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Insights from bureaucrats
the
Gujarat: In full throttle on all fronts
Industrialization, Innovation, Inclusion
Recently, we visited Gujarat and interacted with several key policy
makers led by the state CEO himself, Chief Minister Mr Narendra Modi.
Starting off as a predominantly industrialized state, we believe Gujarat
has now laid the foundation for many years of balanced development.
Combine this with the Gujarati entrepreneurial spirit and you have a
formidable growth engine – a shining role model for 'India Shining'.
Special report: Gujarat
The Inside Story
Summary findings and assessment
...........................................................................................................
2
Chief Minister Speak
..............................................................................................................................
3-4
Industry:
Growth SIR-ge .......................................................................................................................
5-12
Agriculture:
Marrying the micro and the mega ......................................................................................
13-16
Services:
Eyeing the GIFT facelift .........................................................................................................
17-19
Annexure:
Gujarat state profile ............................................................................................................
20-21
Dipankar Mitra
(Dipankar.Mitra@MotilalOswal.com) +91 22 3982 5405

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Gujarat: In full throttle on all fronts
Industrialization, Innovation, Inclusion
Growing at 2-2.5% higher than all-India average with 20%
higher per capita income, Gujarat has chalked out a two-
pronged strategy for the next phase of its growth boom:
1) Capitalize on its existing strength of industry and
entrepreneurship; and
2) Achieve new breakthroughs in agriculture and services
sectors.
the
Services: Eyeing the GIFT facelift
IT and finance remained the only gap facing the state in
the gamut of the service sector activities. This is now being
corrected with the GIFT City initiative that is a globally
benchmarked international financial centre (IFC) which,
when completed, would be many a multiple of scale
compared to global peers.
Industry: Growth SIR-ge
Gujarat's successful industrialization drive owes a lot to:
(1) facilitating role played by the government by way of
simplified procedures, investment platforms such as
Vibrant Gujarat, etc, which helped in reduction in
transaction costs for business, and
(2) effective resolution of a key issues involving land, water,
environment and labour.
Now, Gujarat is poised to push the boundaries of industrial
development to higher orbit in different phases e.g.
SIR-ging scale:
Making the most of the Central sector
projects like Dedicated Freight Corridor (DFC) and Delhi
Mumbai Industrial Corridor (DMIC), Gujarat has now
have initiated planned industrial development of special
investment regions (SIR). One such SIR at Dholera is
planned to surpass Shenzhen China in its scale.
Energetic turnaround:
On the energy front, Gujarat
has scripted a remarkable turnaround story in SEB
(state electricity board) finance without major increase
in power tariff while at the same time ensuring 24x7
power supply to each village and town of Gujarat.
Our assessment: Industrialization,
Innovation, Inclusion
From industrialization by default …:
We see a
fascinating story in Gujarat. Inherent natural
disadvantage (of infertile land and lack of irrigation)
and advantage (of mines and ports) led to Gujarat
choosing an industrialization-based growth model
almost by default.
… to innovation by design …:
But then, it ushered
in several landmark innovations in diverse areas e.g.
establishment of a gas grid, interlinking of rivers,
industrial zoning and investment regions, push to PPP,
turnaround in the co-operative system, corporatization
of SHG model, cattle care to improve livestock,
promotion of clean energy, environmental regeneration,
etc.
… and inclusion by diligence:
And now, Gujarat is
increasing focus on various social indicators including
skill improvement of the workforce, women
empowerment, lower mortality rates, large scale
plantation, etc. While rapid growth helps address these
issues in part, efforts are needed to upscale the state's
flagship programs to a comprehensive framework of
social sector improvement.
Shining role model for 'India Shining':
Together
with the many initiatives of scale that only Gujarat can
possibly think now, the foundation is being laid for many
years of balanced development. Combine this with the
Gujarati entrepreneurial spirit and you have a
formidable growth engine - a shining role model for
'India Shining'.
Agriculture: Marrying the micro & the mega
Completion of the command area development of the
mega Sardar Sarovar project by FY15 would raise gross
irrigated area from 30% to 46% of gross cropped area.
Further, it would help reap 81% of the ultimate irrigation
potential (currently 53%) and nearly achieve full
potential (93% v/s 56% at present) so far as irrigation
through surface water is concerned.
This comes on top of a close to double digit growth for
nearly a decade on the back of cumulative efforts
towards micro irrigation, water conservation and soil
improvement.
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Chief Minister Speak: Mr Narendra Modi
Tale of 3 B's: Business-like, Best practices, Balanced growth
the
Mr Narendra Modi
Chief Minister, Gujarat
Three biggest challenges while assuming office
(1) Earthquake, (2) Drought (both in 2001), and (3) Failure of Madhabpura Co-operative
Bank along with 123 other urban co-operative banks. The entire administrative machinery
was pooled together to deal with the first two situations along with common people. Against
the World Bank' estimate of seven-year average time to recover from an earthquake of that
magnitude, Gujarat turned around in three years flat. Rainfall was good next year to solve
the water problem. However, to restore credibility of co-operative movement, some harsh
decisions needed to be taken (including banning loans to Directors, 50% cut in staff strength
and 50% cut in salary). Such unpopular steps were taken even in the face of impending
election in 2002, but eventually the sector turned up again.
,,
,,
,,
Governance cynicism is overdone
Rules should leave
minimum scope
for grey areas
,,
,,
Reemphasised that the currently prevailing cynicism regarding widespread corruption, failure,
and lack of governance is overdone. Underscoring the need for positive thinking, the CM
drew attention on Gujarat as a role model for governance. Rules should leave minimum
scope for grey areas.
