Monday, January 21, 2013

SEARCH FOR A BETTER LIFE - In economic terms, Gujarat is on a roll

By Swapan Dasgupta

Attending the Vibrant Gujarat summit at Gandhinagar last week, I was pleasantly surprised to find a good representation of journalists from Kolkata-based media organisations. Subsequently, I was informed that the Bengali press had given generous coverage to the event, perhaps in anticipation of the investor meet organised by Mamata Banerjee in Haldia. Whatever the motivation, I was tickled by the idea that the buzz in India’s fastest-growing and most entrepreneur-friendly state was resonating in a state that is being viewed as a basket case. Perhaps something from Gujarat would rub off on West Bengal.

Back in Delhi, I mentioned this to a friend who occupies a senior editorial position in a national publication. “Oh well”, she retorted dismissively, “as long as the coverage was confined to Bengal.” “Here in Delhi”, she added joyously, “the papers have barely mentioned it.”
This supercilious dismissal of a bi-annual event that is the nearest equivalent to a Davos in Asia—minus the fine dining and the paraphernalia surrounding Heads of State—isn’t unusual. Ever since 2002, it has become obligatory for the Left-liberal fraternity to either ignore or debunk the economic achievements of the Gujarat Government. In the early days until 2007 it was believed that a combination of political disapproval, judicial activism and diplomatic isolation would result in Modi falling off the map.  
Every attempt was made to encourage the Chief Minister’s detractors to attack the state government with all guns blazing. Almost every vocal critic of Modi was rewarded with committee posts, Padma awards, Rajya Sabha seats and international prizes. Simultaneously, anyone who dared suggest that there was more to Modi than the failure to prevent the post-Godhra killings was mercilessly hounded. A former Director of Rajiv Gandhi Institute of Contemporary Studies was eased out of his post after he wrote a report in 2005 suggesting that Gujarat ranked number one among states in terms of economic freedom. Interestingly, seven years down the line, Gujarat remains at the top of that pile.
That the tide has turned is obvious. Today, Anil Ambani’s hyperbolic testimonial to Modi doesn’t provoke outrage in the same way as Ratan Tata’s 2007 remark that industry would be “stupid” if it wasn’t in Gujarat. India Inc. has given a resounding thumbs- up to Gujarat. For that Modi has, in a small measure, Mamata Banerjee to thank. The story of the development of Sanand as an automobile hub in just four years began when Tata Motors shifted its Nano plant from strife-torn Singur in West Bengal. India has not witnessed such a spectacular success story in recent times.
In economic terms, Gujarat is on a roll. Whether it is Jagdish Bhagwati or Lord Meghnad Desai, there is a growing line of ‘respectable’ people unafraid to sing the virtues of the ‘Gujarat model’ or even suggest that India would realise its full potential if there was a leader like Modi at the helm. Even the US and European Union’s unstated diplomatic ‘sanctions’ against the government in Gandhinagar appears to be crumbling. There was a mega-size British delegation at Vibrant Gujarat and the British High Commissioner’s speech on the occasion was described by someone as representing a “720 degree turn”. The Canadians were there in full strength, as were the Australians showcasing their fast-growing knowledge economy and, of course, the Japanese who have invested heavily in the 1,483 km Delhi-Mumbai freight corridor (nearly 38 per cent passes through Gujarat), the hottest development of the next decade.
Indeed, the Special Investment Region in Dholera is arguably the most talked- about venture in the whole country, blessed as it is with special legislation that meets almost every item (including labour flexibility) on industry’s wish list. Shardul Shroff, the Managing Partner of Amarchand Mangaldas, who briefed delegates on the exciting legal ramifications of the SIR legislation, told me that the investor-friendly facilities were actually available to every state in the country (including West Bengal). Yet, it is significant that only Modi has followed it through with state legislation. Just as Gujarat has circumvented political hostility of the UPA Government and extracted its full quota of monetary allotments from the Centre by adhering strictly to the rules.
The fact that Gujarat has developed a huge land bank for industry and townships gives it a natural advantage for new development. But the transfer of land from low-yielding agriculture to industry would not have been possible unless rural folk had not detected the possibilities of self-improvement from abandoning their traditional livelihood.
The most reassuring feature of contemporary Gujarat—both urban and rural—is this unending search for better opportunities and a better life. The thousands of ordinary, middle-class individuals who flocked to the seminars making copious notes weren’t there as part of the latest tamasha in town. Some of them were there purely to be exposed to modern business practices and some, particularly the owners of the SMEs, were there to sniff for ideas and opportunities. The country seminars whether hosted by developed countries or nations that never feature in the Indian consciousness, weren’t about foreigners investing in Gujarat; they were about inviting Indians to do business overseas and investing there. When it comes to politics, Gujarat is quite spiritedly nationalist (some would say xenophobic) but when it comes to business, Gujaratis are quite unequivocally global. Little wonder that the regressive economics that marks a section of the BJP finds no mention in the political language of Modi.
In a recent, broadly sympathetic article, Vivek Dehejia, a Canada-based economist, has asked an interesting question: in the free-market ethos of Gujarat, why is there such an emphasis on the government and the Modi cult? The implication is obvious: if the impulses observed in the Vibrant Gujarat meets have struck roots in society, they will surely outlive the Chief Minister’s tenure in Gandhinagar.
Gujarat’s development may well be on auto-pilot. However, as the freeze on reforms at the Centre between 2004 and 2012 suggest, it doesn’t take long for an economy to stagnate in the absence of leadership and political direction. Much of what Gujarat has achieved has been due to the single-minded determination of Modi to circumvent political opposition through exemplary economic growth. It is Modi’s no-nonsense style of functioning and his ability to pick the right team and motivate them that has made all the difference. A more laid-back approach that incorporated political venality wouldn’t have ruined Gujarat or diminished its economic importance. However, it would have meant that the state would be deprived of its cutting edge and sustained double-digit growth. A glance at neighbouring Maharashtra suggests the possible plight of a Gujarat that has eschewed the Modi legacy. Without inspirational leadership, Indians as a collective tend to merely chug along. By insisting on a relentless pace, Modi has actually been very un-Indian.  
After his third successive election victory, the discourse on Modi has shifted. His detractors are now asking whether the Gujarat model is applicable to a diverse, fractious country with uneven levels of development. I leave it to Modi to answer that question. However, in a recent conversation he underlined a facet of Gujarat’s development. Gujarat, he told me, merely has a seafront. It has no raw materials—no iron ore for steel, no coal for power and no diamond mines. Yet it has made huge strides in these fields. Imagine, he added, if we had the natural resources of an Assam, a Jharkhand and a West Bengal: “I would have changed the face of India.”
For India’s sake I hope he gets the opportunity. 


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