Modi puts Gujarat growth on a fast track

James Fontanella-Khan Financial Times | 19 Jun 2013 08:03 am

Gujarat/New Delhi: Dilip Patel, a 27-year-old graduate student, says few young people care about the role played by Gujarat's leader in the communal slaughter that blighted the western Indian state 10 years ago.

"You can't keep on living in the past," he says after listening to Narendra Modi, the state's chief minister, address a crowd celebrating the opening of India's largest solar energy farm in the north of the state.

"We have decided to forget " all we want now is development ... Modi provides loads of development."

Since the devastating riots of 2002 that saw more than 2,000 Muslims killed on Mr Modi's watch, after which he was accused of orchestrating the pogrom, Gujarat has become India's most investor-friendly state with a double-digit annual economic growth rate.

Such turbocharged growth, coupled with a report on the riots from a Supreme Court-appointed team that exonerated Mr Modi, has made the chief minister a possible prime ministerial candidate for the Hindu nationalist Bharatiya Janata party in 2014 parliamentary elections.

Comparisons usually do not hold up with China, yet Gujarat, an automobile production and diamond polishing hub, is likened by some to the industrial southern mainland province of Guangdong.

A study by the Associated Chambers of Commerce and Industry of India in March showed that Gujarat had attracted the highest value of investment proposals of any Indian state over the past five years. Global companies such as Tata Group and Ford are flocking there, to the envy of other states hankering for jobs and investment. At the biennial "Vibrant Gujarat" conference, industrialists such as Mukesh Ambani and Ratan Tata lined up to congratulate Mr Modi on his record of cutting through red tape, curbing corruption and offering uncontested land for industry.

"It is stupid if you are not in Gujarat," Ratan Tata, the chairman of the Tata Group, once said in a ringing endorsement after moving his Nano plant from West Bengal to the state.

Not only has Mr Modi led an economic transformation built on the supply of electricity and improving roads, he has pulled off a remarkable rebranding of the state, largely centred on himself.

Admirers say he has the instincts of a chief executive with little tolerance for underperformance among his officials. His critics say the "media hype" is intended to clean up his image, arguing that the communal riot and Mr Modi's divisive, overtly religious stance make him unacceptable to India's voters.

One senior western diplomat says that while Gujarat's boasts do not always live up to scrutiny, the international community is being forced to engage with Mr Modi in support of their business executives.

The US, which denied Mr Modi a visa in 2005 due to "particularly severe violations of religious freedom", has begun warming to Gujarat's chief minister. Peter Haas, the Mumbai-based US consul general, recently stood at Mr Modi's side at the inauguration of the Gujarat Solar Park, praising the state's government for creating the conditions and incentives for investment.

"I meet guys who marvel at the efficiency of Gujarat," says Prashant Agarwal, a Mumbai-based columnist for Mint, a business newspaper. "The red tape, the bureaucracy are gone. Gujarat is open for business. On the social front, sure more can be done, but that's true anywhere [in India]. Modi is generating jobs."

Mr Modi took charge of Gujarat when its economy was shrinking and domestic growth was stagnant after a string of natural calamities including a big earthquake in 2001.

Faced with economic decline, he reorganised the government's administrative structure and embarked on a big cost-cutting exercise.

Mr Modi insists there is no reason other Indian states cannot replicate the success.

"Gujarat follows almost the same rules and regulations as the other states in the country. The only difference is that the urge of its people for development and growth is encouraged," he says.

The rising prosperity has gone some way to heal wounds, particularly among the middle classes, in a state known for bitter communal divisions between Hindus and Muslims.

"Business is really flourishing for those within our community and people are slowly forgetting the past," says Mohammad Nurrubbdhin Saheb, a member of an industrial family in Ahmedabad, the state capital. "[Mr Modi] has kept very good relations with us and has even come to visit our factories."

Others regard Mr Modi with less enthusiasm.

Kamran Shaik, owner of a textiles business, says: "The situation has changed a lot for us and now we can live a normal life. We all have jobs together ... But we just don't mention Modi."

Jagdish Bhagwati, economics professor at New York's Columbia University, has some words of caution about the branding of the state that produced liberation leader Mahatma Gandhi. He warns Mr Modi's administration against setting up fast-paced economic growth as "a god" and to not forget a social breadth that combines altruism with self-interest.

"The public image of Gujarat is industrialists and chief executives," Prof Bhagwati says. "But I think it's a mistake to think that Gujarat is just into growth."

Copyright The Financial Times Limited 2012

Posted on www.ft.com on May 6, 2012 8:25 pm

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