Investment in agricultural is critical
India is primarily an agricultural economy, and real wealth is generated in rural areas. The
agricultural investment in 11th Five-Year Plan (ending FY12) failed to keep pace with inflation.
Farmers are under stress and this is not sustainable.
Skill-oriented education
It is true that only 13% of the people in Gujarat migrate from elementary education to
higher education. But higher education is not necessary for everyone - the focus should be
on skill development. The government has identified about 976 such skill sets that are
required to live through in every village; these have been grouped and skill centres established.
At all stages, dignity of labor needs to be maintained.
Higher education is not
necessary for everyone -
development
the focus should be on skill
Cross-pollination of ideas among states
Gujarat bureaucrats are constantly on the look-out for best practices of various states that
are relevant to Gujarat. Every year, one state is invited to Gujarat to present its best practices.
Likewise, several states visit Gujarat regularly to understand its programs and the best
practices. Visits happen at all levels, central/state officials, MPs, MLAs, political party leaders,
etc. It is only a matter of time before some of these good practices get adapted and
implemented. However, no one state can fully replicate the model of another. Even within
Gujarat, in the initial stages, the development model for the city of Bhavnagar had to be
thought through differently than that for Ahmedabad.
No one state can fully
another. Even within
replicate the model of
Gujarat, the development
model for Bhavnagar is
different than that for
Ahmedabad
,,
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the
,,
,,
,,
The culture of business
In Gujarat, PSUs and even
a business-like approach
the government itself have
,,
,,
,,
In Gujarat, PSUs and even the government itself have a business-like approach. This ensures
viability of projects undertaken and infuses professionalism. Besides, in Gujarat, PSUs are
both encouraged and induced to deliver on their corporate social responsibilities as well.
Other issues
Compulsory voting needs to
be seriously considered as
we are too concerned
about our rights but too
negligent about our duties
Teamwork and motivation:
His team motivates him and he in turn motivates them.
Besides, regular interactions in informal setting help achieve breakthroughs in many
critical decisions.
GST and Lokpal:
Federal system of India ensures autonomy to states and this should
not be altered. A Lokpal system needs to be introduced.
Compulsory voting:
Compulsory voting needs to be seriously considered as we are
too concerned about our rights but too negligent about our duties.
Sports:
Cited how China has banned telecasting cartoons on TV so that kids engage in
sports. Gujarat government has taken several steps in sports including popularization
of chess.
Failure:
Despite good performance, the media does quite often portray a negative
image. However, such negative publicity has served the opposite end with Gujarat getting
established as a benchmark for other states.
Examples
1) Milk wastage:
Nearly 20% of milk used to get wasted due to lack of refrigeration in
the production and distribution chain. This was corrected through the Jyotigram scheme
which ensured 24x7 electricity in all villages, and installation of small chillers for
transportation. This led to 66% higher realization too much extra effort.
2) Livestock improvement:
Gujarat is perhaps the only state to organize camps for
cataract operations and dental treatment of cattle.
3) Mission Mangalam:
Through Mission Mangalam, 150,000 self-help groups have
been connected to 2.2m members, primarily women, in the BPL segment (below
poverty line). It's now been converted into INR10b company now and plans to grow
to INR50b by 2014. Each partner of the company, viz., the government, NGOs and the
corporate brings in a unique set of skills for the success of the program.
Small initiatives
reap big benefits
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Industry
Growth SIR-ge
The success of Gujarat's industrialization drive owes a lot to:
(1) facilitating role played by the government by way of simplified procedures,
investment platforms such as Vibrant Gujarat, etc, which helped in reduction
in transaction costs for business, and
(2) effective resolution of a key issues involving land, water, environment
and labour.
Now, Gujarat is poised to push the boundaries of industrial development to
higher orbit in different phases e.g.
SIR-ging scale:
Making the most of the Central sector projects like Dedicated
Freight Corridor (DFC) and Delhi Mumbai Industrial Corridor (DMIC), Gujarat
has now have initiated planned industrial development of special investment
regions (SIR). One such SIR at Dholera is planned to surpass Shenzhen
China in its scale.
Energetic turnaround:
On the energy front, Gujarat has scripted a
remarkable turnaround story in SEB (state electricity board) finance without
major increase in power tariff while at the same time ensuring 24x7 power
supply to each village and town of Gujarat.
the
Top rank areas in the world
Gujarat holds the world's
highest rank for:
Single-location petroleum
refinery
Processed diamonds
Castor and cumin
Sponge iron plant
Denim (3rd largest producer)
A. Industry and infrastructure
A.1 Well established industrial base and favourable investment climate
Top ranking areas in India
Very significant contribution of
Gujarat to India in various
sectors and products:
Soda ash
Diamond processing
Salt
Plastic industry
Petro chemicals
Chemicals
Groundnut
Petrochemicals
Cotton
Textiles
Minerals
98%
80%
78%
65%
62%
51%
37%
35%
31%
31%
10%
Highly industrialised state:
Gujarat is one of India's most industrialized states with
~45% share of industry in GSDP and 31% share in manufacturing. Gujarat is home to
around 800 large and 320,000 MSMEs.
Second highest IEMs:
Gujarat is a very close second (after Maharashtra) in terms of
total number of IEMs (industrial entrepreneurs memorandums) implemented at 1,581
in the last 20 years, 1991-2011.
