WHY IS GUJARAT UNBEATABLE?-A SUMMARY:MUNISH ALAGH
I. A SUMMARY OF
STRENGTHS OF GUJARAT ECONOMY-NUMBERS
REFERENCE-CMIE,
STATES OF INDIA DATABASE
The cumulative average rate of growth in %
of Per Capita Net State Domestic Product of Gujarat in a comparative level in
the last three decades is the following
GUJARAT-PER
CAPITA NET STATE
|
|
CARG (% p.a.)
|
|
1980-1990
|
10.58%
|
|
1990-2000
|
11.46%
|
|
2000-2010
|
13.2%
|
CLEARLY THERE CAN BE NO MORE CLEAR PROOF
REQUIRED FOR GUJARATS GROWTH BEING HIGHER IN LAST TEN YEARS THAN THE FACT THAT
THE GROWTH IN PER CAPITA NSDP IS HIGHEST IN LAST TEN YEARS
|
|
CARG (% p.a.)
|
|
1980-1990
|
14.08%
|
|
1990-2000
|
16.23%
|
|
2000-2010
|
14.08%
|
MAHARAHTRA-CUMULATIVE
AVERAGE RATE OF GROWTH % OF PER CAPITA
NET STATE
|
|
CARG (% p.a.)
|
|
1980-1990
|
3.05%
|
|
1990-2000
|
4.36%
|
|
2000-2010
|
5.67%
|
MAHARASHTRA-
CUMULATIVE AVERAGE RATE OF GROWTH % GROSS
STATE
|
|
CARG (% p.a.)
|
|
1980-1990
|
6.01%
|
|
1990-2000
|
6.91%
|
|
2000-2010
|
9.99%
|
GUJARAT
HAS ALWAYS BEEN A HIGHER GROWING STATE THAN MAHARASHTRA
BOTH OVERALL AND IN INDUSTRY AND THIS CONTINUES.
GUJARAT-ALL INDUSTRIES SUMMARY
- WAGES TO WORKERS
HAVE INCREASED BY 9.7% PER ANNUM CAGR BETWEEN 2000-2008
- INVESTED CAPITAL
HAS INCREASED 5% CAGR BETWEEN 2000-8
- GROSS VALUE OF
OUTPUT HAS INCREASED 18.1% BETWEEN 2000-8 CAGR
- NET INCOME HAS
INCREASED BY 20.3% CAGR BETWEEN 2000-8
- PROFITS HAVE
INCREAD 26.4% CAGR BETWEEN 2000-8
II. A SUMMARY
OF STRENGTHS OF GUJARAT ECONOMY-FACTS IN
DETAIL
BASIC
SUMMARY OF SOCIO ECONOMIC REVIEW OF GUJARAT STATE 2011-12 and OTHER GOVERNMENT
DOCUMENTS
According to the Industrial policy of
Gujarat State for 2009, Gujarat is one of the most industrialized state in
India, this document also states that Gujarat has the reputation of being a
highly investor-friendly state and has become the most favoured investment
destination. How far is it true? Below, we study this.
The Annual
Survey of Industry (ASI), 2009-10 carried out by the Central Statistical
Organization (CSO), under Ministry of Statistics and Program Implementation,
Government of India, reinforced the position of Gujarat as the most
industrially developed state in India in respect of first ranking in industrial
investment and second in terms of value of production and value addition in
industrial sector.
Over the years,
Gujarat has diversified its industrial base substantially. In the year 1960-61,
textiles and auxiliaries were the major contributor to industrial economy of
the state. In the span of over 52 years, the industrial spectrum has completely
transformed and today 13 major industry groups together account for 83% of
factories, 94% of fixed capital investment, 93% of value of output and 93% of
value addition in the state’s industrial economy. In the recent years, refined
petroleum products has emerged as one of the largest industrial groups having
37% share, followed by chemicals having 14% share. Other important groups Basic
Metal(8%), food products (7.14%), textiles (5%), machinery and equipment
(3.36%)
Industrial units
having investment exceeding Rs. 10 Crore in plant and machinery are classified
as large industrial units. industries are required to file Industrial
Entrepreneur’s Memorandum (IEM) with Secretariat for Industrial Approval,
Ministry of Commerce & Industry, Government of India, on observing certain
requirements with respect to location and environment.
