Not So Vibrant

Chief Ministers across the country have been on the defensive of late. Most of the states are compared with Gujarat and few have the ability to counter the claims made by Chief Minister Narendra Modi.

Recently, West Bengal Chief Minister Mamata Banerjee snapped at journalists who asked her why her state was not as efficient as Gujarat. Similarly other chief ministers are a loss when they are questioned about Gujarat.

Unfortunately, few have taken the trouble of questioning or probing the claims made by Narendra Modi. The Centre for Monitoring Indian Economy (CMIE) recently examined the investment statistics flaunted by the Gujarat.

The Vibrant Gujarat investment summit held by the chief minister has been projected to have earned billions of dollars of fresh investment into India.

But a closer look at the figures reveals a different story. Only a small percentage of projects announced in Vibrant  Gujarat (VG) summits in 2009 and 2011 have actually moved on the ground. The details of many grand projects are missing.

While there is lack of information about the projects at one level, at another there is an aggressive PR machinery that is relentlessly promoting investment figures that remain questionable.

CMIE says that investment proposal figures show a spike in the quarter following the VG Summit. But the problem is that many of these proposals do not convert into commitments.

The wooing and the flirting is high profile, but walks to the altar are largely missing.  In VG held in January 2009, government claims that 3,574 Memorandum of Understanding (MoUs) were signed for investments worth Rs 12 trillion.

But CMIE could  capture information and details of only 220 projects worth Rs 3,947 billion (Rs 3,94,700 crore).  “The number of projects captured…were drastically low when compared with the official numbers displayed on the event's website because of poor disclosure of basic information about the projects proposed. In most cases the website does not provide the details of a valid company name, location, product, and capacity,’’ says the CMIE report.

Of these 220 projects, there was no progress in 36 projects worth Rs 1,649 billion (Rs 1,64,900 crore). Moreover, there were 33 projects worth Rs 465 billion (Rs 46,500 crore) had  stalled. There are 31 projects worth Rs 1,076 billion (Rs 1,07,600 crore) where there is no information on the progress of the project.

Only 63 projects worth Rs 217 billion (Rs 21,700 crore) have been completed and 54 projects worth Rs 540 billion (Rs 54,000 crore) are under implementation.

The same is the story for VG 2011. The grand claim was of 8,380 MoUs worth Rs 20 trillion being signed. But research by CMIE did not get any details of these MoUs and projects. “Like in the earlier fair, details of either company name, or location or product etc were not clearly available for us to identify individual projects in these,” says CMIE.

Out of 8,380 claimed, only 175 projects that entail investments worth Rs 1,883 billion (Rs 1,88,300 crore) could be identified.  “Of these, 87 projects worth Rs 1,514 billion (Rs 1,51,400 crore) are still in the proposed stage. Implicitly a large number of these identified projects have not made much progress. Further 19 projects worth Rs 52 billion (Rs 5,200 crore) have been stalled, and implementation of 2 projects worth Rs 1.5 billion (Rs 150 crore) has also been stalled. There are 11 projects worth Rs 119 billion (Rs 11,900 crore) where information on progress of work is not available,” says the CMIE report.

According to information available,  only 43 projects worth Rs 181 billion (Rs 18,100 crore) are under implementation and 13 projects worth Rs 15 billion (Rs 1,500 crore) have been completed.
About half a per cent of the MoUs signed in 2011 are even being implemented. The conversion figure for 2009 is about 3.2 per cent according to the data of the CMIE paper.

This figure is surprising only because of the great hype around Gujarat’s claim of a flood of investment. Perhaps there are various mitigating reasons why the other projects did not take off.
These figures place Gujarat at the same level as other states. It is not head and shoulders above others. While Gujarat may be pushing projects faster than some laggard states, but it is not racing ahead at the speed it claims.

There are many states that have recorded a higher economic growth rate than Gujarat. Between 2006-7 and 2010-11, Gujarat had a growth of 9.3 per cent. Good rate but still ranked sixth. Even humble Orissa was at 9.4 per cent. Bihar topped with 10.9 per cent while Chhattisgarh (10 per cent), Haryana (9.7 per cent)  and Maharashtra (9.6 per cent) followed.

So here are some suggestions and thoughts for Chief Ministers who are worried about the Gujarat juggernaut.