State of resilience

A view of the Reliance petroleum refinery at Jamnagar. - JAYANTA SAHA

Gujarat's amazing ability to fight adversity has enabled it to go ahead with a large number of developmental initiatives.

RESILIENCE - that is one word that sums up everything about Gujarat. Whether it is the common man, trade and industry or even the government, the Gujarati spirit of enterprise and an amazing resilience to fight adversity have put the State back on the top of the heap every time some natural or man-made calamity has struck. When events such as the devastating earthquake four years ago, the violent communal riots three years ago and the pneumonic plague a decade ago occurred, people thought it was time to write off Gujarat. But every time Gujarat goes down, it scripts an amazing bounce-back story.

Led by industrialists and businessmen who can trace their origins to Gujarat, a small stream of investments started two years ago. Many new investments were announced in the Kutch region, which was declared a tax haven after the devastation caused by the earthquake measuring 7.9 on the Richter Scale on January 26, 2001. The stream turned into a deluge at the "Vibrant Gujarat Global Investor Summit" in January this year, when fresh investments in excess of Rs.1,06,000 crores were announced. Everyone in Gujarat now talks big, whether it is ports, oil and gas, pharmaceuticals, biotechnology, or Information Technology (IT). In every sphere, the State wants to catch up with others and break new ground. The first day of the two-day investor summit as part of the Vibrant Gujarat festival saw virtually the who's who of Indian industry descending on the State capital. On the first day itself, the tally of investment proposals stood at Rs.87,000 crores. By the time the event concluded the next day, 226 memoranda of understanding (MoUs) had been signed by the Gujarat government and different investors. A total of Rs.1,06,000 crores had been pledged by investors, including Reliance, Adani, Torrent, Larsen and Tourbro, Essar and Welspun. Heavy engineering, natural gas and ports were the sectors that attracted the largest number of investment proposals, followed by agriculture, urban development, tourism, chemicals and pharmaceuticals, textiles, gems and jewellery, IT and biotechnology.

The summit was the result of a massive public relations exercise launched by the State government to win the confidence of hard-nosed businessmen across the world. A crack team of State government bureaucrats and well-wishers was on the job under the Industrial Extension Bureau (iNDEXTb), liaising with industry months before the event.

To ensure global participation, five delegations led by senior Cabinet Ministers visited different parts of the world and held discussions with non-resident Indians (NRIs; non-resident Gujaratis are called NRGs in the State) and foreign investors. Many investors and NRIs flew down to participate in the event. Not all of these investment MoUs may translate into real capital flows into the State, but most of the announcements were made by large corporate houses that are responsible to their boards and investors. Also, several announcements were actually about projects that were already in the pipeline. The figure of Rs.1,06,000 crores should thus be seen more as a status of investment plans in the State and not necessarily as the outcome of the Vibrant Gujarat jamboree. The Congress, which is in the opposition in the State, questioned the extravaganza, saying that the actual business conducted at the two-day summit did not justify the high expenditure on the event. But the fact remains that such investments have actually been promised.

As Gujarat pitches itself as the petroleum hub of India, the State government is talking about new exploration ventures, a gas grid and two brand new liquefied natural gas (LNG) terminals to supplement the two already existing at Hazira and Dahej. Public sector companies and private companies, too, have announced a slew of investment proposals in the sector. The State already boasts two large refineries - the Indian Oil Corporation (IOC) runs a five-million-tonne per annum (MTPA) refinery at Vadodara, while Reliance has a 33 MTPA refinery at Jamnagar. Another private player, Essar Oil, is setting up a 12.5 MTPA refinery at Jamnagar. The Oil and Natural Gas Corporation (ONGC) has a large exploration presence in the State.

But more than the bigger national companies, it is the State government-owned Gujarat State Petroleum Corporation (GSPC) that deserves special mention. The company has grown from being an operator of small fields in Gujarat into an emerging petroleum sector giant in just six years. Helped by the opening up of the oil exploration sector, the GSPC has been striking oil and gas with amazing regularity. The company recently announced that it had struck oil in the Tarapur block in Anand district. The GSPC estimates the oil reserves to be in the range of five to seven million barrels, the market price of which is approximately Rs.1,000 to 1,250 crores. Incidentally, the Tarapur field had earlier been abandoned by the ONGC citing insufficient reserves as the reason. The company had earlier struck oil at Dholka in Ahmedabad, where the initial oil in place (OIP) estimates had been put at 50 million barrels. At a conservative estimate of 10 per cent recovery, the oil from this single well alone was expected to amount to five million barrels.

The GSPC also holds the credit for constructing India's first and only land-based drilling platform, in the Hazira gas field in 1998, through which it produces 3.6 million metric standard cubic metres per day (MMSCMD) of gas at present. The GSPC has 21 fields or blocks in the country at present and its gas transportation subsidiary, Gujarat State Petronet Ltd (GSPL), is developing a gas grid across the State to supply gas to various industrial clusters and individual customers.

