By Swapan Dasgupta
It is a commentary on the bizarre priorities of our information order that investment commitments totalling $450 billion, equalling nearly one-third of India's GDP, are either ignored or put on par with anodyne political statements. This, however, is not the occasion to lament the lack of even-handedness in the treatment of anything remotely connected to Gujarat Chief Minister Narendra Modi. It is the time to celebrate something that is fast becoming undeniable: the emergence of Gujarat as the economic powerhouse of India.
Last week, there was a stark contrast between a Gujarat bubbling with optimism and the rest of the country despairing over economic mismanagement and missed opportunities. It is not that all the MOUs signed at the 5th Vibrant Gujarat summit will be translated into reality. Many will remain paper commitments. But when the who's who of Indian industry line up to proclaim their faith in Gujarat as a wholesome place for investment, having already put their money where their mouth is, neither India nor the rest of the world can afford to be in denial.
The proclamations of faith in Gujarat are all the more meaningful because they have been made despite the Centre's unremitting displeasure with anything that could bolster Modi's credentials. Modi doesn't usually win awards for being the "Reformer of the Year" or for innovative governance. In fact, he doesn't even make it to the short-list. But he has invariably secured an unequivocal thumbs-up from those who have a real stake in the emergence of India as a world economic power.
The sceptics who insist that the rise and rise of Gujarat has little to do with the state government are partially right. Entrepreneurship and business are part of the Gujarati DNA, a reason why Mukesh Ambani stated that Reliance Industries has always proudly cloaked itself in the Gujarati business ethos. But Gujaratis have been under no obligation to sink their money into Gujarat: from Dholera to Durban, the world has been their karmabhoomi.
The reason why Gujarat has registered the highest, double-digit GDP growth in the past decade owes considerably to the targeted, business-friendly approach of its government. Four features stand out. The first is quick decision-making—what Modi has dubbed the "red carpet not red tape" approach. Ratan Tata, for example, recounted how the land allotment for the Nano project was completed in just three days, a quick-fire decision that has fetched Gujarat some Rs 30,000 crore in Tata group investments and direct employment for some 50,000 people.
The second feature is the curious phenomenon of the near-absence of political corruption at the top. Even Modi's worst enemies will not deny that the Chief Minister's fanatical personal integrity has had a salutary trickle-down effect. Irritated by politically-inspired extortion, industry has identified Gujarat as a place where it is possible to do ethical business.
Thirdly, Gujarat since 2002 has been marked by social peace. Particularly important for industry is the absence of rural unrest which unseated Tata Motors from West Bengal and is now so marked in Maharashtra and Karnataka. This is because Gujarat has bucked a national trend and is witnessing high growth in agriculture—last year the sector grew by 9.9 per cent. This means that farmers now have a stake in the larger prosperity of the state and aren't swayed by populists and Maoists.
Finally, the growth of Gujarat has been spurred by a philosophy of "minimum government and maximum governance". In plain language, this means that the state government has concentrated on creating the infrastructure for growth and left it to the private sector to get on with the job of actual wealth creation. In Gujarat, politicians don't talk the language of class conflict; they too mirror the preoccupation with dhanda (business). So all-pervasive is the respect for enterprise that even the children's amusement park in Ahmedabad has created kiddie games centred on the use of virtual money!
The extent to which this vibrant Gujarati capitalism will benefit Modi's national ambitions is difficult to predict. But one thing is certain. As Gujarat shines and acquires an economic momentum of its own, more and more businesses will find it worthwhile to channel a major chunk of their new investments into Gujarat. The Centre may not like the resulting uneven growth but the alternative is not to thwart Gujarat by political subterfuge—such as preventing public sector banks from engaging with the state government and the whimsical use of environmental regulations. Gujarat has shown that accelerated and sustained growth is possible when the state plays the role of an honest facilitator, rather than a controller.
Modi didn't create the Gujarati character; he was moulded by it. He merely gave it a contemporary thrust and an ethical dimension. If politicians focussed on these, India will be a much better place.