Sunil Parekh, co-chairperson of the Federation of Indian Chambers of Commerce and Industry (FICCI) in the state, said Gujarat has been “less job creative” and the state has been lagging due to absence of a policy framework and enthusiasm it once had.
Speaking at the inaugural session of “FICCI Gujarat State Council Annual Day”, Parekh representing an organisation that has partnered Gujarat government in all major industrial initiatives, including the Vibrant Gujarat summits, said, “In Ease of Doing Business (EoDB) as a state we were number one when the whole calculations started. We are now at number six. Five other states have replicated everything we have done and performed better… I am sorry to say, but I feel Gujarat is now lagging because we do not have the same kind of policy framework and the enthusiasm we once had.”
“We are number five (in job creation) among all the states in the country. Among the major industrialised states, we are the lowest in job creation primarily because our investment pattern has been different,” he said at the event where state energy minister Saurabh Patel was also present.
Citing four issues that need to addressed if Gujarat intends to double its GSDP from the current Rs 17 lakh crore to Rs 35 crore by the year 2025, Parekh who is also a strategic advisor to Cadila Healthcare Limited, said Gujarat needs to focus on “job creation”, innovations and filing patents. FICCI arm in Gujarat has come up with the idea of doubling the state’s GSDP by 2025 and has also appointed Price Waterhouse Coopers as a knowledge partner for the same.
“Our value addition is one of the lowest among all the major states of India and we have remained as a B2B (Business-to-Business) products. Apart from pharmaceuticals, milk, edible oil and fertilizer sectors, large number of products are part of intermediate chains. Therefore the value chain is not complete. This reflects in VAT and GST collections too,” he said.
Talking about the Incremental Capital Output Ratio (ICOR), the FICCI official said, “ICOR is nothing but the amount of money required to create one rupee of output. In 1960s-70s and 80s we required 50 paise of investment to create one Re 1 of out put. That figure today has increased to Rs 2.5 to create the same. which means we have become far more capital intensive than we ever were before.”
Hinting at the cricitisim of the state government by an industry representative, Energy Minister Saurabh Patel who spoke later said, “I wish Rahul Bajaj was here. The environment in Gujarat is different.” At an event in Mumbai, veteran industrialist Bajaj had recently said that there was an “atmosphere of fear” and people were afraid to criticise the government. “Government always welcomes suggestions from the industry; for the benefit of the state and the nation,” Patel added.
Stating that Gujarat has not been affected as much as other states on account of the “slowdown”, Patel said, “The industry in state is diverse… Pharmaceuticals is doing pretty good. Engineering is doing okay. There might be complaints as far as profitability is concerned. The sectors which might not be doing well could be diamonds. But that is more because of (lack of) exports… You do not find people who are complaining that we are not doing well.”
Stating that power consumption was one of the barometers for measuring economic activity in a state, Patel said, “The energy consumption in industry (in Gujarat) has not decreased. In fact the energy consumption has increased compared to last year. There was a fall last month, but the fall in energy consumption was because of Diwali holidays and rain. So consumption is one of the barometers for industrial production.”
Talking about the EODB, Patel said that the state government as part of the EODB initiative will introduce a Bill in the Gujarat Assembly on December 9 which will exempt all MSMEs from infrastructure approvals for first three years. He said the government had already brought an ordinance in October 2019 in this regard.