Gujarat emerging as growth engine of Indian economy

Virendra Pandit | Updated on March 23, 2011

Mundra has a major privately-run port and is now a port-based industrial and thermal power hub.

In the last decade, few states have absorbed the spirit of globalisation of economy and economic liberalisation the way Gujarat has. Traditionally, this western state, whose large swathes remained dry round-the-year until a few years ago, has been business-friendly; the Gujaratis, whether in India or abroad, have been known as astute traders and businessmen, always looking for an opportunity to multiply their wealth.

Not only this, Gujarat has always been on the forefront of paradigm changes in India's social, cultural, political and economic changes. In the recent past, the western State has emerged as India's own El Dorado attracting people from across the country looking for jobs. In fact, Gujarat owes its progress as much to its own people's enterprising nature as to the contribution of those who made the State their home.

The economic growth indicators of Gujarat have been impressive with an achievement of an average annual growth rate of 10.4 per cent in the last five years, which is higher than that of the erstwhile “Asian Tigers”. Gujarat contributes to 16 per cent of the industrial production of the country and has also mobilised the highest share (12.7 per cent) of the investments.

Crisis management

Ever since its inception in 1960, Gujarat has witnessed man-made and natural disasters, and has also been a frontline state in the Indo-Pakistan Wars of 1965 and 1971. But it has always bounced back with renewed vigour, ubiquitously called the ‘Gujarati khamir' (resilience). It was due to the spirit of oneness and inherent social strength that the State was able to overcome the trauma and debilitating impact of the January 26, 2001 earthquake that devastated Kutch, Surendranagar and Ahmedabad districts and claimed over 13,000 lives.

Kutch, the epicentre of the temblor, bounced back as a major investment region fast-pacing on the industrialisation path with investments of over Rs 25,000 crore since 2001. Today, Bhuj boasts one of the best airports in India and Mundra has emerged as a major privately-run port and port-based industrial and thermal power hub. The tax reliefs and subsidies given by the Central and State Governments for the development of Kutch made this possible.

Three natural disasters had struck Gujarat during the last 12 years. In May 1999, Kutch faced a super-cyclone that left hundreds dead, mainly salt-pan workers. It had an adverse impact on Kandla Port operations for weeks. Similarly, unprecedented floods hit Ahmedabad in 1999 and Surat in 2006, causing colossal losses to business activity.

But, leaving behind the pain, Gujarat has had many a reason to smile. In fact, the State converted crises into challenges and challenges into opportunities. The once-parched State now has the bounty of the Narmada waters in many districts, thanks to the ambitious Sardar Sarovar project on the river, on which more than Rs 25,000 crore have been invested during the last three decades. The project went through a long process of litigation on environmental and rehabilitation issues. But the State's unity, cutting across political lines, saw it through each challenge.


The results of economic liberalisation could be seen most clearly in Gujarat in the first decade of the new century, beginning 2001. Gujarat emerged stronger and a beacon of hope for the rest of the country in terms of economic and industrial development. With the agricultural growth of more than 11 per cent in the last five years, the highest in India, Gujarat came in for praise by the Washington-based International Institute for Food Policy Research last year.

On the industrial front too Gujarat was among the top few states in India to attract investments and job creation. The Modi Government began organising the now-famous, biennial Vibrant Gujarat Global Investors Summit (VGGIS) from 2003 onwards to showcase the State as a major investment destination. In the four such events held so far, investments worth thousands of crores have been promised and many projects are at various stages of implementation across the State.

According to a Deutsche Bank Research report, Gujarat ranks first in the ‘regional scoring tool' among 27 states in India. With a 5.50 crore population and an area of 1.96 lakh square km (6.2 per cent of the country), the State has a Gross Domestic Product of $45.3 billion and a per capita income of $915 at current prices. It is one of the most industrialised states with 37.4 per cent people living in towns and cities. The Socio-Economic Review (2007-08) noted that Gujarat demonstrated a high industrial growth rate of 12.5 per cent in 2002-05. The State is home to over 800 large industrial units and 3.20 lakh micro, small and medium enterprises.

Gujarat accounts for 30 per cent of India's stock market capitalisation, 21 per cent of exports and 9.5 per cent of the workforce. The State is the world's largest producer of castor and cumin, has the largest gas-based single location sponge iron plant, the largest producer of processed diamonds and the third largest denim producer. Besides, it also has Asia's largest grassroots petroleum refinery at Jamnagar and the country's only LNG import terminals at Hazira and Dahej.

In terms of its presence across sectors, Gujarat produces India's 31.2 per cent of petroleum products, 22.9 per cent of chemicals and pharmaceutical products, 12.6 per cent of engineering goods and 10 per cent of food and beverages. It contributes significantly to the country's soda ash production (98 per cent), salt processing (85 per cent), diamond processing (80 per cent), plastic industry (65 per cent), petrochemicals (58 per cent), chemicals (50 per cent), groundnut (42.3 per cent), pharmaceuticals (42 per cent), cotton (35 per cent), and fabrics (30 per cent).

Cultural richness

This impressive record, however, does not mean Gujarat only means business! In the cultural arena the State has emerged as a major attraction for tourists and pilgrims alike. If the State showcases its nine-day-long Navratri Festival as the world's longest annual dance festival. The International Kite Festival, held on January 14 each year, has become the final destination for the global kite-flyers.

In sports, particularly cricket, Gujarat is padding up to play a long innings. While Mr Narendra Modi now doubles up as President of Gujarat Cricket Association, the Adani Group almost came within the striking distance of having a Gujarat team on the IPL a few months ago.

Published on March 23, 2011

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