Testimony of investment climate:
Various testimonies received from international
and national bodies include
Second best state in Asia Pacific category in 'Improving transparency, accountability
and responsiveness in public service' (UN in 2010)
Adjudged 'the most market-oriented and business friendly state' (Forbes magazine)
Award for successful implementation of Citizens' Grievance Redressal programme
of 'SWAGAT' (UN)
Ahmedabad as the third fastest growing city in the world (Forbes magazine, 2010)
Surat as the fourth fastest growing city in the world (The City Mayors Foundation,
2011)
Ahmedabad among the 15 best new cities for business in the world (Fortune
Magazine, 2011).
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A.2 Government as a facilitator
Policy driven state:
Foundation for rule-based and transparent process of industrialization
has been laid in the form of well-documented policies for most critical sectors.
Sectoral policy facilitates investments, enhances transparency
Sector
Biotech
Agro
Policy/ GR Document
Biotech Policy 200-12
Agri Industrial Policy, 2003
Policy for land allotment to modern technology
the
Sector
Power
Policy/ GR Document
Power Generation Policy, 2009
Solar Power Policy, 2009
Wind Power Policy, 2007 (with amendment)
Scheme for Contrat Farming
Infrastructure
GID Act, 1999, with two amendments
State VGF Scheme
Regulation for Determination of Project Cost
SIR Act, 2009
Industrial Sector
Industrial Policy, 2009
Guarat SEZ Act, 2004
Minerals Policy, 2003
Schemes for MSME, Textile & Apparel,
Gems & Jewelry
Industrial Infrastructure Projects - 2009
Ports
Urban
Tourism
BOOT Policy, 1997
Port Policy, 1995
Integrated Township Policy, 2007
Tourism Policy, 2003-10
Roads
IT
Education
Road Policy, 1996
IT Policy, 2006-11
GRs for establishing private university
Source: Government of Gujarat
Facilitating business:
Several initiatives have been taken aimed at reduction of the
transaction costs, time and efficiency of capital used for business. This covers simplification
of procedures, dissemination of information, industrial zoning and creation of land bank
among others.
Key initiatives for industrial development
Simplification of
procedures
Gujarat Investor Portal
Understanding the roadblocks
Delivery mechanism to plug gaps
To support Industrial Facilitation Act
Online filing/status Common
Investment monitoring
system
Industrial Zoning
Status of investment/MoU at various
levels of approval and implementation
To create environmentally sustainable
industrial areas
Industrial zoning obtain speedy clearances
Identification of land for industrial purpose
Investor Supprt
Software
Application Form
A software to assist in identifying
suitable location
Detailed information on infrastructure
Creation of Land Bank
in each district
Facilitate obtaining land information and
Information Bank
upto Taluka level
Centralised availability of information
about the districts, sectors,
investment region, SEZ, etc.
Doing business in
Gujarat
development of infrastrucuture
A compilaiton of various incentives offered
to the investors and the clearances for a
new venture
Source: Government of Gujarat
A.3 Resolution of key issues - land, water, environment and labour
Creation of land bank:
For various large scale projects, the State Government has sought
to create a repository of land that would provide a big push to industrialization. For instance,
of the 0.25m ha of land intended for development of SIRs, 75-80,000 ha already in possession
of the government while another 30,000 ha are being acquired. Additionally, more than
6,000 ha are being acquired through private initiatives.
Land acquisition is a participatory process with four important components:
1) Sensitization about being part of growth process
2) No relocation (for village expansion)
3) Prices are fixed with consent and
4) CSR activities.
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In our interactions, the State Government officials exuded confidence that Gujarat is already
compliant with the expected Land Acquisition Resettlement and Rehabilitation (LARR) Bill.
The participatory mode of land acquisition in Gujarat
Elements
Compensation and sharing
Details
10% of the differential amount between Allotment Price and Land
(Consent) Price shall be paid to the land owners giving consent.
The land owners will be given developed commercial plot to the
extent of 1% of their land acquired at token rate of INR.1.
Entire Land loss - One time financial assistance equivalent to 750
days min. agri. wages for loss of livelihood, i.e. INR 75,000.
Marginal Farmer - One time financial assistance equivalent to 500
days min. agri. wages for loss of livelihood, i.e. INR 50,000.
Capacity Building & Employment
One person between the age of 18 and 45 in each family for
training in a course for upto 2 years in ITI or a similar approved
institution.
The trainee would be paid stipend, expenses etc. on the pattern
currently adopted by Gujarat PCPIR Welfare Society.
GIDC will endeavor to obtain employment to one member of each
project affected family in the units that come up within or near the
industrial estate.
3% of the difference between Allotment Price and the price at
which land is purchased will be utilized for public purpose projects.
The total of private and government land acquired of each village
shall be considered for the proportionate allocation of this amount
amongst the villages.
Source: Government of Gujarat
the
Land acquisition is a
participatory process with
four important components:
1) Sensitization about
being part of growth
process
2) No relocation (for village
expansion)
3) Prices are fixed with
consent and
4) CSR activities
Sharing with Village Panchayat
Interim Relief
Water:
As many parts of the State are prone to water scarcity, several initiatives are being
taken through PPP mode in the area of municipal and industril water treatment plants,
rainwater harvesting and micro irrigation - that has helped in turnaround of agriculture.
Besides, the Sardar Sarovar Project would be a major game changer (see page 13).
Desalination projects are also underway.
