The Trick’s in the Implementation

Gujarat leads the country in ensuring industrial policies are executed properly.

By Dinesh Awasthi

Economic uncertainty has returned in the world but by and large it has not affected India. The slowing demand has not affected business and industry in Gujarat. If you look at recent investments in the state, most of the money has gone into the infrastructure sector. Power, roads and ports have seen huge investments. Gujarat is one state which has 100 percent electrification in the rural areas under the Gram Jyoti Yojana. This has led to the emergence of a large number of micro enterprises in villages and rural areas.
Growth has been seen both in the urban and the rural economy. As soon as rural economies grow, the demand in the country, which is mainly emanating from villages, gets a further boost. The growth of agriculture has touched about 10-12 percent in the last eight years, something which no state has been able to achieve. If agricultural income grows, it should lead to an increase in demand. This means overall economy of the state has been growing not only because of large industrial houses but has also been rural economy led.
There is, however, a flip side to it. Farmers who earlier had nothing are now sitting on a cash pile and most do not know where to invest. The first investment they make is to fulfill their desires of a good house, nice cars and other luxuries of life. The same happened in Delhi NCR and Gujarat is treading the same line. In such a situation, money will run out someday and people used to this new life style without any skills may take up crime. It is difficult to control someone’s money but the government can come out with policies which state that only 50 percent of land sale proceeds will come by cash and the rest as investment in the project. This way, the chances of skewed consumption get lessened. The other solution is to encourage skill development and enable people to become vendors and suppliers for MNCs. Changes in Gujarat’s economic and socio environment need to be handled well. We are otherwise creating a frustrated generation.

Gujarat has been helped greatly by its 1,600 km coastline and big and small ports in becoming an important business center. While every state has an industrial policy, the real differentiation lies in the implementation of the policy. Gujarat leads in this context as the bureaucracy is very proactive, politicians are receptive and corruption level is relatively low. The state has managed to create an investor-friendly environment which is part of its ecosystem. Gujarat has been investor-friendly for a long time; the first industrial estate of India was in Rajkot in 1967.
Earlier, local industries had low levels of automation, productivity was low and highly skill-oriented. Today’s entrepreneurs are more tech-driven with industries like gems and jewelry embracing tech in a major way. While new companies in the energy sector have come up, the IT and software industry has not taken off the way it has done in cities like Pune or Bengaluru. People are still more interested in the brick and mortar industry. In the long run it augurs well to have a manufacturing base.