The filing of
IEM with Secretariat of Industrial Approvals (SIA), GOI is considered as
an important parameter to assess the degree of industrial development in a
state. The details of IEMs filed for Gujarat since the introduction of
liberalization process in August 1991 till the recent time (to
March 2012) are as follows:
10537 IEMs
having an aggregate investment of Rs. 10,33,314 Crores have been acknowledged
for locations in Gujarat. In addition, the state has also received 471 Letters
of Intent entailing an investment of Rs. 27,534 Crores, over the same period. The
Government has put in place an effective mechanism for monitoring of all the
industrial approvals, in order to know the status of these approvals and
provide effective intervention in the speedy implementation of these projects.
Of these
approvals, as on 31st March. 2012, 5276 projects with an investment of
Rs.1,87,066 Crores have been Commissioned. In addition, 3287 projects having
investment of Rs. 7,35,736 Crores are Under Implementation.
The state
has implemented Micro, Small and Medium Enterprises (MSMED) Act 2006
from 2nd
October, 2006. During the year 2011-12 (Up to November 2011), 29089
units
have been registered having investment of Rs. 8465.92 crore and employment
generation
of 218054.
Vibrant Gujarat - Global Investors'Summit : "Vibrant
Gujarat Global Investors'
Summit - 2011" was organised on 12-13 January-2011 at Mahatma
Mandir, Gandhinagar to attract the investors to establish projects in the
State. In all 8380 MoUs have been signed/announced in different sectors with
total proposed investment of Rs. 20.83 lakh crore.
Preparations have begun for the Vibrant Gujarat 2013 .This time, the
event will be
organised , during 11 to 13 January, over an area of about one lakh square
metres or
four times larger than the one organised in January 2011.
SEZ’s:Gujarat
has the distinction of being the first state to enact the Special Economic Zone
(SEZ) Act,
2004. Special Economic Zones (SEZs) are growth engines that can boost
manufacturing, augment exports and generate employment. Board of Approval (BOA)
in Ministry of
Commerce and Industries (MoCI), New Delhi has accorded approvals to 60
SEZs in
Gujarat at the end of March-2011. The total proposed investment by the
SEZ Developers
is around Rs.267373.45
crore.
The number of factories has
increased from 14863 in 2008-09 to 15576 in 2009-10,
showing
an increase of 4.80 percent over the previous year.
The total length of roads (except
Non-plan, Community, Urban and Project roads) in the State has increased to
74117 kms. at the end of 2008-09 from 74112 kms. at the end of 2007-08. On the
lines of Ahmedabad-Vadodara expressway, constructed by Central government
undertaking National Highways Authority of India (NHAI), Gujarat government has
chalked out plans to build its own expressway between Ahmedabad and
Bhavnagar.
The number of registered motor vehicles has
increased from 129.93 lakh at the end of 2010-11 to 136.36 lakh at the end of
September-2011, showing an increase growth of 4.95 percent.
The State
of Gujarat, located on the West Coast of India, has about 1600 Km. long
coastline.
Gujarat is strategically positioned to serve the vast north and central Indian
hinterland.
The State
has 41 minor and intermediate ports,
geographically dispersed across South
Gujarat
(14 ports), Saurashtra (23 ports) and Kachchh region (4 ports). Besides, in the
State of
Gujarat there is a major port of Kandla, under the administrative control of
the Central Government.
it was a
port policy that opened the doors for a port-led development in Gujarat. The
port policy calls for public-private partnership (PPP) in port development and
management.
Gujarat
Maritime Board will construct a jetty and allied infrastructure near Bagsara,
Rajkot,
in the Gulf of Kutch for salt export through sea route at an investment of over
Rs 80
crore.
The
Gujarat Maritime Board (GMB) is working to interlink all ports of the state
using the
Integrated Port Management System, wherein the data regarding cargo
handled,
arrival and departure of the ships will be updated daily. GMB intend to
interlink
all ports of GMB including private ports of Mundra, Pipavav, Dahej and Hajira
through
information technology (IT) network.
Japan and
the Gujarat Maritime Board (GMB) have signed an MoU for Rs 100 croreto upgrade
the Alang ship breaking yard to international requirements by way of
technology
transfer and financial assistance under a Private-Public Partnership (PPP).
The
modernised Alang yard will be ready by 2012-13.Gujarat government is all set to
begin a
commercial
ferry service for passengers and vehicles across the Gulf of Khambhat.
The
Pipavav Shipyard, an integrated shipbuilding facility on the Saurashtra coast
of Gujarat, was dedicated to the nation during the year. The shipyard has been
developed
to have
one of the largest dry dock and wet dock facilities in the world, with
state-ofthe-
art
technology which can be used for construction of vessels relating to the oil,
gas
and
defense sectors.