THE fact that Gujarat has been blessed with a third of the total coastline in the country - 1,600 km - has created several opportunities for port-based infrastructure in the State. Gujarat's port sector has been endowed with unique natural advantages and supporting infrastructure. The State has a legacy of a vibrant port-led economy with a rich maritime history. Some of the best maritime locations in the country exist in the Gulf of Kutch and Cambay. Gujarat boasts 41 ports in the country, the highest number for an individual State. Gujarat's ports handle 20 per cent of India's cargo, and are growing at 22 per cent per annum. The installed port infrastructure in the country stands at 140 million metric tonnes per annum (MMTPA) and the total cargo handled in 2004 was 90 MMTPA. The equation, however, is projected to reverse in the next few years, and even the planned port infrastructure would not be sufficient to keep pace with the rising volumes. A supply gap of over 80 MMTPA has been projected in the year 2018. Gujarat is the only State in the country that has more than one gas producer and two LNG terminals. Anticipating the future demand for gas, the State government is already talking about two more LNG terminals. Good-quality ports lead to the development of port-based infrastructure. Gujarat is one of the leading States in terms of the number of Special Economic Zones (SEZ) approved by the Indian government. Kandla, Mundra, Surat and Dahej have SEZs associated with nearby ports. The upcoming SEZ at Mundra is the first in the country, which is virtually an extension of a port. At Kandla, the SEZ and the port are only minutes away from each other.

The Gujarat Maritime Board has profiled investment opportunities across the port sector. Direct investments are planned in areas such as port construction, warehousing and storage facilities, port operations, stevedoring services and flotilla services. Indirect investment opportunities have been identified in industrial parks, ship-building and repairing, small-scale industries, water parks and tourist spots.

Kandla has been showing the way to the major ports on how a government-owned port can take on the private sector. With private and joint-sector ports mushrooming in its neighbourhood, the lone major port in Gujarat is unfazed. The port claims to offer a value proposition to its users that is difficult for the others to match. To be sure, the port's cargo volumes have been expanding. In fact, on October 26, 2004, Kandla port established a new record of highest single-day cargo in its history when it handled 1.23 lakh tonnes of cargo.

On an annual basis, traffic volumes have been rising steadily in the last three years. In 2001-02, Kandla port handled 377.3 lakh tonnes, which rose to 406.3 lakh tonnes in 2002-03 and further to 415.2 lakh tonnes last year.

The port has embarked on a major expansion plan. After the commissioning of the 11th berth last year, it got equipped for Panamax capability. Work has now started on the Berth Numbers 12 to 14, which would gear it for post-Panamax capability, where ships 240 metres long and with a dead weight tonnage (DWT) of 75,000 tonnes will be able to berth directly. The port already offers a draught of 11.5 metres, which will go up to 13.5 metres by the end of next year. For the past three years, the port has been carrying out massive dredging operations to increase draught.

Just 40 km from Kandla port is Mundra, a joint venture between the Adani Group and the Gujarat government. If Kandla's unique selling proposition is value for money, Mundra would come up as a star example of an efficiently managed private sector port that can respond quickly to market requirements to offer the best deal to its customers. Mundra port has drawn up plans for a modern ship-building and repair yard with a capacity to take in 100 vessels for repairs or breaking in a year. The port will see four new cargo berths in the next couple of years. At present, the port has four berths for bulk cargo and two dedicated container berths that are being operated by the Mundra International Container Terminal (MICT), its joint venture with P&O ports. Construction has already begun on the two berths for bulk cargo.

ANOTHER sunrise industry for the country is pharmaceuticals, where too Gujarat is leading the way, accounting for 40 per cent of the total drug production in India. Gujarat's biotech industry has evolved because of a convergence of the traditional industries thriving in the State. Large pharmaceutical companies such as Alembic, Torrent, Zydus Cadila and Cadila Pharma not only have their production units in the State, but also carry out extensive research and development (R&D) activities. Companies such as Dishman Pharma and Zydus Cadila are trying to make the State a global manufacturing hub by incorporating the latest CGMP (current good manufacturing practices) norms in their units.

As part of its efforts to carve a niche for itself in the biotech sector, Gujarat is actively seeking to attract the private sector and build on the advantage of having a large number of pharmaceutical companies located in the State. Chief Minister Narendra Modi's favourite line on the importance of the biotech industry sums up the State's commitment to the emerging sector: "If IT is India today, BT is Bharat tomorrow."

The state has started work on a Rs.54 crores biotechnology park at Vadodara and has appointed the consultancy firm Ernst and Young to help it identify a private sector partner for the proposed facility. The Central government has committed Rs.15 crores for the proposed biotech park, while the State government will chip in with Rs.27 crores. The private partner will be expected to contribute the rest. The park is expected be operational by the end of financial year 2005-06. The State government has already acquired 40 hectares of land for the first phase of the park and another 200 hectares is available for future expansion. Basic infrastructure such as roads, power facilities and a common effluent treatment plant are already in an advanced stage of construction.

