Wednesday, January 21, 2009

An investment miracle in Gujarat?

Most of us are aware of the remarkable things going on in Gujarat by way of public administration. From this, we tend to jump to the conclusion that things are going well by way of investment in Gujarat.

Writing in Mint today, Salil Tripathi makes some important new points. He looks at the time-series of investment `under implementation', organised as percentage shares of various states, that's tracked by CMIE.

His main finding is that Gujarat was a leader in investment -- in 1995. The violence in 2002 led to a sharp and dramatic drop in investment. In the last three years, there has been some pullback from the depths, but only partly. While Gujarat has strong public goods in some dimensions, it has paid a high price and continues to pay a high price for weaknesses on the most important public good of all: law and order.

Chief Ministers across India are hearing stories about the remarkable things going on in Gujarat by way of public administration. There is a lot that other states can and should learn from Modi's Gujarat on these fronts. But the most important lesson that they should learn is that law and order is the most important public good of all. When a government falters on the safety of life and property, this induces large and sustained penalties by way of lost economic growth.


  1. Kindly go through the Comments section of Mr Tripathi's article. I was amused to see only 2 out of 16 responses (12.5%...blame it on my sector of work-Finance) supporting the article-that too feebly. It says one of these two things to a neutral/indifferent observer:
    a)people who voiced against Mr Tripathi haven't mentioned any numbers- and I believe numbers & numbers alone can talk unequivocally (again blame it on my sector-finance) & not words and hence cannot make home their point to me.
    b)majority (87.5%) of the readers of Mint are supporters of Modi-tva, and possibly from Gujarat, as they keep mentioning about on-the-ground-development, which can be felt & not be encapsulated in numbers.

  2. Yes Gujarat did go through the 2002 riots etc. But how long are we going to hold on to it and continue to mention it in anything related to Gujarat. Do we talk about the holocaust every time one sees a BMW, Audi or Mercedes? What happened is highly shameful but the information regarding the same is highly distorted. Indian media is not straight, they are biased. It is evident from the talk shows. We have miles to go before we have some quality and impartiality like some other talk show hosts. Our media will conveniently hammer some issues and blatantly keep mum on "others". Same with the committees and fact finding missions. I am from Gujarat and let me share that the state has a lot to offer in terms of business and economy as well as education and entrepreneur opportunities. It is in the genes and blood of our brothers and sisters. They go to any country, merge with the culture and flourish. But they keep their Gujarati culture alive in them and their future generations. Yes, the Vibrat Gujarat MOU data might be trumped up but in a small stretch on the outskirts of Surat (few kilometres stretch) you can see companies like ONGC, NTPC, L&T, Reliance, Cairn Energy, GSPL, GSEG, Essar, Shell, Kribhco to name a few. Believe it or not but Modi is and will transform Gujarat because we have the "Can Do" approach. And however hard people and the media tries the 2002 blot will be washed away by the newer and better achievements. Give the man a chance.

  3. If the data shows that investments have fallen then it is true. But where, Gujrat really scores is on the quality of implementation. One visit to Gujrat and Orissa and elucidate this point. And its really only a matter of time before the investments start coming back to Gujrat.

  4. I agree to a large extent with what Salil Tripathi voiced. Check the link.

  5. V Anantha Nageswaran posts a good rebuttal to this article here :


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