The
estuary of Narmada river, considered lifeline of Gujarat, will now become the
lifeline
for ship-building activities of India. The state government has decided to set
up
world-class
maritime park on the seacoast.Gujarat Maritime Board (GMB) worked out
a
complete plan for a 25 km. stretch, starting from the south of Dahej in Bharuch
district
upto the
point where the Gulf of Khambhat and Narmada river meet - for the maritime
park. GMB
proposes to spend Rs 1000 crore in infrastructure for developing the park. At
least a
dozen shipyards are proposed to be set up in the area, each with an investment
ranging
from Rs 300 crore to Rs 1200 crore.
With the
decision to develop the maritime park at Bharuch and
five
others in different locations in Kutch and Saurashtra, Gujarat may well fulfill
the
government
of India's shipbuilding policy perspective of taking it to 10 per cent. The
maritime
park in Bharuch will get extra fillip on account of Petroleum, Chemicals and
Petrochemicals
Investment Region (PCPIR) set up in Dahej.
ENERGY:
The total
installed capacity of the State as on October, 2011, it
has
touched to 13314 MW (comprising of 4996 MW by Gujarat State Electricity
Corporation Ltd. (GSECL), 5318 MW byPrivate Sector and 3000 MW by CentralSector
Share).
INFRASTRUCTURE:
The
Blueprint for Infrastructure in Gujarat 2020 (BIG 2020) is an integrated plan
for
the
state's infrastructure development, to make Gujarat a globally preferred place
to
live in
and to do business through accelerated, balanced, inclusive and
sustainable
growth driven by robust social, industrial and physical infrastructure. It
envisages
an investment of Rs. 11,80,912 crore across 19 infrastructure sectors, is an
integrated
plan for the state's infrastructure development.
The state
government issued a notification for the setting up of the Gujarat's Special
Investment Region (SIR) that will have an investment of Rs. 1 lakh crore (Rs. 1
trillion).
The
notification was issued to the Dholera SIR Regional Development Authority
(DSRDA).
The government has already notified 99,000 hectares of land in 22 villages in
the region and an investment of Rs.1 lakh crore is on the anvil.
The
Gujarat Infrastructure Development Board (GIDB) has decided to development
Dholera
Special Investment Region (SIR) as a new age city with world-class
infrastructure
and high
quality of life. GIDB was the first entity in the country to enact an SIR Act
in 2009, as the state has issued notification for developing four more SIRs at
PCPIR-Dahej, Halol-Savli, Aliabet and Santalpur. GIDB will be the apex
authority to develop the SIRs.
The
Gujarat Government has decided to transfer 662 acres of prime land across the
Sabarmati
in Gandhinagar district to the Gujarat International Financial Tec-City
(GIFT)
Company Ltd., a joint venture between Infrastructure Lease & Finance
Services
(IL&FS) and state-run Gujarat Urban Development Company (GUDC), to
kick-start
the construction of GIFT city- the high-tech financial hub.
GIFT is
the country's first multi-service SEZ with special focus on financial services.
GIFT alone is likely to attract investment proposals, in the form of
MoUs, for
Rs 50,000 crore.
GIFT gets IFSC status : The Union Ministry of
Commerce and Industry has
given its
approval to the Gujarat International Finance Tec-City (GIFT) SEZ, Gandhinagar,
for
setting up the first operational International Financial Services Centre (IFSC)
in the country. Now, instead of setting up branches in other countries, banks
or companies just need to visit GIFT SEZ to conduct their business in
international currency denominations. This will be the first
operational
IFSC in the country and it will facilitate financial services for Indian
entities
across
the world.
The
GujaratInfrastructure Development Board (GIDB) has taken up the study to
develop
Surendranagar-Wadhwan,
Morbi-Wakaner and Bharuch-Ankleshwar as twin cities.
In a first ever initiative of its kind,
Gujarat Government has announced a novel
'Participative
Policy for Land Development in Industrial Estate', offering a slew of
incentives
for the affected landowners over and above the prevailing policies or practices
elsewhere
in the country. The first policy, termed 'Participative Policy for Land Owners
in
Industrial Estates', is to make the landowners as partners with GIDC in the
economic
growth on their land. The other, termed 'GIDC Developing Estates on PPP
model',
is to develop Industrial Estates on Public-Private Partnership (PPP) model on
land
purchased privately by Industries Associations. The twin new land development
policy is implemented by Gujarat Industrial Development Corporation(GIDC). It
has been necessitated due to growing demand for land for up-and-coming for
projects signed during the four editions
of
Vibrant Gujarat Global Investors Summit (GSSIS) already under various stages of
implementation.
