Gujarat is ready to leapfrog into its next phase of growth, according to the panellists of “Clarity Through Debate–Gujarat Unleashed: How can Gujarat continue to lead Indian industry’s growth agenda”, a discussion held in Ahmedabad on Tuesday. The chief guest was Saurabh Patel, minister of state for industries and energy. The panel included Samir Barua, director, Indian Institute of Management (IIM), Ahmedabad; Parimal Nathwani, group president, corporate affairs, Reliance Industries Ltd (RIL) and member of Parliament (MP), Rajya Sabha; P.K. Laheri, director, Torrent Energy Ltd; Piruz Khambhatta, chairman and managing director, Rasna Pvt. Ltd; Nitin Shukla, managing director and chief executive officer, Hazira LNG and Port Companies; Girish Patel, chairman, Paras Pharmaceutical Ltd; R.S. Sodhi, managing director, Gujarat Co-operative Milk Marketing Federation (GCMMF). The panel discussion was moderated by Tamal Bandyopadhyay, deputy managing editor, Mint. Edited excerpts:

Saurabh Patel: The state has made tremendous inclusive growth in the last one decade. The government’s focus has always been on the inclusive growth of the state and today we can say that even if you go to the remotest of the villages in the state you will find development there. The state’s GDP (gross domestic product) has been growing at a healthy rate. In the last Five-Year Plan, the Planning Commission had given the state a growth target of 10.2% against which we have achieved a growth rate of 10.4%. This Five-Year Plan we have been given a target of 11.2% and we are confident to achieve more than that.

A decade ago, Gujarat was an energy deficit state, but now we are an energy surplus state and it is soon going to be the energy hub of the country. The state’s contribution to the country’s industrial output is 16% while the state contributes 20% of the country’s total exports. Gujarat government’s focus on inclusive growth can be measured by the achievement it has made in agriculture growth in the last few years. While the country’s agriculture growth has been 2% the state has grown at a rate of 8-9%. This has resulted in an increase in the purchase power of people from rural parts. Gujarat has been focusing more on spending on infrastructural development than spending on giving subsidies.

For the recently concluded Vibrant Gujarat Summit, I would like to say that we never had any targets in our minds where the number of MoUs (memoranda of understanding) was concerned. We wanted to make this event a global platform for discussions on growth. We quietly worked on it and as a result during this summit we had 12 seminars in which the focus topic was investment in other states. As far as the MoUs are concerned, it is an expression of intention for investment. We did not accept a lot of investment proposals which we found not viable. Our aim is to ensure that none of the investors who signed MoUs in the state should go and put their projects outside the state due to issues on our side. If 100 MoUs have been signed and one of the investors goes to Maharashtra then we are to be blamed. However, if the investor cannot implement the project for internal reasons like lack of market, lack of funding etc, then the state cannot be blamed. The success of this event lies in the fact that a lot of investors from outside Gujarat are coming to the state.

Moderator: What ticks for the growth of Gujarat that is thriving on industrial development? Is it the stability of the government or its approach towards the industries–red carpet and not red tape–or is it the entrepreneurial spirit of the people that drives the state?

Sodhi: I am not an expert on the industrial side. But when you talk of inclusive growth, out of the 6 crore (people) I represent, 4 crore of Gujarat…is in rural areas. As far as the entrepreneurial spirit of the state goes, Amul has been successful due to this very reason for the last 60 years. The board members of Amul are from various political, social and religious backgrounds. When we enter our house, we leave our shoes outside. Similarly, when we enter our boardroom, we leave our political hats outside and purely enter by commercial interest. This is the reason why Amul is what it is today and it may not be so successful in other states.

Barua: I have been in Gujarat for the last 34 years, so I am as much a Gujarati as anyone who has been born and brought up here. My assessment will be that the major share of credit for what Gujarat has been able to achieve goes to its people. The “can do” spirit that drives Gujaratis is absolutely amazing. They are born entrepreneurs and one of the major attributes of a Gujarati is the ability to take risks. Looking back at the establishment of the IIM at Ahmedabad, (it was the) entrepreneurial spirit of a few individuals led by Shri Kasturbhai Lalbhai and Dr Vikram Sarabhai, who ensured that one of the first two management institutes in the country were set up at Ahmedabad in Gujarat.