Environment:
Many steps have been taken to improve the environmental situation, as also
in ensuring that the new facilities that are coming up are ecologically compliant. Gujarat is
the only state to lay down an integrated state wide gas grid of 2,200 km. It has also strived
to become a carbon neutral state through sustainable development. The Petrochemicals
and Petroleum Investment Region (PCPIR) would have a common effluent infrastructure
system with effluent disposal pipelines, common effluent treatment plants and solid waste
disposal sites. Eco cities are being developed in Dahej and Sanand. Despite high cost currently,
use of solar energy is being promoted in the State.
Labour:
In addition to multiple schemes aimed at raising literacy levels, Gujarat has
established 60 skill upgradation centers offering various kinds of vocational training. It plans
to raise the number of such centers to 300 by 2013. Society for Creation of Opportunity
through Proficiency in English (SCOPE) is another such initiative to enhance employment
potential of Gujarat's youth. The percentage of working days lost in Gujarat due to industrial
strife is 0.42%, the lowest in India.
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A.4 Taking industrialization into higher orbit
Paradigm shift - from clusters to SIRs
Gujarat's industrialization has moved from cluster-based approach (83 clusters) to industrial
estates (180 in number), and then to SEZs (60 currently). Now, there is a paradigm shift
towards establishment of Special Investment Regions (SIR), essentially very large areas
covering multiple SEZs, industrial parks or clusters with superior infrastructure, usually
centred around a mother industry along with its downstream facilities.
SIRs - Taking industrialization into higher orbit
the
SIRs are very large areas
covering multiple SEZs,
industrial parks or clusters
with superior infrastructure
Source: Government of Gujarat
SIR Act, 2009:
SIRs are developed as global industrial hubs with world class infrastructure
and adoption of global best practices. Gujarat is the first state in India to lead this
initiative with the SIR Act, 2009. Various authorities set up for the purpose include Apex
Project Development Company, Regional Development Authorities for each SIR, and
Special Purpose Vehicles. Mechanisms are being put in place for single window clearance
and dispute settlement.
Dholera SIR:
Dholera SIR (around 100km away from Ahmedabad) is being developed
as one the biggest SIR in Gujarat and much bigger than Shenzhen, China. It would also
be the biggest planned city anywhere in the world. Of the 90,370 ha, nearly 41,110 ha
(i.e. 37% of total area) have already been allotted. The SIR will be connected by
expressway and fast metro rail to Ahmedabad. Besides, it will have a new international
airport, major highway links and port connectivity. The project is expected to create
~0.8m jobs that would support a population of 2.5m i.e. 0.5m higher than the current
population for the region.
Making the most of DFC, DMIC and port connectivity
Dedicated Freight Corridor (DFC):
The DFC, undertaken by Indian Railways, is one
of India's biggest ever transportation initiatives. The DFC plans to cover about 2,762km
in two routes - the Eastern Corridor from Ludhiana to Dankuni and the Western Corridor
from Jawaharlal Nehru Port at Nhava Sheva near Mumbai to Tughlakabad, Delhi/Dadri
along with interlinking of two corridors at Khurja. Of the Western DFC's total length of
1,483 km, 38% i.e. 565 km passes through Gujarat.
Delhi Mumbai Industrial Corridor (DMIC):
DMIC is a high impact industrial area
within 150km distance on both sides of DFC. Twenty-four industrial nodes have been
identified within DMIC, out of which Gujarat will have six nodes with another six being
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planned. The potential impact of DMIC could be gauged from its coverage which includes
62% of the area of State (18 out of 26 districts) affecting 74% of the population (including
16m workers).
Port and road connectivity:
Gujarat has the longest coastline in India of 1,600 km
with 42 ports. Road and rail link between DFC, industrial nodes and seaports are being
upgraded while new roads and rail links are being planned. Provision of rail-linked
freight terminals, logistics parks, and warehouses are also on the radar.
the
DFC, DMIC and Port connectivity - laying the foundation for decadal growth
The Dedicated Freight
Corridor (DFC), undertaken
by Indian Railways, is one of
India's biggest ever
transportation initiatives.
Of the Western DFC's total
length of 1,483 km, 38%
i.e. 565 km passes through
Gujarat
Source: Government of Gujarat
Leading the PPP drive:
Gujarat has led India's PPP (public-private partnership) drive, and
is the first state to have an institutional arrangement for the same. The Gujarat Industrial
Development Board (headed by Chief Minister) has facilitated PPP in a major way. Viability
gap funding arrangement, with Centre and state each contributing 20%, has further broadened
the scope of PPP. After successfully launching PPP in infrastructure (ports, railway lines,
roads and bridges), it now has also introduced PPP in the social sector.
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PPP projects during 1999-2010
No
1
2
3
4
5
6
7
8
9
10
11
Sector
Port
Road
Railways
Power
Urban Infra
Parking places
Hospitals
Poly-techs, ITIs
Water
Urban Transport
IT Infra
Total
54
Implemented (USD 7b)
18
19
3
4
10
In pipeline (USD 18b)
30
11
4
11
10
6
3
15
3
6
5
104
Source: Government of Gujarat
the
BIG 2020:
As per the Blueprint for Infrastructure in Gujarat (BIG 2020) the total investment
requirement is INR12t (~USD300b). This is equivalent to 30% of the total infrastructure
spend planned for India under the 12th Five-Year Plan (FY13-17).
Vibrant Gujarat: A landmark event
USD450b investment committed in 2011:
Vibrant Gujarat is a platform provided by Gujarat government for forging
business relation and co-operation with domestic and global investors. The biannual event beginning from 2003 has now
metamorphosed into a much bigger common platform for business ties with wider participation of other Indian states.
