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Is Urbanization a result of Gujarat business model

December 16, 2017


The answer is yes. The Gujarat India sees today is a direct and clear outcome of rapid overall development that began from the time Narendra Modi first took over as Chief Minister of Gujarat in 2001. The GSDP rose from $45.39 billion in 2004-05 to $158.19 billion in 2015-16. This massive growth has triggered Gujarat’s rapid urbanization and stands as the third most urbanized state in the country.

It was he who decided if Gujarat were to come out of being counted as just another state into a dynamic and progressive growth centre, the state would need to develop its infrastructure as a prerequisite to all other development.

The evolution of the Gujarat model took inspiration from China’s resounding success with its infrastructure development to support and facilitate Special Economic Zones along its coastal areas by connecting them to seaports to leverage China’s natural advantages. At the heart of the plan was to leverage China’s natural resources and then add value by converting them into finished products for the global market.

An ambitious CM nursed dreams of converting Gujarat into a thriving business hub. The state had some inherent advantages working its favour. It shared a state border with Maharashtra, India’s most developed state, and Ahmedabad was well connected to Mumbai, India’s financial capital. The biggest advantage of all was the 1600 km coastline that had potential to make Gujarat a major hub for import and export. The CM realised that Gujarat bred some of India’s most successful businessmen, but most resided and invested outside of Gujarat.

Modi planned to initiate a rapid infrastructure development program that would attract greenfield investments that had potential to create further downstream projects. Thus began Gujarat’s quest of building some of India’s best ports (45), roads (6,500 kms), refineries, power generation plants (30,716.47 MW by March 2017) and airports (18 domestic and one international). He extended full support to the business community that quickly recognized opportunities for investment in manufacturing and services.

The result saw Gujarat quickly emerge as a major manufacturing destination in sectors like chemicals, petrochemicals (4.61 million tonnes of crude refining in 2016-17), pharmaceuticals, textiles (70% of India’s Denim production), gems and jewellery (80% of India’s diamond exports), automobiles (Tata Motors, Maruti, GM) and trading.

Gujarat is now in the process of emerging as a major hub for defence equipment manufacturing, automobile and component manufacturing, electronics and food processing. Gujarat has invested heavily in developing the Gujarat International Finance Tec-City (GIFT) in Gandhinagar, a 3.5 square kilometre smart city, as a major financial services hub to serve as a counter magnet to Mumbai. When fully functional, the GIFT has the potential to create over 5 lakh jobs.

The consequence was this massive investment in industry and services can be seen across the state with the rapid urbanization of modern commercial spaces that rival the best of properties available in Mumbai, Bangalore and Hyderabad. New cities have already come up at Dahej, Sanand, Dholera, and Changodar that offer modern housing and supporting infrastructure.

Surat is the same city that fell victim to a major plague scare triggered by the manmade filth in the city. Today, Surat is a dynamic urban centre that continues to attract investment.

The stretch between Ahmedabad and Gandhinagar is attracting investment and will see further urbanization in the coming years. The Japanese-funded bullet train connecting Ahmedabad with Mumbai is scheduled to begin operations by 2022. The initiative is expected to catalyse the urbanization process.

Two new post cities have come at Mundra and Pipavav and with further investment flowing in, these urban port cities will further consolidate Gujarat’s emergence as an urban state.

So how does all this fit in with the current assembly elections underway and what are its implications for future development? Gujarat has been under BJP rule since 1998 and is very likely to win yet another term. Continuity is critical for Gujarat as the business community has invested heavily in the state. Since there is a direct correlation between investment and urbanization, Gujarat will continue to the high trajectory of growth. If the BJP led by Narendra Modi wins yet another term at the centre in 2019, then Gujarat will continue to be the biggest beneficiary.

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