentment that newer projects - notably Tatas' Nano - got major sops while some existing investors were ignored. But big business is mostly behind the CM.

Gautam Adani, chairman of the Adani group widely seen as being close to Modi, says that the state has become more "policy-driven".

"He has been driven only by what is in the interest of the state," says Adani.

The state's biggest investor is Reliance Industries, whose founding family, the Ambanis, opted for their home state to house huge refineries.

Parimal Nathwani, Reliance's group president, says: "There is law and order, industrial peace and the staff are well-behaved. Exports are growing and industries are expanding."

So, if the BJP wins big in Gujarat and Modi moves to the Centre and becomes PM in 2014, how would India Inc fare?

The main concerns surround his ability to build a consensus in a complicated polity.

"He is very autocratic.

There's hardly any discussion or debate here," says an industry consultant.

If he were to stay in Gujarat for a third term, says the bureaucrat, he could find his industrial policy constricted by the need for greater social investment, and by increased public suspicion - as in other states - of partnerships between governments and private companies.