Saturday, April 13, 2013

Gujarat, the gateway to India: fact or farce?

AHMEDABAD, April 13, 2013

Going by the Gujarat government's figures, memorandums of understanding (MoUs) for Foreign Direct Investments (FDI) worth $876 billion were signed during its five biannual Vibrant Gujarat Global Investors Summits from 2003 to 2011 and a whopping 84 per cent of the projects have already been implemented or are under implementation.

This would mean Gujarat has overtaken all of China, whose FDI inflows during this period were to the tune of $600 billion. And, interestingly, after the 2013 Vibrant Gujarat Global Investors Summit, the government chose not to give out any MoU numbers when Chief Minister Narendra Modi declared that, "Gujarat is now the gateway to India."

Behind the envelope calculations show that if the State had implemented even 60 per cent of the investments promised, it would have left the dragon behind.

But, as it were, the latest figures of FDI inflows for the financial year 2012-13 up to January this year indicate that Gujarat ranks sixth in the country with Rs. 2,470 crore or 2.38 per cent share.

Maharashtra continues to top the FDI numbers with FDI of Rs. 40,999 crore or 40 per cent, followed by Delhi, Tamil Nadu, Andhra Pradesh and Karnataka.

Gujarat was slightly ahead of West Bengal in 2012-13, which got FDI of Rs. 1,934 crore.

In fact, Gujarat's share in the FDI kitty has been heading southward during the last three financial years from 3.38 per cent (Rs. 3,294 crore) in 2010-11, 2.85 per cent (Rs. 4,730 crore) in 2011-12 to 2.38 per cent (Rs. 2,470 crore) now. These numbers contradict the State government's claim that Gujarat had bucked the worldwide overall economic downturn to become the engine of India's growth.

Nothwithstanding the government claims, it is an open fact that Gujarat's FDI numbers have always been the same or lower through the years.

Reserve Bank of India's FDI figures encompassing the decade of 2000 to 2011 reveal that while Gujarat received just about $7.2 billion in FDI, Maharashtra got $45.8 billion and Delhi over $26 billion. Even Karnataka and Tamil Nadu, with a $8.3 billion and $7.3 billion share, got a larger piece of the national FDI pie.

Albeit the overall FDI inflow into India fell by some 30 per cent during 2012-13, Gujarat has beaten this, as the numbers suggest, with a bigger decline close to 50 per cent.
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