It takes care of the industry demand as well as adequate compensation
for the
farmers selling their land.
After
Tata Motors and Ford, French car maker Peugeot
has decided to set up a
manufacturing
facility at Sanand, which is becoming country's most preferred auto hub.
India's
leading car maker Maruti Suzuki and Gujarat government has also finalised the
deal to
set up the automobile major's new manufacturing plant at Becharaji in Mehsana
district.
The state
government set up an international level Automotive Skill Development
Institute
on PPP mode with PSA Peugeot, to generate skilled manpower for the
automotive
sector.
Gujarat government has moved to set up seven new Special Investment Regions
(SIRs) at
Sanand and Changodar, both in Ahmedabad district; Aliabet, an island in the
mouth of
Narmada river falling in the Gulf of Khambhat; Navlakhi, a port on the eastern
tip of
the Gulf of Kutch; Pipavav and Simar along the southern Saurashtra coast; and
Anjar in
Kutch district. Once through, it will take the total number of SIRs in Gujarat
to
13. SIRs
are especially notified industrial cum- residential zones, each 100 sq km or
more, to
be developed under the public private partnership (PPP) model.
The Centre has signed an agreement with the Government
of Gujarat for setting up a
Petroleum,
Chemicals and Petrochemicals Investment Region (PCPIR) at Dahej in the
state.
With the
state experiencing rapid industrial development and the need for industry
responsive
skilled manpower ever on the rise, the state government has set an
ambitious
goal to provide specialised training
to two lakh people every year,
starting
from 2013.
The State
Government decided to establish the Centre
of Excellence for
Entrepreneurship and Technology or iCreate to
create an 'ecosystem' that encourages
young entrepreneurs.
The centre, set up in collaboration with the Confederation of
Indian
Industry (CII) and Deloitte, aims to identify, nurture, mentor and grow the
spirit
of the
new-age entrepreneurship and innovation among youth. The Centre of
Excellence
(CoE), with an incubation centreiCreate- will come up on the outskirts of
Ahmedabad.
Gujarat State Disaster Management Authority (GSDMA)
is coming up with five
Emergency
Rescue Centres (ERC) strategically located at five places in the state
to deal
with man-made and natural disasters including terrorist attacks. These five
ERCs
will be
located at Gandhidham, Rajkot, Vadodara, Surat and Ahmedabad. These
centres
will be equipped with state-of-art facilities, rescue vehicles, special outfits
for
rescuers
who venture into high temperature zones, obnoxious gases among other
dangerous
situations. GSDMA authorities have mapped every village in the state in
view of
natural disasters and also for chemical and industrial hazards. It has
prepared
a blue book for each of the village focusing on management and mitigation plan
in case
of any disasters.
Institute of Seismological Research (ISR),
the institution specializing in geo sciences,
is
profiling all major economic zones in the state to predict their future
sustainability. The
suggestions
given by the Raisan-located institute will be woven into state
government's
construction policies made and provide due input to the Gujarat State
Disaster
Management Authority (GSDMA).
III. A SUMMARY
OF STRENGTHS OF GUJARAT ECONOMY-FACTS IN BRIEF.
WHY GUJARAT?
According to a
report prepared for “Investing in Gujarat” for Vibrant Gujarat by Industrial
Extention Bureau of Government of Gujarat the following reasons are stated for
Investing in Gujarat:
1. Strategic Location: Strategic location
providing access to major international and
domestic markets
- Located on the west coast of India
and connected to major ports of UK, Australia,
Middle East and
East Asian economies
- 1,600 km coast line –offers
numerous opportunities for port based industries.
2. Strong Economy
Leading
investment destination with highly competitive investment climate. Gujarat's
share in India – 5th largest economy.
No. of factories-10%
Net
Manufacturing value-12%
Value of output-16%
Fixed capital
investment-17%
Exports-22%
·
Ahmedabad is rated as the third fastest
growing city in the
world (2010) by
Forbes magazine
·
Top contributor to Indian
economy, around 22 % of Indian
exports contributed by Gujarat
·
One of the most industrialized
state, with 38 % of GDP
contributed by
secondary sector
·
Sustained investor confidence,
the state with the highest number of
proposals in India
·
Delivering promises, the state
with highest number of MoU
and IEM
realization.
