The ‘Gujarat factor’ in the development project
The Vedanta-Foxconn deal has sparked claims of favouritism, reviving old rivalries. In the spirit of federalism and fair competition, the Centre should nurture a level playing field for all states
From the country’s most powerful politician to one of the world’s richest people, no Indian state comes close to matching the political and economic clout of Gujarat in the past decade. Ever since Prime Minister (PM) Narendra Modi stepped on to the national stage, all roads seem to lead to and from Gandhinagar. This opens up an intriguing question: Is the disproportionate influence in policymaking wielded by netas and bureaucrats from Gujarat at the Centre leading to favouritism in key decisions affecting states?
The answer might lie in the snowballing controversy over the Foxconn-Vedanta $22 billion semiconductor project setting up base in Gujarat, instead of Maharashtra. In the last week of July, Maharashtra chief minister (CM) Eknath Shinde informed the assembly that the coveted project, which is expected to provide thousands of jobs, was set to come to Maharashtra, even writing an official letter to the companies with a proposed signing date. So, what changed in six weeks? Vedanta chairman Anil Agarwal has clarified Gujarat was chosen a few months ago but that in July, Maharashtra made a massive but unsuccessful effort to get the project; the Opposition has pointed to a high-level meeting in early September between the project principals and the PM, and the fact that Gujarat goes to the polls soon.
The nature of the decision, especially in the context of the tangled Gujarat-versus-Maharashtra relationship, threatens to reopen wounds, both past and present. Recall that the formation of the two western states in 1960 emerged from a bitter — even bloody — conflict over the geographical division of the old Bombay state. While entrepreneurial Gujaratis have contributed to the wealth and prosperity of Mumbai, an element of sibling-like rivalry between the two state leaderships has always existed. Maharashtra’s linguistic and regional “Big Brother” assertion was reflected in the Samyukta Maharashtra movement, and later, in the rise of the “sons of the soil” Shiv Sena crusade.
In the last decade, the tables have turned politically and economically. When earlier this month, on a visit to Mumbai, Union home minister Amit Shah urged Mumbaikars to defeat the Shiv Sena in their “own home” in the forthcoming civic elections, he was seen as driving a knife into a wounded tiger. The hostile takeover of the Sena-led coalition government by encouraging a rebellion against the Thackeray family has only stoked fears among the Marathi manoos (common man) that a Modi-Shah-led Bharatiya Janata Party (BJP) is undermining Maharashtrian asmita (self-respect). The frequent visits of CM Shinde to Delhi to seek clearance on Cabinet formation has only reaffirmed the perception of Maharashtra’s remote control being held by Gujarat’s intimidating “jodi #1”. In that sense, the timing of the project announcement couldn’t be more politically sensitive.
Moreover, while Maharashtra had a headstart as an economic powerhouse, Gujarat has gradually challenged its larger neighbour as the preferred investment destination in recent years. In 2020-21, Gujarat received the highest foreign direct investment (FDI) among all states, while Maharashtra was pushed to second. In 2021-22, Gujarat slipped to sixth as Karnataka climbed to the top, but that might be a temporary blip. While Gujarat’s political ascendancy has contributed substantially to its economic upsurge, states such as Maharashtra must also introspect. The Enron power project in the 1990s — once seen as an exemplar of the early liberalisation blueprint — was mired in allegations of bribery and corruption, leading to re-negotiation and a severe credibility crisis for Maharashtra Inc.
More recently, several key infrastructure projects have been stuck because of fiercely competitive politics; the bitter fight between the Shiv Sena and the BJP over the Aarey metro car shed development is a classic example. Where a stable single-party rule in Gujarat over the last 25 years has ensured swiftness and confidence in decision-making, coalition experiments in Maharashtra have led to uncertainty, compromises and delays in project execution.
But while Gujarat can take pride in its economic resurgence, the much-hyped Gujarat model is driven by an excessive centralised approach, not in sync with the plural character of Indian federalism. In his Independence Day speech, the PM called for “cooperative competitive federalism” where states seek to outshine each other on the development front. But fair competition demands that the Centre nurture a transparent, level playing field and not a partisan political environment skewed in favour of double-engine BJP-ruled states, as alleged by some states. States should compete for investment based on objective economic factors.
Opposition-run states believe they are on notice from central agencies and being routinely destabilised. The overarching political ambition to create an Opposition-mukt (free) Bharat might be part of the BJP’s quest for long-term supremacy, but it also creates more friction points of suspicion and resentment, instead of genuine cooperative federalism. It can be argued that Gujarat gets precedence even in non-business matters. Why, for example, are major global leaders encouraged to visit Gandhinagar in preference to other capitals? Modi, as Gujarat CM, was CEO of his state; as PM, he is the captain of Team India.
Post-script: There is a personal angle to the complex Maharashtra-Gujarat equation. My late grandfather was a Maharashtrian, a 1943 batch Imperial Police officer from Bombay state, who was coerced into shifting to Gujarat by Morarji Desai because the new state in 1960 had a shortage of senior police officers. Then, his shift from Maharashtra to Gujarat was a rare one. Today, as Gujarat rules the roost, who can say no to anything India’s dynamo state wants?
Rajdeep Sardesai is senior journalist and author
The views expressed are personal