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RS 100000 CR?

It is a Rs one lakh crore question. Is Madhya Pradesh really poised for a giant leap to the enviable group of industrialised states in two years? State?s Industry Minister Babulal Gaur is as upbeat on the question as former chief minister Digvijay Singh sceptical. A beaming Babulal Gaur boasts about staggeringly big investment.

india Updated: Oct 03, 2006 15:45 IST

It is a Rs one lakh crore question. Is Madhya Pradesh really poised for a giant leap to the enviable group of industrialised states in two years? State’s Industry Minister Babulal Gaur is as upbeat on the question as former chief minister Digvijay Singh sceptical. A beaming Babulal Gaur boasts about staggeringly big investment.

A dismissive Digvijay Singh disdainfully dubs the claim as deception. Between the two extreme positions, the truth lies somewhere. But it is very difficult to locate the truth. Statistics don’t help. If any thing, the figures confuse.

Gaur provided reams of papers that proclaim investment to the tune of Rs one lakh crore- Rs 100513 crore to be precise. The statistics are about the ‘investment scene between April 1,2004 and August 4, 2006’. Of the Rs one lakh crore, nearly 70 percent – Rs 69574 crore— is categorised as “ expression of interest for investmentt’. This includes Rs 23553 crore in manufacturing, Rs 521 crore in service and Rs 45500 crore in power sector.

It is also interesting to note that of the 121 projects that add up to more than Rs one lakh crore investment proposals, 38 are the ones that are undergoing expansion. This implies they existed before the BJP came to power. Two are categorised under ‘Technology Upgradation’ while rest are new ones. Only in projects worth Rs 1636 crore production has started after April 1, 2004. The projects worth Rs 30000 crore are under implementation.

The figures instantly arouse scepticism, given the experience of the Digvijay Singh regime. The then CM had also signed 22 power purchase agreements (PPAs) worth Rs 30000 crore for 7000 mega watt power generation. The PPAs turned out to be a cruel joke. Not one mega watt power was added in the State. Will the history repeat itself?

“ No, this time round we have reasons to be optimistic,” says an official of the company that has expressed intent for setting up 2000- mega watt thermal power plant in Sidhi with the cost of Rs 8000 crore. Power scenario is now changed. Neither finances nor counter guarantees are a problem any more”. Representative of another power company was equally upbeat. But they gave as much credit to the State Government as to the Centre for buoyancy in power sector.

Buoyancy, feel the industry insiders, has pervaded all other industrial sectors too. The market is flush with funds. Industrial growth rate is an all time high. But several states are hamstrung by socio-political reasons in leveraging its advantages. Some states are afflicted with Naxalism, other reeling under the fear of terrorism.

In the country’s metros and their surroundings land is hard to come by even at an astronomically high price. In Maharashtra, Karnataka and Gujarat, investment opportunities are plateauing out. Lawlessness frightens investors from investing in Bihar and UP. In the situation, MP beckons them. The State is endowed with natural resources, cheap land and labour, abundant manpower (both skilled and unskilled), and, above all, adequate peace to do business with a sense of security and dignity.

“And don’t forget, we have an investor-friendly government too, ” adds Babulal Gaur. Over a dozen representatives of the industries having stakes in MP told the Hindustan Times that they share Gaur’s claim in varying degrees. However, they are still guarded in praise of the State’s Industrial Policy. Interestingly, none wanted to be quoted even in lauding the government’s efforts.

General perception in the industry is that though investment scenario is improving, Gaur’s claim about Rs one lakh crore investment proposals is a bit too exaggerated. They emphatically underlined the difference between expression of interest and actual investment. “ It is funny that barely eight months back Gaur was claiming Rs 50000 crore investment and now the figure has skyrocketed to Rs one lakh crore”, an industrialist remarked.

There is also a feeling that the Government is high on promise but low on deliverance. An industry representative opined that Chief Minister Shivraj Singh needs to be more focussed on core issues. Merely talking on this much length of roads being built or that much mw power being added doesn’t help. The CM needs to be more clued –in about the State’s actual capacity on ‘give and take’ vis-à-vis potential investors. Babulal Gaur’s effervescence should also be tempered with ground realities, industrialists feel.

Industry insiders opined that textile and food processing are the two sectors where government’s proactive policy would immensely help the State. So far investment in textile is around Rs 4800 crore and in agro food processing Rs 5500 crore. These are the areas where cluster and parking approach needs to be strengthened. After a long gap, textile industry has come out of slump and this is evident in three new textile units being set up. But food processing potential remains hugely untapped.

Significantly, big investments have come more due to viability of the geography than lobbying of the Government. Sidhi is a case in point. Of the six proposed thermal power plants, five are to be set up in Sidhi district, easily one of the most backward districts in MP. It is all because of the abundance of coal. Likewise, there is only one plant in petrochemical sector –the Rs 10,300 crore Bina Oil Refinery in Sagar district, another backward district. It started during the Congress regime in 1996. So how do the infrastructure facilities influence investments ?

Insiders pointed out the investors are more concerned about taxation than infrastructure. They feel the State Government is doing a fine job on building roads, improving power supply, offering cheap land and reasonably hassle- free bureaucracy. But the issue of taxation sticks out like a sore thumb in an otherwise congenial atmosphere. “ Unless the Government drafts a well-defined policy about doing away with multiple taxes, scepticism will persist about its intentions”, says a representative of pharmaceutical firm.

A top official of a well-known textile firm complained that the government in its zeal to attract new investors is ignoring the existing units. A majority of the units at Mandideep, Pithampur, Govindpura and Malanpur are either sick or on the verge of sickness for want of adequate government support. SMI and SSI units are also crying for attention.
In the circumstances, the government is expected to take a holistic view of the industrial scenario than score some brownie points over the Congress on failure of the Digvijay Government.

First Published: Oct 03, 2006 15:45 IST