The colour of money

OUTLOOK/ MACRO VIEW

Gujarat has unveiled a new industrial destiny by cornering for itself over $100 billion of investment.

It's important to have a perspective when looking at key statistics relating to growth. India has been growing at an average 8 per cent for three consecutive years, with industrial growth averaging over 9 per cent. The pipeline for fresh industrial investment is conservatively estimated at Rs 800,000 crore currently.

This is a clear signal that increased productivity is not expected to augment output that can match the boom in consumption. Hence, fresh investment is necessary. The net capital stock in mining, manufacturing and electricity is Rs 15,00,000 crore (1993- 94 prices), and private manufacturing has a larger share here.

Even if we look at the history of industrial investment intentions in India from 1995-2005, the largest being in 2005 at a total of Rs 3,53,956 crore (at current prices). The current pipeline is double that already. At a time in the world when almost all CEOs of Fortune 500 companies and others are being specifically asked about their India strategy, we are expected to receive FDI in excess of $10 billion this year "� an all time high for the country.

These numbers are necessary to afford better understanding of what a single State is capable of. 'Vibrant Gujarat' is a biannual investment summit that has been held five times starting from 1998 to the recent one in January 2007.

All major industrialists declare their plans for investment on a single platform over two days. Such a meet has the advantage of clustering investment profiles together and put out a consolidated picture of the State at one point. The figures, starting at a meager Rs 12,000 crore in 1998, rose to an awesome Rs 4,61,000 crore "� spanning infrastructure and manufacturing investments.

The past record of implementation of earlier intentions to invest was also presented by industrialists themselves, all of whom are publicly quoted companies.

They included the likes of Mukesh Ambani, Ratan Tata, Shashi Ruia and Kumar Mangalam Birla among others. It was indeed an endless line of Indian industry's who's who.

Investment in SEZs and power accounted for Rs 300,000 crore. Many of the projects are in the infrastructure sectors, which include LNG terminals, container terminal by PSA Singapore (Gujarat currently ships over 22 per cent of all India cargo of all major and minor ports together).

Significant moneys are also being allocated for big multi-product township category SEZs by Adani, Essar and Reliance, several key urban development initiatives in solid waste management by World Bank, Sabarmati River Project, upgradation of municipalities, rapid bus transportation system and about 30 other small-sector specific SEZs for sectors like pharma, apparels, biotechnology, engineering and wind energy. Job generation is estimated at about 13 lakh for skilled categories.

To quote K V Kamath, MD & CEO, ICICI Bank, who said in his keynote speech, that followed on the back of a few key investment announcements: "these figures of investment in Gujarat would call for a revision of the total national level pipeline investment funds estimates."

The final tally of a mind boggling $100-billion-plus figure by investors, all of whom are serious ones, clearly shows their desire to capture a place in the annals of a new and powerful India.

The writer is advisor, Crisil, Zydus Group & Suzlon Energy Ltd.