labels: economy - general, investments
Slipping on the summitnews
The Modi government want
27 September 2003

The Modi government wants to make its Vibrant Gujarat Global Investors' Summit a grand success. But, as K Sunita writes, snags exist: lack of ideas, bad planning and Godhra and its aftermath

Narendra ModiAhmedabad: As Gujarat gets ready for the Vibrant Gujarat Global Investors' Summit, a much-hyped gathering of industrialists and potential investors from all over the world, the Narendra Modi government is leaving no stone unturned to make the meet a grand success.

The opening ceremony was held on 25 September here. From 28 to 30 September, there will be an international business meet in Ahmedabad, covering various sectors that have been designated as priority segments. These include ports, oil and gas, roads, agro and food processing, biotech, healthcare and pharmaceuticals, minerals and mining, and tourism.

Initially, IT was not present in the list of projects on offer but, now, it has been included as a last-minute addition. The event will progress through 1 and 2 October in Surat and Porbander, with the last leg to be held on 4 October in the Kutch region, where an international seminar on disaster management will be held.

The partners in the event are Industrial Extension Bureau (iNDEXTb), the marketing arm of the industries department of the Gujarat government; United Nations Industrial Development Organisation (UNIDO), the nodal agency for promotion of industries in developing countries across the world; FICCI; and the Department of Industrial Policy and Promotion, Government of India.

Scepticism galore
In spite of the best efforts of the government officials and an army of non-governmental agencies associated with the event, all does not seem to be well. Questions are being asked in various circles as to what the government expects to achieve from this event. How much investment the state will be able to garner from this mega event is a moot point.

Even official personnel are not sounding too confident of achieving the kind of success that should make the Modi happy. The government has put more than 120 projects on offer but the amount of work done on them leaves much to be desired.

"The proposals are appalling - they are simply free-floating ideas which lack depth. There are no concrete business models or any revenue-sharing proposals. How can such vague concepts lure investors," asks the CEO of a prominent business house.

Some government officials themselves admit that the project profiles could have done with more groundwork. "These are not project reports, these are project fliers," says a government official.

But nobody dares to criticise the event in public and thus offend Modi. "Nobody wants to take the risk of incurring his wrath. The slightest murmur of dissent or even a trace of criticism can put you in trouble," says an ex-government official. Some officials identify the problem areas, requesting anonymity.

"While the government has identified 123 projects for the summit, only about two dozen presentations are ready. Though the government has engaged the services of Crisil to vet the infrastructure-related proposals and put them in a saleable shape, it has not given Crisil enough time to do the feasibility studies. How much can Crisil achieve in a little over a month," asks an industrialist.

Thoughtless planning
Nayan Parikh, infrastructure advisor to the governments of Chhatisgarh and Madhya Pradesh, who is also the managing director of Nayan Parikh Consultancy: "Some of the projects make good sense and are likely to find takers. For instance, the river Mahi weir project in Vadodara is a fairly doable one. Similarly, the collection and treatment of hospital waste, which is an industry segment in itself, can be structured without government investment."

Since the state's finances are not in the best of conditions, projects which are self-sustaining will take off, he adds. "Moreover, in the tourism sector, if the government privatises the properties it holds currently, they will have better chances of attracting private investment. Besides, gas distribution-related projects should also not face much problems."

Industry observers and experts are also worried about the fact that the government has spent over Rs 25 crore on the event. Moreover, all state-based public sector units were asked to pay Rs 2 crore each. United Nations Industrial Development Organisation (UNIDO) is also bearing part of the expenses.

In addition, Reliance Industries has agreed to participate in the event by contributing Rs 7 crore. And this is also worrying some sections. "How far is it feasible for a corporate entity to spend these kinds of amounts for what is basically a government event," asks an industrialist.

Amarsinh Chaudhary, the leader of the opposition in the state assembly, has also criticised the Modi government for spending such huge amounts on the event without any certainty of returns. "When you hold an event of this magnitude, the returns have to be much higher than the amounts you pump in, otherwise the whole exercise is a waste of effort and just a publicity gimmick. Is the government confident of netting investment worth even a few hundred crores," asks another industrialist.

Some chance
Says Sunil Parekh, Crisil advisor and former senior director of the Confederation of Indian Industry (CII): "It is not possible to quantify the extent of investment at this stage. But areas like ports, oil and gas distribution, which are already doing very well in the state, are very likely to attract further investment."

D J Pandian, managing director, Gujarat State Petroleum Corporation, also feels the picture is fairly bright. "The summit will provide business partners an opportunity to get together. In fact, it is a test of organising skills. As for the sectors in which we expect investment, oil and gas are important segments. Private players are already in the picture in this arena. We also have multinational companies in the sector that are doing well; Cairns, Shell, Niko and British Gas are already doing business. Considerable investment is expected in this field."

The number of confirmed invitees is another matter of debate. Non-official sources point out that if hotel bookings are an indicator, then the number of confirmed participants is an area of worry. Asks Youth Congress member Yogendrasinh Jadeja, who owns a travel agency, Navigator: "Where are the bookings? For an event of this magnitude, I had expected I would be flooded with booking requests but I have nothing much to show. Ask other travel agents - we are disappointed."

Adds an ex-government official: "The track record of the state government in organising investors' meets is not much to write home about. Many such events showcasing the investment potential of Gujarat organised by the industry organisations during the last three years have invariably turned out to be damp squibs."

For instance, Petrominex, a petroleum and mining specific event organised by CII jointly with the government last year, failed to take off mainly because of the boycott of the event by the chief minister following his tussle with CII bigwigs who questioned his role during the post-Godhra carnage, he adds. "Other events have not done too well either."

This does not seem to be an exaggeration; apart from Petrominex, the state government also held the Resurgent Gujarat meet, organised with great fanfare by FICCI, the state government and the UK as the partner country during February 2002, before the Godhra riots. This event also failed to attract adequate investment.

Earlier, former chief minister Keshubhai Patel tried to give a new direction to the state's progress when he conceived the Vision 2010 plan. Three years have passed since the plan was first formulated to boost infrastructure development by attracting fresh investment to the state.

Out of the 383 projects worth Rs 1,17,000 crore, which were targeted to be implemented by 2010, only about 34 have been awarded for implementation. Again, the reason for the tardy progress has been the reluctance of the private companies to invest in a big way in the state. "Investment worth just Rs 43,000 crore has taken place," says a source.

The Godhra factor
Another problem being faced by the state is that the Modi government has not come out of the shadow of the Godhra and post-Godhra riots. Its handling of the post-Godhra riots trials has also been appalling.

"The state government started marketing the event at a time when the National Human Rights Commission's petition in the Supreme Court in the Best Bakery case put the state's role during the riots of 2002 in perspective all over again," says a social activist.

"Who wants to invest in a state which can break into the riots any time? And who wants to invest in a state where the government itself is a party to destruction," asks an industrialist. "Remember one thing, in spite of best efforts, it may not be possible to prevent a Godhra, but it is always possible to prevent a post-Godhra."

Well, in the meantime, the entire state - and indeed the country - is waiting for the event to unfold. If it succeeds, Modi might finally be able to put Godhra and post-Godhra riots behind him.


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Slipping on the summit