The Americans have the right word for it - razzmatazz, the most appropriate word to describe the Vibrant Gujarat summits, started by Chief Minister Modi in the year after the post-Godhra pogrom and now into its eighth edition - long enough to evaluate whether this is serious business or just razzmatazz.
Given the announcements made at these summits of humongous investments by almost every big name in Indian business and a host of foreign giants, Gujarat's GSDP (Gross State Domestic Product) should surely have been soaring. Then, why has it been steadily
declining? Back in 2010-11, the GSDP rate at current prices stood at 20.19%. In every subsequent year, or so say official Gujarat government records, that rate has fallen first to 17.6%, then slipped to 13.3%, further dropped off to 11%, and now slid to 10% (2015-16). Curious. Just as Y-on-Y (that is, Year-on-Year, for the uninitiated), Vibrant Gujarat Summits announce larger and larger numbers of MoUs and higher and higher amounts of promised investment, actual investments tumble and carry down with them the GSDP growth, whether measured at current prices (nominal growth) or at constant prices (real growth)
Indeed, in real terms, the slide is even more dramatic. Real GSDP growth stood at 10.8% in 2012-13, slipped to 8.3% the following year, slid thereafter to 7.7%, and has now crashed to 6.7% (2015-16). Modi should really take his place in the highest echelon of 21st century economists for having irrefutably demonstrated that higher and higher MoUs lead to lower and lower growth rates! Amartya Sen, please stand aside. Here comes the next Nobel Prize winner for Economics.
What is even more fascinating is the inverse relationship between promised MoU investments and actual on-the-ground industrial investment approvals according to
figures released by Gujarat's Industries Commissioner. If one adds up the announcements made over the past seven summits, the pledges come to a whopping Rs 84.55 lakh crore. When, however, actual investment approvals are counted, it appears that over the period of the lasts seven summits (1/8/83 to 31/08/16), investment approvals stand at just a whisper above 10% of the promises made: a mere Rs 9.51 lakh crore! (Can you hear Modi singing in the distance:
Kya hua tera wada, woh kasam, woh irada?)
And that is why, Delhi and Maharashtra, without any summits, vibrant or otherwise, have attracted 29.20% and 20.16% respectively of Foreign Direct Investment over the first two years of the Modi regime, while poor Gujarat, notwithstanding its glittering Vibrant Gujarat Summits, stagnated at a puny
5.13% - having attracted no more than $2,682 million FDI, just about enough to cover the costs of their bi-annual
tamasha!It was announced in 2009, eight years ago, that 31 MoUs committing investment of the order of Rs 2.12 lakh crore had been concluded. Eight years later, according to
papers released to the press at the official Congress party briefing on 10 January 2017, only one of these projects is off the ground. The biggest non-starter is Gujarat State Electricity Corporation and Gujarat State Petroleum Corporation (GSPC), who jointly announced they would be investing Rs 26,600 crore in the power sector. GSPC is now wallowing in over Rs 20,000 crore unpaid loans with
ONGC being urged to take over the company, despite its having virtually no assets and a huge debt overhang. Little wonder then that there has been little or no investment momentum shown by either partner.
Private sector announcements have fared no better. While Adani had dangled Rs 12,000 crore before the Summit for power plants at Dhanduka and Dahegam, virtually no action has been taken at either location. The same is the fate of investment pledges of over Rs 10,000 crore each made by such towering Indian industrial houses as Torrent, OPG, and Shapoorji, as with those of over Rs 5,000 crore made by Avantha, Canasia, GMR, JSW Energy, Rachana, Responsive and Shyam. At Rs 3,000 crore, we have Videocon and at Rs 1,500 crore, Reliance Cementation figures. Two, Antai Balaji and Avinash Steel, have just disappeared - even from their web-sites!
Why? Principally because Gujarat is a power-surplus state and there are no buyers! This was well-known even in 2009. Then why these empty announcements? For three reasons - perhaps. First, because power is sexy and the sector looked good on Modi's CV. Second, because big promises give a big boost in the stock market to those who make big news. Third, because it is an easy way of acquiring government land at throw-away prices. The last point is well-illustrated by the case of SG Transstadia, with whom an MoU was signed just two years after the company was set up (as revealed by the Congress spokesman at his open press briefing on 10 January 2017). The land they coveted was priced at Rs 144.5 crore by the Valuation Committee. This was then leased to Transstadia by the Government of Gujarat at a rent of a mere Rs 4 lakh per annum (for 35 years!) whereas, at the usual rent of 15% of valuation, the annual rent should have amounted to Rs 21.67 crore. Similarly, where the government of Gujarat permitted Indigold to sell to Allumina land allotted to the former, the Supreme Court has set aside the government order and asked it to deposit compensation of Rs 3.15 crore.
Readers are, therefore, advised to arm themselves with jars full of salt as the current Summit announces that MoUs of over Rs 20 lakh crore have already been signed by the second day and the final figure is expected to touch Rs 30 lakh crore! If there were some system of substantial earnest money deposits for making such announcements (say, 10% of the announcement - not refundable - before signing such MoUs), there would be a sharp drop in such fake news to go by past experience.
But this won't happen - because Modi has made a career out of following the example of Goebbels: "arguments must be crude, clear and forcible, and appeal to the emotions and instincts, not the intellect". What a perfect description of Modi's oratory! The influence of Mussolini on the RSS might also be recalled in this context. At page 100 of his recent biography,
The Untold Vajpayee, Ullekh N.P. cites an article in the
Economic and Political Weekly of 22 January 2000 by an Italian scholar, Marzia Casolari, saying that as a consequence of the RSS leader, BS Moonje, having established contact with Benito Mussolini: "Hindu nationalists looked at the political reality of fascist Italy and subsequently Nazi Germany as a source of inspiration...If it is true that Hindu society elaborated its own patterns of militarization, it is equally true that a most relevant result of fascist influence was the transmission of a more functional organization and a stronger political character to the already existing organizations of political Hinduism." A useful lesson to bear in mind as we evaluate Modi's brain-child, the Vibrant Gujarat Summits. After all, Modi remains an RSS
pracharak, ready at any time, as he himself boasts, to pick up his
jhola and leave. What a lovely prospect!
(Mani Shankar Aiyar is former Congress MP, Lok Sabha and Rajya Sabha.)Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.