Planning Commission releases study praising Gujarat’s success in manufacturing, focus on MSMEs

A new study, conducted for the Planning Commission, explains in detail how Gujarat has facilitated the growth of micro, small and medium enterprises, and emerged as among the top States in manufacturing. 

A new report, released by the Planning Commission, praises Gujarat for its innovative initiatives to promote the job-generating, growth-driving manufacturing sector. The report explains in detail how Gujarat has facilitated the growth of micro, small and medium enterprises, and emerged as among the top States in manufacturing. This finding negates the politically-motivated baseless allegation that only big industry is promoted in Gujarat.

The study, ‘Survey on Business Regulatory Environment for Manufacturing – State Level Assessment’, has been conducted by Deloitte Touche Tohmatsu India Private Limited (DTTIPL). Commissioned by the Planning Commission, the release of the report coincides with Commerce and Industry Minister Anand Sharma’s desperate attempt to downplay the DIPP-funded study on improving India’s business regulatory environment that hailed Gujarat’s land acquisition policy as the best in the country.

The ‘Gujarat Model’ just cannot be wished away, no matter how hard the detractors of the BJP’s Prime Ministerial candidate Narendra Modi, who as Chief Minister of Gujarat has taken the State to new heights of economic success, try to disprove facts. Anand Sharma will now have to contend with the report commissioned by the Planning Commission which supplements the findings of the DIPP-funded study.

The DTTIPL study has highlighted Gujarat’s iNDEXTb initiative which serves the dual purpose of facilitating enterprise and monitoring the implementation of investment proposals. The study says, “iNDEXTb is a nodal agency under the Industries Commissionerate, Government of Gujarat for providing hand-holding support to entrepreneurs. The Investor Facilitation Portal developed by iNDEXTb facilitates monitoring of investment proposals by generating MIS reports, which can be used by officials to identify applications on which action has not been taken within the stipulated time frame.”

The study points out how iNDEXTb assists entrepreneurs by helping them finalise their choice of location for setting up a manufacturing unit. This is done by providing critical information on access to three key basic inputs – land, power and water. The Investor Facilitation Portal’s assistance is available for micro, small and medium enterprises (MSMEs) as well as large enterprises across all sectors. The facilitation is for both setting up new industries as well as for expanding existing manufacturing units.

“Some of the States have developed GIS-based software which shows mapping of land plots in industrial estates,” the study says, adding, “The real time vacancy details can be checked by applicants and the applicants can select plots based on analysis of such location.” Citing the example of Gujarat, the study says, “iNDEXTb has a GIS-based software which shows the geographic mapping of industrial areas in Gujarat, including highways, GPCB zones, CRZs, port connectivity, soil quality, power and utilities grid connectivity, etc.”

Knocking the bottom out of mendacious allegation leveled by the detractors of Narendra Modi that the State Government promotes only a few big companies, the report says: “For reaching out to micro enterprises, iNDEXTb has set up kiosks at 26 district industries centres. These kiosks are equipped with infrastructure facilities such as internet connectivity, printer and scanner.”

The study refrains from assigning ranks to States. What it has done is to cluster States on the basis of six parameters. These are: finance and tax related compliances; labour law related compliances; infrastructure and utility related approvals; land and building related approvals; environmental clearances; and, other business regulatory compliances.

States have been clustered in three categories – ‘Top’ 33.33 percentile of States; ‘Middle’ 33.33 percentile of States; and, ‘Bottom’ 33.33 percentile of States.

The findings of the study show that Gujarat figures among the ‘Top’ category comprising nine States that have been assessed on all six parameters. Gujarat figures among the top States on four select parameters – finance and tax related compliances; infrastructure and utility related approvals; land and building related approvals; and, other business regulatory compliances. On environmental clearance, Gujarat has been put in the ‘Middle’ category of States. Only on labour law related compliances, Gujarat is placed in the ‘Bottom’ category of States.

Explaining the last categorisation, an analyst said “this classification can be turned around to trash the allegation that the Modi Government does not protect the interests of workers. The fact is that the Government protects the overall interests, which can at times be conflicting, of all stakeholders by holding growth and development for all as the supreme objective.”

The study comes with the rider that it solely focuses on assessing the existing business regulatory framework in individual States. “Other key factors that impact the performance of manufacturing units, like quality of infrastructure, availability of natural resources, market linkages, labour and skill availability, access to finance, etc, have not been covered in the current study,” it says, adding, “Consequently, the relative standing of individual States may differ from their relative contribution to India’s manufacturing GDP.”

Elaborating on this point, the study explains, “For example, a particular State may have been identified as being relatively mature in its business regulatory environment but may not have an equivalent standing in terms of contribution to India’s manufacturing GDP owing to limited natural resources within its geographic boundaries.”

Commenting on Gujarat’s success in manufacturing sector, it notes that the State ranked second in the country in terms of share of manufacturing GDP, contributing around 13.7 per cent of manufacturing GDP in 2011-12. The State’s manufacturing sector contributed 28.2 per cent to Gujarat’s GSDP in 2011-12, with a CAGR of 9.5 per cent between 2007-08 and 2011-12. The sector employed around 3.4 million people in 2009-10 representing 13.7 per cent of Gujarat’s working population.

Referring to interaction with industries, the study says: “It is understood that Gujarat is a power surplus State with respondents expressing satisfaction on quality and availability of power. It was also indicated that quality and availability of water has improved over the years.  Road network and rail connectivity have also shown improvement.”