Data Analysis - Is ‘Make in India’ as vibrant as the ‘Vibrant Gujarat’?

Data Analysis - 

Is ‘Make in India’ as vibrant as the ‘Vibrant Gujarat’?

Yesterday, I was listening to speech of Hon’ble Prime Minter while sitting in studio. Prime Minister gave extensive list of new investments proposed in the country. It must excite all of us. No one should doubt the new investments and all must welcome it.... but past track record of announcements do not provide the excitement. 

Importnat: This is not 'shakya version' (mahabharat charater) which PM was mentioning many times in his speech but from offcial data of Govt. of Gujarat under the leadership of PM himself.

Let me share some facts with you...

No doubt 'Vibrant Gujarat' is a landmark event in India for the world to visit and explore India's economic potential, but the way corporates are making announcements is making fun of the serious event.

After 8th Vibrant Gujarat, I decided to do a quick analysis on what all happened in last 8 episodes. Let me place a quick summary of all commitments made by corporate world from all over the world. 

Let us do a reality check about business leaders and their announcements.

Vibrant Gujarat Edition	No. of MOUs signed	Investment Commitment
		(in USD Billion)
2003	76	14
2005	226	20
2007	675	152
2009	8662	243
2011	7936	462
2013	17790	230
2015	21000	410
2017	21910	460
Total	78,275	1,991
	Total Commitment till date :	USD 1.99 Trillion

Data Source: Government of Gujarat & Press Releases official websites

If we do little more analysis, more interesting dimensions will emerge.

Let me do it for you.

Proposed Investment per square kilometre:

Total Area of Gujarat state is 196,024 Sq. km. It means committed investment per square km is USD 10.15 million it means about 66 crores per sq. kms. This will make Gujarat the richest region in the world.

Proposed Investment per person:

Total Population of Gujarat state is 60,439,692 (as per 2011 census). It means committed investment per person is about USD 32,941 or INR 21.4 lakh per citizen of Gujarat means not a single person will remain unemployed in Gujarat. In fact, with birth certificate, they can issue PAN umber for tax purpose. KYC forms should be filled in maternity ward itself.  

Big question is, do we really need MNREGA, PDS and BPL schemes for Gujarat. These should be stopped with immediate effect because every household is having highest per capita income in the country.

Proposed Investment per District:

There are total 33 districts in Gujarat; it means average investment commitment per district is about USD 60.33 billion. It is more than total FDI investment in India.

Investment per parliamentary constituency:

There are total 26 parliamentary constituencies in Gujarat; it means average investment commitment per district is about USD 76.57 billion. It means, there is no need for MPLAD fund for Gujarat MPs. Central government should divert this fund to other states.

Now, what is the future of Gujarat?

For every USD 100,000-dollar investment, we need one manager to manage the investment. It means, Gujarat will need about 19,910,000 managers and technical people to manage these investments. It means 1.9 Crores technical people are required. It means whole Gujarat population will be required to manage this investment.

This means Gujarat will need about 100 million people to take care of this investment. Current population is about 60 million.

Where is the raw material and market to absorb this production in Gujarat?

We don't know what type of raw materials are required, if it is mines and minerals in that case Gujarat will have many manmade lakes to attract tourists or they will need ports at every 50 kilometres to make these investments viable.

If investment is in IT and services, in that case Gujarat will need at least 100 smart cities in next 5 years.

Image the demand for social infrastructure like schools, hospitals and other facilities including road infrastructure.

The biggest question to answer?

Big question is when existing units are not able to show growth in Gujarat and in India due to lack of market or manpower or raw material. They are investing outside Gujarat and outside India. What will happen to the fresh investment.

Why sales of existing units are showing the growth while so many new investments are proposed?

Why corporates are making such investments in Vibrant Gujarat?

Logically, all the investments must be based on proper feasibility analysis. The announcement of the proposed investment by corporates at Vibrant Gujarat and now in India seems to be either under political compulsion or it can be PR activity to get media attention.

I can be wrong but I suggest, it will be worth to study the feasibility reports submitted by these corporates at these flagship events. This may open many new dimensions about business planning.

Economic Implications of these investment announcements:

· This investment should generate operating profit of about USD 200 billion per year to justify viability of the investment.

· This will add about USD 50 to 100 billion additional tax revenue for the state.

· This investment will also need about raw material worth USD 2 trillion.

· How much water and power is required will depend upon what type of investment is committed? I request Union government to specify the type of investment committed to identify the needs of power and water.

· What about effluent and emissions, will it convert Country and Gujarat into environmental disaster, worse than many cities of China

· This will make Gujarat revenue surplus state and Gujarat state can offer free education, free healthcare and free public transportation to all.

· Per capita income of Gujarat will be highest in the world.

I wish to see this happening in my lifetime.

Implications of this Hype:

I wish all the best for all the investors those who committed these investments. If these investors are not serious, this will reduce the credibility of these corporate announcements because these corporates also make similar announcements in every state investment conclave. The best part is all political leaders of the state feel happy with this hype but people on the street look at these announcements at modern day joke.

Evaluate all the investments proposals and share with shareholders:

I saw some of the announcements made in Vibrant Gujarat 2017. The following questions came to my mind.

· Are these investors serious and do they really have resources to invest and can they justify these investments to their shareholders, or they are making statement under political pressure.

· Are these investment announcements approved by the Board of Directors and have they evaluated the feasibility?

·  Are these announcements good for Corporate Governance in the country and will not lead to NPAs and banking frauds?

· If these companies are so bullish about their investments why there are not able to make investment so far and why their existing businesses are not showing the growth the way they are making announcements now and as projected?

Hype is good in short term but can be counter-productive, if not managed properly: 

In short term, Hype can help in getting attention and excitement but will raise fundamental questions on the capability of governance and credibility of all the players involved.

· Imagine, if these commitments do not happen on ground, who will take the responsibility? What justification will be given?

· Corporates will wash their hand by saying they were ready but policy environment or market was not favourable was not conducive. Is government ready to accept their policy failure?

·What will be the argument of state and central government in coming days? It will be interesting to watch these statements. Please do let me know when you see any such statement.

· Why so far, no status report was issues by the Union government and state government for the people of the Country. Accountability and transparency are important part of governance.

·Can we have status report of the investments commitment so far in the country which was mentioned in the speech?

High time to Protect the credibility of the Country:

It is prudent for State government to accept the ground reality and request corporates, please do not make announcements if they are not serious. At least we will know the factual positions and what will happen on ground.

Litmus Test: How many people in this country believes that corporates are serious about their announcements? Can leading industry associations like CII, FICCI etc and their Global knowledge partners give assurance that their members and clients are serious and projections are serious announcements. I am sure these people must have credible insight about proposed investments or they are also part of hype creation.

Should country take them seriously? Time will tell.

It will be useful if we know the sector-wise investment. This will help students to plan their career because without right skill sets nothing will happen on ground.

I request Union and state governments should place status paper on actual invetsment took place in last three years in public domain to convey the factual position to the country.

I will be very happy even if 10% comes to the ground as investment. This will be great achievement.

What will be the response of government?

Do we have to wait 2019 for update...