The success of the latest Vibrant Gujarat Summit 2011 can be gauged from the fact that nearly 8,000 MoUs were signed
with an investment commitment of INR21t (USD450b) and employment generating potential of 5.2m, a majority of which
is through MSMEs (micro, small and medium enterprises).
Vibrant Gujarat 2011 summit drew more investment
No. of MoUs highest in employment generating
than all the summits put together before (INR trillion) MSME sector
2009
12.1
20.8
2011
2007
4.7
2005
2003
1.0
0.7
Source: Government of Gujarat
Project fructification:
The projects have two stage cycles, (1) environment, and (2) execution. The Gujarat Pollution
Control Board completes/decides on environmental approval within 90 days. The execution cycle is around 2-3 years for
small and medium ones and 5-6 years for the bigger ones. At present, 66% of the projects committed in 2005 have been
closed while 75% of SSI projects of 2009 have been closed. Gujarat's track record of project fructification is much better
than all-India average.
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B. Energy
B.1 Gujarat a power surplus state
Gujarat is one of the few power surplus states in India, ensuring 24x365 power availability
for all categories of consumers.
the
Turnaround of Gujarat's
power sector (PBT, INR b)
B.2 GEB - the biggest turnaround story
Gujarat Electricity Board, an earlier loss-making state monopoly was turned around through
a series of organizational restructuring and reform measures. First, GEB was restructured
in 2005 into seven corporate entities: six functional entities (one each for generation and
transmission, and four distribution companies for four regions of the state) and one holding
company also handling bulk purchase and sale of power. Consumer-centric services and
improvement in key metrics (higher PLF, lower T&D losses, optimum use of resources and
manpower) also helped the turnaround. Most notably, the turnaround came despite no hike
in power tariffs for the last six years (barring the 63p/unit pass-through of higher fuel
surcharge).
2
2
1
1
4
-9
-19
Source: Government of Gujarat
B.3 Future is bright
While the current situation remains comfortable, the state has plans to more than double
conventional power generation capacity to 30,479MW by FY17 from the current level of
13,354MW. Private IPPs' share is expected to rise from 31% at present to 36% in FY17.
Besides, renewables are being expanded especially solar power, despite high cost. Thus,
Gujarat's power surplus is likely to more than double from 3,559MW to 7,227MW by FY17.
Also the transmission network is being expanded ~50% in line with generation capacity.
Distribution of current capacity
of 15,592 MW
Growth of conventional sources
(MW)
State (GSECL)
Private IPPs
35,000
28,000
21,000
14,000
7,000
0
Conventional
Renewables
FY07
FY11
FY17
FY15
FY14
FY13
FY12
2,897
3,828
4,145
3,559
State Owned IPPs
Centre share
Power surplus is likely to grow
(MW)
FY17
FY16
5,471
7,227
Source: Government of Gujarat
B.4 Jyoti Gram Yojana (JGY): Addressing both agriculture and rural
industrialization
JGY was a scheme for separation of rural feeders from agricultural feeders. This has covered
all 18,000+ villages in Gujarat and 10,000 surrounding hamlets. Agriculture consumers are
supplied 3-phase power for 8 hours, and 1-phase power after 8 hours. Other consumers
are supplied 3-phase power 24x7 in the villages as well. Around 16% of the total energy
catered to JGY. This has also improved availability of power for small and ancillary units
around the villages, promoting rural industrialization and checking migration.
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Agriculture power continues to be
subsidized by industry, commercial
% of total
40
the
Full realization from most
categories except agriculture
Realization (INR/Unit)
Avg Realization
Improving efficiency on various
parameters
%
Consumption
Revenue
6
4
2
0
FY05
FY08
FY10
FY11
100
75
50
25
0
30
20
10
0
Source: Government of Gujarat
B.5 Kisan Heet Urja Shakti Yojana (KHUSHY): CuttingT&D losses
To reduce T&D losses on agricultural feeder 'KHUSHY' is deployed. LT lines are converted to
HT lines, and dedicated transformers allocated to agriculture consumers. This reduces
technical and commercial losses while improving voltage profile.
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Agriculture
Marrying the micro and the mega
the
Completion of the command area development of the mega Sardar Sarovar
project by FY15 would raise gross irrigated area from 30% to 46% of gross
cropped area.
Further, it would help reap 81% of the ultimate irrigation potential (currently
53%) and nearly achieve full potential (93% v/s 56% at present) so far
as irrigation through surface water is concerned.
This comes on top of a close to double digit growth for nearly a decade on
the back of cumulative efforts towards micro irrigation, water conservation
and soil improvement.
Sardar Sarovar Project (SSP) - A project of many landmarks
The Sardar Sarovar Project is one of India's largest water resources projects covering
four major states - Gujarat, Maharashtra, Madhya Pradesh and Rajasthan.
The dam's spillway discharging capacity (3.1m cusecs) would be the third highest in the
world.
With 532km length and 1,133 cumecs (40,000 cusecs) capacity at the head regulator,
the Narmada Main Canal would be the largest irrigation canal in the world.
In terms of the volume of concrete involved for gravity dams, this will be the second
largest in the world with an aggregate volume of 6.82m cubic meters.
At 163 meters, the dam will be the third highest concrete dam in India. The reservoir
would occupy an area of 37,000ha and would have a linear stretch of 214km and average
width of 1.77km.
The Full Reservoir Level (FRL) of the Sardar Sarovar Dam is fixed at RL138.68 meters
(455 feet). Submergence at this level is estimated to be 37,690ha of which 11,279ha is
agricultural land, 13,452ha is forest land, and 12,869ha is river bed and wasteland.
