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Rajasthan Decks Up, But Modi Is Missed

20th January 2016

Over 2,500 delegates and industry bigwigs including Adi Godrej, Anil Ambani, Tulsi Tanti, Anand Mahindra, Anil Agarwal, Gautam Adani and Cyrus Mistry showed up at Rajasthan chief minister Vasundhara Raje Scindia's showpiece business summit 'Resurgent Rajasthan' on Thursday, but one guest was conspicuously absent: Prime Minister Narendra Modi.

On the night before the summit, posters of finance minister Arun Jaitley were still being strung up on the city's prominent stretches. It was widely noted that the finance minister was being sent to Jaipur instead of the PM, who reportedly neither confirmed nor declined Rajasthan's invitation to the two-day event.

The Rajasthan government announced at the summit that the memorandums of understanding (MoUs) it has signed with industries from India and overseas over the last year were worth well over Rs 330,000 crore, or upwards of $65 billion. The investments are believed to be essential to Rajasthan's growth story, which has so far been concentrated in pockets, particularly between Neemrana and Alwar and in the mineral rich parts of the desert such as Barmer.

"We were not in a happy state a year ago. We still are not in a happy state. We want industries to help Rajasthan get out of this trouble," Raje said with characteristic frankness about the state of Rajasthan's finances and economy. "I assure you, success will not go to our head. The Rajasthan Model is such that our success will belong to all participants," she said.

However, Modi, the most popular speaker at the annual 'Vibrant Gujarat' summit, in which industrialists announced mega investment plans under the Gujarat Model, seems to have been sorely missed. Some of Raje's invitees confessed that they had signed up with the hope that they would hear and see the prime minister in flesh and blood. They had hoped he would also encourage investments in Rajasthan, as the battle heats up between states for scarce investment funds. Some also felt that since both Rajasthan and the central government have BJP governments, enlisting Modi as lead speaker would assure better chances of Rajasthan being heard by policymakers in Delhi.

"We registered because we thought Modi would be among the speakers," says Harish Jaisansaria, director, Neelkanth Polymers, which has interests in guar gum products and derivatives, apart from food grains, telecommunications and solar energy. Like many attendees, his expectation of a better business environment in Rajasthan includes reinstatement of tax breaks that the centre, not the state, has withdrawn over the years. In particular, he mentions the duty drawback break guar exporters once got and the forward markets scheme.

To mark the central government's presence, a sizeable contingent of the Union Cabinet arrived from Delhi. Venkaiah Naidu, minister for urban development, was vocal in his support for Raje as well as Rajasthan's bid to industrialise. Suresh Prabhu, minister for railways, Dharmendra Pradhan, minister for oil and gas and ministers of state Mahesh Sharma, Jitender Tomar and Rajeev Pratap Rudy were among the prominent invitees and speakers.

Raje, many believe, is the Prime Minister's political rival, which explains his absence. Her event, the first of its kind for Rajasthan, came a close second to the original in Gujarat in both scale and pomp, said a few who have also attended 'Vibrant Gujarat' in the past.

"Rajasthan has just started with such an event. This is their very first summit," says Sangeeta Prasad, CEO, Mahindra Lifespace Developers, who has twice attended Vibrant Gujarat. Mahindra has developed a "WorldCity" in Jaipur, where the cumulative investment has been Rs 3,000 crore. "We are keen on projects in Gujarat even as we expand and develop in Rajasthan," she says.

In the past, the central government re-crafted tax policies for Special Economic Zones, which were meant to promote bulk exports on lines of China's mega export parks. After the tweaks, many, like Mahindra Lifespaces, found interest in their domestic tariff areas growing within their SEZs, while interest in export-oriented units tended to grow slower. "We have earmarked more land within our WorldCity at Jaipur for units catering to the domestic market. This says something about the central SEZ policy, not about Rajasthan's economy," she says.

Within this context, chief minister Raje has taken great pains to underscore her government's commitment to promote industrial growth across sectors, especially to invest in solar energy. Anil Ambani led Reliance Power has planned a 10000 MW plant, the country's biggest, and another 6000 MW plant in the state. The MoUs were settled upon this February, and will cost Rs50000 crore to set up. Earlier this year, Rajasthan overtook Gujarat in installed solar power capacity, by crossing 1100 MW.

Anil Agrawal, one of the rising mining barons in India, said at the summit, "When I arrived in Jaipur today, I went to the Govindji temple, and I have to say, I have never seen the temple clean before." The statement was repeated often by other invitees in Jaipur, and it is both an apparent dig at the state's usual neglect and praise for having laid out the red carpet for investors. Agrawal made a pitch for more mining in Rajasthan, as a way to improve its economic prospects. "The government should give first chance to local entrepreneurs," he said, referring to Rajasthan's reserves of oil, gas, potash, phosphate, marble, silver and zinc.

A growing concern among the oil companies is that the cess charged upon their mineral extracts should be computed ad valoreum now that crude prices are low. Cairn, in particular, has asked the government to cut the cess levied upon crude extracted from its Barmer field.

Raje, who has been in talks with both Indian and foreign firms and governments, including Australian, Singaporean and Japanese firms assured her audience inside a packed hall at the massive Jaipur Exhibition and Convention Center, that her MoUs would translate into investment. The state has also made a slew of "industry friendly" changes in industrial disputes rules, the contract act, labour laws, apprenticeship rules and the factories act. Each of these changes is also perceived as "unfriendly" for workers.

"The Indian mindset is, overall, more left of centre rather than industry oriented. The prices of pulses and onion are more important than other things, such as investment. By not taking up these as if they are a priority agenda, and so in a more upfront way, even Modi will face challenges," says Pradeep S Mehta, who heads CUTS, Jaipur, a consumer advocacy group.

It is no doubt – and this is not lost on the BJP -- that the recent drubbing in Bihar polls might have had something to do with the perception that the BJP is industry and business friendly at the cost of other groups. Yet, Rajasthan's sense of urgency stems from the fact that while its industry and services (combined) grew at 8 per cent over the last decade, agriculture's share in the state's GDP declined to 19 per cent. State officials took great pains to say that the "Rajasthan Model" is perched atop three motives, "job creation, good governance and social justice", which many would consider a variation on the Gujarat Model.

A key similarity between the two models is the land on concessional rates that Rajasthan appears willing to part with. Right now, the state has gathered up 17000 acres in a land bank, which it hopes to set up industry on. Rahul Kumar Agrawal, an Indore based businessman with interests in plastics and onion seeds, is seeking some of this land. "They seem to have land banks, which I need in Jaipur or around," Agrawal says. "Now-a-days onion prices make or break governments and Rajasthan's farmers seem to have understood this. We have more and more demand for onion seeds from here, so we want to get closer to our buyers. It will save us transportation costs," he says.

The chief secretary, Rajasthan, CS Rajan, said 33 per cent of the previous round of MoUs translated into actual investment in Rajasthan--there is no parallel claim for Gujarat's Vibrant summits. Also, unlike Gujarat, where the impressive-sounding investment figures are drummed out while the summits are on, Rajasthan made public its MoUs and their ultimate worth as and when companies were signed up. This also means that no significant new investment announcements could materialise during Thursday's summit. Even the Rs 300,000 crore figure, and their constituent break-up were widely reported over the last year.

In scale, however, Rajasthan is being no less ambitious than its neighbour. During the last six decades, Rajasthan reportedly got investments worth Rs 2.51 lakh crore and Resurgent Rajasthan hopes to top that figure over just a two-day summit.

Source: Outlook India

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