Contribution of
Gujarat to India
Phrmaceuticals-35%
Chemicals-51%
Petrochemicals-62%
Plastic
Industry-65%
Diamond
Processing-80%
Salt
Processing-80%
3.Excellent Infrastructure
Gujarat’s
excellent trade and transportation networks create better
market access
and trade flows for companies
- The Sardar Sarovar Narmada river
linkage project, to create continuous
water supply throughout the state
- High teledensity and excellent
internet connectivity in the state
- A power sufficient state with one
of the highest per capita power consumption.
- The only Indian state with an
integrated state-wide Gas Grid
- State with the highest number
of ports and airports
- Excellent road and rail network
4. Impetus to Industries
Taking a lead in
creating the right kind of infrastructure with a
focus on the
future
·
12 Special Investment Regions
of more than 100 sq km each being planned
·
1 Petrochemical and Petroleum
Investment Region, 60 Special Economic Zones and existing 200 industrial areas,
creating opportunities across sectors
·
38% of the planned Delhi Mumbai
Industrial Corridor route is through Gujarat
·
Development of new industrial
areas for agro parks, tourism , recreation and information.
5. Doing Business
- A Globally competitive business
destination with outstanding human capital
- The land of entrepreneurs who are
spread across the globe
- Home to some world renowned
institutes in management, engineering and design
- Availability of high quality
health care facilities
- Government initiated schemes for
womenempowerment, reducing infantile
mortality and primary education
support
6. Government Initiatives
- Awarded 2nd best state
in Asia pacific category in ‘Improving
transparency,
transparency, accountability accountability and and responsiveness
responsiveness inin public public
service’ by UN
in 2010
- Stable political climate
- Urban development initiatives for
high quality living
- Simpplification of pprocesses and
singgle window apppproach for investors
- International campaigns for
investment promotion across sectors
- Wide array of choices for tourists
right from heritage monuments,archeological sites , wild life and beaches
7. Opportunities
A land of
immense opportunities, an opportunity for everyone
·
Industry specific advantages –
in a slew of sectors
·
Presence of more than 370,000
MSMEs in the state
·
Strong growth of agriculture
and horticulture - creating opportunities in agro processing.
- Historically strong gems and
jewelry sector
- Strong mineral base
- Large investments requirement in
infrastructure
- Opportunities in ports and port
based industries
- Opportunities in the tourism
industry spread across the value chain
- Opportunities in sunshine sectors
like solar power and Biotechnology
- Hub of chemical industry in India,
contributes to more than 62 % of national petrochemicals and 51% of
national chemical sector output
- More than 9% to national
engineering output. More than 30 industrial clusters in the engineering
sector
- State accounts for 30% of India’s
stock market capitalization
- Contributes 80% of total diamonds
processed in India. Gujarat’s comparatively cheaper and skilled workforce
can be effectively utilized to setup large low cost production bases for
domestic and export markets
- Over 70% of total Gems and Jewellery
exports of India
- 85% of unique handmade silver jewellery
production of India.
LIMITATIONS
Niti Mehta and SP Kashyap write in
Gujarat 2020:Viewpoints and a vision that there are large spatial imbalances in
the levels of development. Development
is biased in favour of areas having proximity to the urban corridors, which
also attract the largest magnitude of investment flows. The remote hilly areas
in the east and to the south have witnessed little growth of per capita income
or employment matching the growing workforce. They also state that right from
the onset, Gujarat has made a clear choice of encouraging the
secondary sector activities over the primary and tertiary sector
activities.
Productive labour force, stable industrial relations and a prolonged record of pro-business government
have been the initial advantages thattriggered a growth spurt in the 90s over
the 80s decade. In fact Gujarat contributed almost one quarter of the total
growth acceleration achieved in the nation during the reform period (R
Dholakia, 2006). Experience of the 90s also show that “the state has developed capabilities to
absorb the negatively large adverse shock on its primary sector not
allowing its aggregate real income to
fall....national liberalisation process seems to have a stabilizing and growth
accelerating impact on the Gujarat
economy” (R Dholakia, 2001, pp181). According to Mehta and Kashyap, this was
manifested in the growth of the non primary sectors during the nineties, even
though agriculture and allied sectors did not witness any positive impact.
Moreover within the manufacturing sector, registered manufacturing showed growth
acceleration, but the unregistered manufacturing (including cottage and tiny
sector enterprises) that employ the largest shares, did not grow significantly.
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