The State Biotechnology Mission is working on a biotech park incentive scheme. While the policy is still under formulation, the Gujarat government is likely to emulate the Software Technology Parks of India (STPI) scheme and grant biotech park status to research facilities of companies that wish to avail themselves of benefits under the scheme. The State is also pitching for a marine biotech park, taking advantage of its long coastline. It has also set up a venture capital fund to help start-up companies to take up specific projects. Gujarat Venture Finance Ltd. has announced a 12-year close-ended venture fund for the biotech sector. The State government has provided the initial funding of Rs.5 crores as seed capital.

The power sector is another area where the State is witnessing a lot of action. Four industrial majors - Adani, Torrent, Essar and Welspun - have pledged investments totalling Rs.12,000 crores in gas-based or lignite-based power projects, assuring self-sufficiency to the State in the power sector in the future.

OF late, Gujarat has been pitching itself as not just an industrial hub, but also as a tourist destination. The State is situated between the two golden triangles of Delhi-Agra-Rajasthan and Mumbai-Goa-Aurangabad. It boasts a host of ancient archeological sites, historic architecture, natural history, religious places, wildlife sanctuaries and handicrafts. While prohibition continues to be a deterring factor for the growth of adventure tourism in the State, it continues to attract a large number of religious tourists to the ancient temples of Dwaraka and Somnath. The Gir National Park is the only habitation of the Asiatic lion. The only place in India where whale sharks visit is the Gujarat coast near Porbandar-Dwaraka. Moreover, Gujarat has a sloth bear sanctuary, a wild ass sanctuary and several lakes that play host to a large number of species of migratory birds. The State offers an excellent road and rail network, a high percentage of urbanisation and a high degree of security.

To return to the theme of resilience, Surat became an international case study after the Surat Municipal Corporation (SMC) launched a massive clean-up drive after the city suffered from an outbreak of pneumonic plague in 1994. The city, known for its diamond cutting industry, became a ghost town overnight. Industry and economy suffered and it was a big blow to the image of the city. The Surat Municipal Corporation swung into action. Scientists said that the two months of continuous rain had precipitated the disease in the city, which had its share of slums and a poor drainage system. Apart from restoring normalcy, the Surat Municipal Corporation gave top priority to the cleaning of dirt and debris, the disposal of carcasses accumulated as a result of the floods, the pumping of stagnant water, the spraying of pesticides, and anti-rodent operations. Cleanliness became the paramount concern. The government realised that a long-term plan was needed to sustain the initial momentum. Within a year, the SMC increased the clearing of accumulated garbage from 50 per cent a day at the time of the plague to almost 94 per cent. An integrated approach was adopted towards sanitation, public health and garbage management. What emerged was a neat and clean Surat, which has since become one of the model cities in the country.

The story of Gujarat would not be complete without a mention of Bhuj, which stands out as an example of the Gujarati spirit of resilience. A casual visitor to Bhuj could actually be forgiven if he/she believes that nothing had gone wrong there. Broad roads, neat rows of spanking new homes, a clean marketplace milling with shoppers - scarcely the picture of a town flattened by a massive earthquake.

Kutch, too, is an amazing story of reconstruction. After the quake, the simpler option would have been to salvage whatever the residents could and continue with the same old infrastructure. But Kutch decided to adopt the more difficult route of rebuilding the towns in the district with proper town planning. And, the results are there for all to see. Bhuj now has three ring roads, including the innermost road that circles Gamthal, or the old walled city. The minimum breadth of any road now is 3.5 metres, as against roads less than two metres wide in the pre-quake era. Nearly 1,000 severely-damaged houses were pulled down, making way for new construction. As many as 6,000 houses had been classified as G-5 or completely destroyed and another 400 as G-4 or severely damaged. In the reconstruction effort, nearly 4,000 new plots have been allotted and construction is complete on nearly 2,500 housing units.

Non-governmental organisations such as Abhiyaan, the Rotary Club and the Kutch Yuvak Sangh have helped in the construction of houses. Multilateral agencies have also contributed, with the Asian Development Bank (ADB) pitching in with Rs.220 crores for infrastructure development and the World Bank providing housing aid of Rs.1.75 lakhs per affected family. The Bhuj Area Development Authority (BHADA), which has been coordinating the rebuilding of Bhuj, stands out as an example of what government agencies can do if they have the will. The BHADA still works out of a makeshift office and all the members of the team get annoyed when things do not happen. So much so, that a BHADA driver loves to take visitors to a small stretch of the outer ring road where the smooth four-lane carriageway suddenly vanishes into a dirt track. The Railways are yet to give permission to widen the road and put up a bigger level crossing. The entire ring road is ready, but for this 50-metre patch. If a small patch of unfinished road can annoy the BHADA staff, one can imagine the way the State feels about its development initiatives.