Laheri: When Gujarat was formed, it was not prosperous. It was facing drought and was an energy deficient state. The state has prospered thanks to the entrepreneurial spirit of the people. However, right from the formation of a separate state of Saurashtra where Manubhai Shah started industrial estate and encouraged SMEs (small- and medium-sized enterprises), till the recently held fifth chapter of Vibrant Gujarat, the government has been supportive, proactive and interactive in a way that instills confidence in the investor. As compared to any other Indian state, Gujarat has the lowest man-days lost in the last four decades in industrial sector. Liberalized environment has been quite suitable for Gujarat’s development and every state can learn a lesson from this.

Shukla: It cannot be that the growth of Gujarat be in spite of the government. Gujarat has adopted a policy-driven approach like the Gujarat Infrastructure Development Act has put in a lot of confidence for multinationals as well as national companies. Gujarat was the first to come up with a separate port policy. The way the government, or GSPC, (Gujarat State Petroleum Corp. Ltd) lay gas grid across the state, the gas consumption increased 500% from 2002 to early 2010. The influence of Gandhian philosophy, wherein dispute resolution (happens) by way (of) dialogues, has led to low labour problems.

Girish Patel: If we look back thousands of years, we will find that even then Gujarat was the largest trading hub of India. Gujarat businessmen are very good incubators. They are able to grow from small size to midsize.

However, the scenario now has changed. You may not make money in commodity (trading) as you can make from a knowledge-based industry, which requires value addition. The businessmen lack professional approach from growing from midsize to large size. Earlier, the government was trader friendly and they were seeing it (industry) as a trader proposition.

In the last 10 years, the government has also turned professional. The CM (chief minister) works like a CEO (chief executive officer) of a large organization, which is driving the growth. He knows that what I am investing today is for tomorrow’s revenue.

Moderator: The number of MoUs that are signed in the Vibrant Gujarat summit has always drawn a lot of attention. This time you have signed close to 8,000 MoUs worth ’21 trillion, which is one-third (of) the Indian economy. In all five summits, close to ’40 trillion worth of MoUs have been signed. How much of them have actually translated to reality and how much is hype?

Nathwani: I think at least 80% of MoUs signed in the previous summit are a reality. The event is an opportunity for all, be it even small hoteliers or farmers. The numbers are going to rise in the coming years as people from the US and the UK are increasingly enquiring about shifting their business to Gujarat.

Shukla: Investors are genuine. On how much investment can be converted into a reality,…even the best run organization when they look at “opportunity funnel” not every project fructifies. Every organization has a success ratio and it cannot be 100%. For people who are buyers or sellers in a marketing company, they will know that the yardstick is two or three offers. It is prudent of government of Gujarat for signing so many MoUs.

Laheri: In the last 15 years, if you look at the projects for which Industrial Entrepreneurs Memorandums have been filed with the Indian government, hardly 30% have materialized. In comparison, for projects at Vibrant Gujarat, the success in the first year is 10-15% and by fourth or fifth year it has been 60-65%. No state can reject an intention on the basis that the investment or the project size is too big.

Moderator: In the last round, I would like to ask the panellists what are their views on the key challenges ahead for the state to leapfrog into the second generation of development, or to maintain the current momentum of growth and to increase the speed of growth?

Khambhatta: The biggest challenge is how the state can take advantage of the fact that China and Europe are currently facing recessionary effects to establish itself as a global manufacturing hub. It is time to move ahead and compare ourselves with the rest of the world and not be content with comparing ourselves with other Indian states. The Centre has to play a role in the development of the state by giving more policymaking powers to the states. There are some star performers in the country and Gujarat is one of them. The central government should empower these states to carry out some reforms which other states may follow later. For example, FDI (foreign direct investment) in retail sector, labour reforms or making international standards for food products, a Bill for which is stuck for the last four years in the Centre. If the Centre cannot decide, then let the states decide…

Nathwani: The state still lacks in creation of health and education infrastructure at the district level. There are many good hospitals and academic institutes, but most are located in major cities like Ahmedabad and people have to travel to these centres for healthcare and education. We need to have more full-fledged hospitals and educational institutes at district level.

maulik.p@livemint.com

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