Keshubhai heads to US as FDI graph heads south:

The visit of chief minister Keshubhai Patel and his team to the US in the hope of attracting foreign investment is unfolding against a discouraging backdrop.

Even before Mr Patel left for the US from Mumbai, his highly publicised meeting with Microsoft chief Bill Gates in Seattle was cancelled, apparently at the instance of the Central government, although a reason for it was not immediately known.

Now the Gujarat team will meet top executives of well-known finance firm Merryl Lynch in New York and non-resident Indian representatives of other industrial giants in Philadelphia, Chicago, San Francisco, San Jose and Boston. Gujarat has squandered several opportunities in the past and missed the information technology bus while states like Andhra Pradesh, Karnataka and Maharashtra have marched ahead, attracting foreign direct investment. While other states have adopted an "open door policy," Gujarat has maintained a laid-back approach so far. This view is shared by Mr Amarsinh Chaudhary, leader of the Opposition in the state assembly, and several economists and industrialists, including NRIs.

Mr Chaudhary said that many industrialists and NRIs had conveyed to him their dismay over the PateI ministry’s handling of proposals for industrial projects. He alleged that even newspapers run by NRIs were being given "stepmotherly treatment" by the Patel government. Mr Chaudhary pointed out how the chief minister’s office had not bothered to open an email from influential Gujarati NRI Dinesh Patel, who had expressed his willingness to arrange a meeting between Keshubhai Patel and a high-level Gujarat team with the US delegation which had accompanied President Bill Clinton to India.

The US presidential entourage went back without meeting either as the state government never made an attempt to bring the delegates to Gujarat. In fact, Mr Patel declined to meet Clinton and his team over luncheon when invited, saying he was busy with the Assembly session, Dinesh Patel apparently sent as many as four messages, but on the eve of his departure to the US the chief minister pleaded ignorance about these.

Only recently, Mr Chaudhary said, Reliance industries backed out of a proposal to set up a 500 megawatt power project after the state administration cut the government guarantee amount from Rs 14 billion to Rs 9 billion and later reduced it further to Rs 4 billion. Added to this is a report from Vadodara on how the Gujarat government had sat over a request by a Vadodara-based entrepreneur for infrastructure. Bharat Swami, the entrepreneur, had entered into a strategic partnership with e-mail and advanced messaging services giant usa.net and needed infrastructure facilities to implement the project. In sharp contrast to this, Andhra Pradesh Chief Minister N Chandrababu Naidu welcomed Swami to set up shop in Hyderabad. Naidu even invited Swami to meet US President Bill Clinton when he visited HITEC City in Hyderabad .

Moreover, the Andhra Pradesh government has offered Swami’s company, S.C.A.D. Consultants, a special package to set up shop in Hyderabad. The incentives include venture capital, leased space and exemption as far as possible from the provisions of various acts and regulations in order to cut down on red tape. Viewing Patel’s seven-day-long tour against this background, the task before the Gujarat team appears tough. The high- level team from Gujarat will not only look into IT business but also explore possibilities of fresh resources to finance the infrastructure sector and plans to go in for massive foreign investment in agro-industries and agro-processing sectors in the state.

Only recently, industry minister Suresh Mehta claimed in the Assembly that Gujarat topped the list of investment in 1999 with Rs. 253.25 billion as against the total investment of Rs 545.4 billion in India. But Mehta did not mention the latest report of January 2000 by the Centre for Monitoring Indian Economy, which said Gujarat, has, of late, fared poorly in attracting FDI.

From the fifth position a few months ago, the state slipped down to the ninth. Of the total Rs. 1,431.98 billion worth of FDI in the country in 274 projects, Gujarat attracted a mere Rs. 56.68 billion. Andhra Pradesh heads the list with an FDI flow of Rs. 576.17 billion, followed by Maharashtra with Rs. 435.54 billion. Karnataka’s share is Rs. 227.96 billion. Even states like Utarpradesh, West Bengal and Madhya Pradesh have out paced Gujarat.

During his sojourn the chief minister’s hopes to attract investment in infrastructure including power (Rs. 551.67 billion), ports (Rs. 230 billion), roads (Rs.1991.5 billion) and water supply (Rs. 70.87 billion) as per the proposed 2000-2010 plan. The prohibition policy of the state government is one of the deterrents to expatriates. The state also lacks proper social infrastructure like top class educational institutions in the private sector as also recreational facilities.

Compiled from local news media