Salient features of SSP
Dam
1 Length of main concrete gravity dam
2 Maximum height above deepest foundation level
3 Top R.L. of dam.
4 Catchments area of river above dam site
5 Live storage capacity 0.58M.Ha.m
6 Length of reservoir
Maximum width
Average Width
7 Spillway gates
Chute Spillway
Service Spillway
8 Spillway Capacity
Power Houses
1 River bed power house
2 Canal head power house
1,200 MW
250 MW
Source: Government of Gujarat
1210 m
163.00 m
146.50 m
88,000 Sq. km
(4.7 MAF)
214.00 km
16.10 km
1.77 km
7 Nos. 60' x 60'
23 Nos. 60' x 55'
84,949.25 cumecs
(30 lakh cusecs)
Canal System
Main Canal
1 Full supply level (F.S.L.) at H.R.
2
3
4
5
Length upto Gujarat - Rajasthan border
Base width in head reach
Full supply depth (F.S.D.) in head reach
Design discharge capacity
(1) In head reach
(2) At Gujarat Rajasthan border
Distribution System
1
2
3
Numbers of Branches
Length of distribution system network
Culturable Command Area
38
66,000 km
18.45 lakh ha
91.44 m (300 ft)
458.00 km
73.01 m
7.60 m
1,133 cumecs
(40,000 cusecs)
71 cumecs
(2,500 cusecs)
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Importance of SSP for Gujarat agriculture
the
Huge water scarcity…:
Despite having 6% of India's area and 5% of population,
Gujarat has only 2.3% of India's surface water.
… with regional disparity:
Further, intrastate water availability is extremely uneven;
South Gujarat enjoys 71% of surface water with just 21% of land mass. Availability of
water is sparse in other areas, viz, North Gujarat (11% water, 23% area), Saurashtra
(16% water, 33% area) and Kutch (2% water, 23% area).
Still ~10% agri growth:
Gujarat has only 16% of its geographical area under irrigation
(12% actually utilized) and irrigation potential of only 33% of the area from all sources.
Despite lack of irrigation, Gujarat has recorded highest agricultural growth rate of 9.6%
between FY01 to FY08 vis-à-vis all-India average of 2.7%. This is primarily on the back
of efforts towards water preservation, retention, and improvement in soil quality.
SSP the game changer:
SSP would take the gross irrigated area up from 30% to
46% of total gross cropped area, would help reap 81% of the ultimate irrigation potential
(currently 53%), and help achieve near-full potential (93% v/s 56% at present) of
irrigation through surface water.
Agricultural production:
Increase in agricultural production is expected to be 8.7m
tpa, worth USD430m.
Sardar Sarovar Project (SSP) - the game changer for irrigation and agriculture
Before SSP
After SSP
93
81
Post SSP, increase in
agricultural production is
expected to be 8.7m tpa,
worth USD430m
30
46
53
46
Gross irrigated area (as % gross
cropped area)
Gross irrigated area (as % of
ultimate irrigation potential)
Irrigation potential (as % of IP
through surface water )
Source: Government of Gujarat
SSP benefits beyond agriculture
Drinking water:
SSP has ushered a sea change in the availability of drinking water in
Gujarat with water supply already reaching 6,613 villages out of 9,633 villages planned
under the project. Also 114 towns (out of 131 planned) have been provided with access
to drinking water. Narmada-based water supply scheme ("Sujalam Sufalam") is
benefitting about 22.5 million people.
Benefits to other states:
As per the award of the Narmada Water Disputes Tribunal
(NWDT), much of water and power from SSP would accrue to other states. However, a
majority of the expenditure has been borne by the Government of Gujarat.
Industrial requirement:
There are strict norms laid down for maximum water that
can be used for industrial purpose, and this stands as low as 2%, of which only 1% is
currently utilized. Many industries (including GIDC-Sanand, IFFCO, Sterling SEZ, etc)
have benefitted from SSP.
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Tribunal award for water (%)
Tribunal award for power (%)
Usage of water in Gujarat (%)
the
Maharashtra
0.9
Maharashtra
27
Industrial
2.2
Rajasthan
1.8
Rajasthan
0
Drinking
9.5
Gujarat
Madhya
Pradesh
32.1
Gujarat
16
Irrigation
88.3
65.2
Madhya
Pradesh
57
Source: Government of Gujarat
Benchmark in rehabilitation work:
SSP has created new benchmark for relief and
rehabilitation work in India with a spend of ~USD0.5b (4-5% of total estimated project
cost). The project affected people (PAP) resettled number 4,760 (from Gujarat), 5,557
(from Madhya Pradesh) and 748 (from Maharashtra).
Interlinking of rivers:
SSP is also the first river-interlinking project in India. Water
released from Narmada to en route rivers has enriched water quality of these rivers
besides rejuvenating of tubewells and recharging natural aquifers.
Environment and global warming:
Nearly 9,300ha forest area has been replenished
and 4,650ha non-forest area planted. Electricity generated and saved is 78bkwh, and
equivalent saving in terms of coal, CO2 emissions, suspended particulate and sulphur
dioxide emission.
Socio-economic benefits:
SSP is found to have salutary impact on migration,
groundwater levels, drudgery for women involving 3-4 hours in fetching water, water-
borne diseases, school dropout rates, and other parameters.
Project backdrop, timeline & status
Background
By some account, the proposal for a dam across Narmada dates back to 19th century.
