CLSA Report: GUJARAT The Silver Lining
On the eve of the 20th anniversary of commencement of reforms – July 1991 was Manmohan Singh’s first speech as FM – On the road travelled to Gujarat for two days. A near 10% growth in agriculture for over a decade, rapid industrialisation and longterm results focussed government is driving Gujarat’s growth, a state that started with some historical advantages. When rest of India is feeling hemmed in by scams, corruption and policy paralysis, in Gujarat you consistently hear of clean administration, responsive bureaucracy and a progressive government focussed on long term development of the state with long term stated policy goals. Gujarat’s success could well provide the template for India. A legacy of strong growth • Between 20022007, industry grew at 12.5% (India manufacturing growth – 8%). Between 2005 and 2010, Gujarat’s real GDP growth was 11.3% (India 8.7%). • Over the last decade, agriculture has grown at nearly 10% per annum, as Gujarat reaped the benefits of scientific farming, rain water harvesting and linking its rivers. • Gujarat has two natural advantages – a long coastline and people with entrepreneurial spirit – something that everyone emphasises in the state. Vibrant Gujarat Summit 2013
http://www.vibrantgujarat.com/
Page 1
The state government's role • The government has been an important catalyst in the growth. It is harnessing its twin advantage well and a corruption free, responsive administration is a big plus. • It was clear from our discussions that the state government has a long term vision for Gujarat’s growth in agriculture, manufacturing and services. Transparent policy applied consistently and a citizen and investor friendly administration has resulted in Gujarat emerging as the favourite investment decision within India. • There has been a quantum leap in integrated infrastructure development and is one of the few power surplus states in the country. It has also set in place the infrastructure for supply of trained manpower to the industry. Future outlook and risks • Gujarat's road map is now to make a quantum leap in large scale manufacturing by creating large industrial cities. The SRI Act and the Delhi Mumbai Corridor are expected to drive it. The other area of focus is tourism development. • The state is likely to emerge as the fourth auto hub in India, if Ford and Maruti set up their next plants there. Tata Motors and General Motors are already present. • Much of Gujarat's growth in the last decade is attributed to Chief Minister Narendra Modi’s dynamism, vision and focus on growth. Some people say that he is now trying to accommodate political people in the administration as he prepares for a role at the centre. This would seem to be the key risk if the clean administration becomes riddled with political functionaries and factions.
Vibrant Gujarat Summit 2013
http://www.vibrantgujarat.com/
Page 2