In 2003 Narendra Modi became the first chief minister to hold a state-level investor conclave called Vibrant Gujarat Global Investors Summit (VGGIS). These summits helped a lot in building his image as an administrator who could attract investment and hence bring development. Many states have emulated this practice since then. With this year’s edition of Vibrant Gujarat scheduled from January 10 to 13, speculations are rife whether investment announcements would exceed the 2015 level of Rs25 lakh crore.

To be sure, not everybody buys these figures. The opposition has in the past raised allegations that only a fraction of investment announcements made in VGGIS are actually realized. Such allegations have been refuted by corporate houses, as was reported in a Mint story recently.

How credible are the investment announcements made in VGGIS? The Socio-Economic Review of Gujarat for 2015-16 says that 57% of all MoUs/Investment Intention approved during Vibrant Gujarat Summit 2003 to 2015 (as on October 2015) have been commissioned or are under implementation, but no further details are provided.

A Mint analysis shows that even half of the investment announcements made in VGGIS might not have been realised. Here’s why. If all proposed investments in VGGIS between 2003 and 2015 were to be combined, the state has witnessed an investment commitment of over Rs76 lakh crore. For the period from 2003 to 2011, Vibrant Gujarat website has the data for investment announcements made in VGGIS. For 2013 and 2015, media reported figures have been used to arrive at the total figure from 2003 to 2015. This figure is around 40% more than the combined GSDP of Gujarat between 2003-04 and 2014-15.

GSDP figures are supposed to be a sum of consumption, investment (both government and private) and net exports. So it is clear that investment announcements in VGGIS are gross exaggerations.

Given the fact that GSDP statistics do not give estimates on capital formation, it is difficult to ascertain the exact amount of capital formation in a state.

Mint has used Centre for Monitoring Indian Economy’s (CMIE) Capex numbers to get an idea about the investment scenario in Gujarat.

A look at trend for new investment announcements in Gujarat shows a big spike in investment announcements in Gujarat in quarters when VGGIS is held. No such trend is seen for all-India figures though.

Are these investment commitments actually realised? It does not look like that. Gujarat is behind many states in terms of share of investment projects completed in investment announcements made, shows CMIE data. In absolute terms, however, Gujarat has seen the highest value of both new investment projects announced as well as completed between 2002-03 and 2015-16.

Gujarat is one of the most industrially advanced states in the country, and hence it is to be expected that it would attract more interest from investors both at home and abroad. The excitement around VGGIS is probably a result of the state’s already existing industrial accomplishments, rather than it being the other way round.

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