However, the foundation stone for SSP was laid by Jawaharlal Nehru in 1961.
After long delay over water sharing dispute, the dam construction started in 1987 after
the Dec-1979 decision by the Narmada Water Disputes Tribunal (NWDT) became final
and binding, and necessary environmental and other approvals were obtained.
Because of delay due to civil society protests during 1995-2000, project cost escalated
from INR60b to INR400b.
With an estimated income effect INR35b per annum, the project has a payback period
of 11 years, besides multiple benefits which cannot be valued.
Current status:
The project is now nearing completion and expected by FY15.
The main dam, power facilities and major canals are all nearly done.
Command area development is progressing apace with ~80% of required land already
acquired.
Phase I of command area is completed while Phases II to V have been taken up
simultaneously.
Land is being acquired with consent based on the experience of Phase I (that resulted in
40,000 court cases).
All work orders have been given for canals.
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The project to be completed by FY15
Potential
Main dam height (mt)
Concreting (LCM)
Hydro power (MW)
Drinking water
Villages
Towns
Irrigation potential (m ha)
Jobs (m)
Flood protection ('000 ha)
139
68
1,450
9,633
131
1.8
1
30
Source: Government of Gujarat
Current
122
66
1,450
6,613
114
0.5
% achieved
88
96
100
69
87
29
the
Canal network - progress
100%
75%
Total Length in Km
% completed
74,626
48,058
35%
5,112
Distributaries
29%
18,413
Minors
21%
26%
458
Main
Canal
2,585
Branch
Canal
Sub-minors
Total
Source: Government of Gujarat
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Services
Eyeing the GIFT facelift
IT and finance remained the only gap facing the state in the gamut of service
sector activities. This is now being corrected with the GIFT City initiative that
is a globally benchmarked international financial centre (IFC) which, when
completed, would be many a multiple of scale compared to global peers.
the
Backdrop for finance and IT
The financial sector in India is expected to grow increasingly larger, with a prospect of 10-
11 million jobs by 2020. Worldwide, financial services centers contribute 5-60% of the
economy and 4-30% of the jobs of their respective country.
Potential of a financial hub
800m sq ft of office space all over India can potentially create 10-11m jobs. Financial
services could grow at 15%-20% rate, i.e. 1.5-2x the speed of overall GDP. Offshoring
industry alone needs at least five new 'Gurgaons' and five to seven new 'Punes'.
Gujarat's strengths
Gujarat already contributes 30% of India's stock market capitalization on the back of high
growth and a traditional pool of businessmen and skilled manpower trained in commerce.
It is also one of the most urbanized states. With nearly all the ingredients in place, the
service sector has come into sharp focus of attention for policy makers in Gujarat.
GIFT of Gujarat
The GIFT City (Gujarat International Finance-Tech City) located on the banks of Sabarmati
river, just 12 km away from Ahmadabad airport, is an endeavor to fill the obvious vacuum in
creating a globally benchmarked financial hub.
Aim:
GIFT aims at offering world class infrastructure to rejig India's financial sector that
would have financial services at its core with associated activities including capital market
and IT/ITES/BPO. Up to 90m sq ft of office and residential real estate would be created for
the purpose.
The 2020 vision:
By 2020, GIFT expects to generate 1m jobs, USD1.2b and USD1.5b
revenue to state and central government, respectively.
PPP mode:
GIFT is being jointly promoted by Government of Gujarat, viz, Gujarat Urban
Development Company Ltd (GUDC) and Infrastructure Leasing & Financial Services (IL&FS).
Of breathtaking scale and scope:
The sheer scale of GIFT as envisaged is many multiples
of current benchmark IFCs. GIFT is also planned with an integrated approach to development
and provision of rich infrastructure.
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GIFT - A city for the future
the
GIFT would have financial
services at its core including
capital market and IT/ITES/
BPO. Up to 90m sq ft of real
estate would be created for
the purpose
GIFT is a multiple of current benchmark IFCs in scale
Paris
Land area (sq km)
Construction scale (in m sq m)
Greenbelt ('000 sq m)
Height (m)
1.6
2.5
40
200
Tokyo
1.6
1.6
120
250
London
1.1
1.1
50
250
Pudong
1.7
4.5
363
490
GIFT
3.6
8.5
1183
410
Source: Government of Gujarat
Fully integrated development with rich infrastructure
GIFT is planned with an
integrated approach to
development and provision
of rich infrastructure
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Other benefits:
Apart from direct provision of infrastructure, various incentives would be
accorded in direct and indirect taxes under Gujarat state laws. Ease in obtaining various
approvals from government authorities in setting up units is being ensured.
Zoning:
The land has been demarcated for specific use to reap maximum business potential,
orderly development and tax related considerations. Dedicated enclaves have been chalked
out for banking and insurance, technology, exchange, corporate, diamonds, world trade
center, as well as social facilities.
Area distribution as per businesses envisaged
All conceivable facilities for business
Processing Area
Non-Processing Area
Related Commercial and Office Buildings
Service Apartments & Residential Flats
Hostels and Restaurants and Food Court
Business Hotel, Shopping Centre, Retail
Stores and Banks
Training center for Financial Services
Medical Centre
Entertainment Centre/ Theatre
Post Office, Telephone Exchange, Police
Station, Security, etc.
Regulators Offices
Source: Government of Gujarat
International Financial Service
Centre (IFSC)
International Techno Park &
International Market Zone
Commodity Exchanges
Global trading exchanges
Insurance
Offshore Banking
IT/ ITeS
KPO/ BPO services
Data Centre
the
SEZ –
Processing
Area, 53 ha
SEZ – Non
Processing
Area, 53 ha
Domestic Tariff
Area, 253 ha
SEZ participation:
Some of the areas of SEZ participation include financial services, trading,
offshore banking services, IT/ITeS, back-office operations, consulting services, insurance
claim processing, research and development services, revenue accounting, etc.
Tax holiday:
A 15-year graded tax holiday is available to units operating in SEZs and
earning export profits. To begin with tax deduction would be applicable up to 100% of
export profits for the first five years which would go down to 50% of export profit in next
five years. The deduction on 50% of export profit would continue for another 5 years in
case it is reinvested in the Reinvestment Reserve Account of the SEZ. Various indirect taxes,
viz., excise duty, customs duty, service tax and central sales tax would also attract zero rate.
All sales and transactions within the processing area of the Zone shall be exempt from all
taxes, cess, duties, fees or any levies under the state law.
Status of implementation:
The project is on track with various levels of approval already
obtained or in the pipeline. Work is progressing apace with key milestones on schedule.
Work on GIFT is progressing apace
Description
1
2
3
4
5
6
7
8
9
10
Launch of phase - 1 (10 msf )
MoUs worth 11,700 crores signed during Vibrant Gujarat 2011
MOA with IL&FS for development of 7.77 msf in phase -1
(Commercial/Residential & Social Facilites)
Master plan
Pre-construction activities: Site leveling & dressing, access to site,
site office (temp)
Pre-construction activities of two high rise commercial buildings by IL&FS
Bid process for Water supply, Access road, Construction power,
Construction water, Project office
Selection of developers: School, Hospital & Hotel
Selection of proof-check consultant for structural design of high-rise building
Multi-services SEZ, focusing on financial services
28 September 2011
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Timeline
Jan-2011
Jan-2011
Mar-2011
Completed
Completed
Commenced
Ongoing
Ongoing
Ongoing
Notified, Aug-11

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Annexure: Gujarat - A state profile
the
Gujarat has one of the highest growth rates in India. On an average, Gujarat grows 2-
2.5% higher than India. As a result, Gujarat's share in India's GDP is rising ~0.1% every
year.
However, Gujarat is primarily an industrial economy; share of industry in state GDP at
41% is well above the all-India level of 28%. As land is less fertile and water is scarce,
agriculture has not been a big driver of the economy.
Gujarat is one of the richest states in the country with a very high per capita income. Its
per capita income has been 20% higher than all-India level for a fairly long period of
time.
Despite high per capita income Gujarat stands much lower (i.e., barely above the all-
India level) in aspects of consumption and poverty ratio. While rural per capita
consumption in Gujarat in FY10 was 5% higher than all-India average, urban consumption
level was 4% lower. Food had a larger share of the consumption basket in both rural
and urban areas compared to the respective all-India average. No major progress in
bringing down poverty levels between FY94 and FY05 suggests somewhat widening
class divide.
Barring abnormal year, Gujarat is growing at 2 to 2.5% higher than all-India
Gujarat
15
10
5
0
-5
All India
Source: Government of Gujarat
Gujarat is largely an industrial economy
FY05
Gujarat State GDP mix (%)
Agriculture
Industry
Services
Gujarat's share in India (%)
GDP (Real)
Agriculture
Industry
Services
India's GDP mix (%)
Agriculture
Industry
Services
16.1
40.0
43.9
6.8
5.8
9.8
5.7
19.0
27.9
53.0
FY06
17.2
39.9
42.9
7.2
6.8
10.2
5.7
18.3
28.0
53.8
FY07
15.8
40.3
44.0
7.1
6.5
10.0
5.8
17.4
28.6
54.0
FY08
15.4
40.2
44.4
7.2
6.6
10.1
5.9
16.8
28.7
FY09
13.3
39.8
46.9
7.2
6.1
10.2
6.0
15.7
28.1
FY10
12.1
40.7
47.2
7.4
6.1
10.7
6.1
14.6
28.1
54.5
56.2
57.3
Source: Government of Gujarat
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Gujarat is a relatively rich state among the bigger states of India
120,000
90,000
60,000
30,000
0
the
Source: Government of Gujarat
Over long period of time Gujarat's per capita income
stands 20% higher than India
160
140
120
100
80
While share of monthly expenditure is higher in rural
areas than all India, it's lower in urban areas
2,500
2,000
1,500
1,000
500
0
Rural
Urban
Source: Government of Gujarat
Gujarat's poverty ratio is better than India average but still high
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
State
Jammu & Kashmir
Kerala
Punjab
Himachal Pradesh
Haryana
Tamil Nadu
Andhra Pradesh
Gujarat
Karnataka
West Bengal
Assam
Rajasthan
Maharashtra
Uttar Pradesh
Madhya Pradesh
Bihar
Orissa
All India
FY94
26.3
31.3
22.4
34.6
35.9
44.6
44.6
37.8
49.5
39.4
51.8
38.3
47.9
48.4
44.6
60.5
59.1
45.3
FY05
13.2
19.7
20.9
22.9
24.1
28.9
29.9
31.8
33.4
34.3
34.4
34.4
38.1
40.9
48.6
54.4
57.2
37.2
Source: Government of
Decline
13.1
11.6
1.5
11.7
11.8
15.7
14.7
6
16.1
5.1
17.4
3.9
9.8
7.5
-4
6.1
1.9
8.1
Gujarat
28 September 2011
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