Image: ET Now Digital
One of the defining facets of the BJP’s deceitful politics is its audacity to claim even its most bitter failures as great successes. While all the indicators of growth have plummeted under the policies of the Modi government — right from demonetisation to the lock down during the Covid-19 pandemic –the well-oiled propaganda machinery of this regime continues to claim that India is at the peak of growth graph under Modi. All statistics exhibiting facts to the contrary are either concealed or dismissed as a “foreign conspiracy”.
The BJP government in Karnataka is headed by Mr. Basavaraj Bommai who, too, is a faithful follower of Modi, especially in this respect.
Take for example the recently concluded Global Investors Meet (GIM) in Bangalore. The Bommai government hailed the summit as a “booming success” in terms of investment(s) promised and the jobs that could be created. Chief Minister Bommai even went to the extent of claiming that this time the conversion rate of investment assurances made would reach a whooping, unprecedented 80% which is unheard of not only in India but also in any emerging economies.
Figures put out by different ministries at different times, however, betray these claims of the chief minister. Recent assessments of investor confidence and the global economic situation by the finance ministry of the GOI, the SBI’s own economic review, the RBI and the IMF –to name only a few—show how the claims of the Bommai government just fall flat.
The success of the much tom-tommed GIM should be and could be tested on three counts.
1. Investment Promised
2. The Crucial Conversion rate of these promises and finally
3. Jobs Expected to be created.
1.Investments:
Claim: 9.82lakh crores of investment promised in the three days of GIM
Fact: Only 1.57 lakh crores of investment were promised during GIM
The GIM was held in Bangalore from November 2-4 for three days. This was the fourth GIM in Karnataka after the first edition that was held in 2000 under the Congress government headed by SM Krishna.
Mr. Murugesh Nirani, the minister for the Large and Medium industries claimed that at the end of the three days GIM 2022, the total of investments promised reached Rs. 10 lakh Crores (9.82 lakh Crores to be precise). Therefore, the chief minister declared the GIM to be a resounding national success. The media also faithfully reported that the three day GIM itself attracted 10 lakh crores of investment which reflected not only the industrious spirit of Karnataka as a destination of global investment but also the industry-friendly regime of Bommai government.
But how much investment was attracted by the GIM precisely?
In fact, before the GIM all the ministers of this government, including the chief min ister had estimated an investment of around Rs 5 lakh crores in the three days of the GIM. How come, then did the amount proclaimed swell to twice the expected figure?
The devil of truth always lies in the details. In fact, a closer study of the statements made by the ministers themselves and the numbers provided itself reveal the truth. The government gave a break-up of the numbers after the summit. According to which around Rs 8.25 lakh crores worth investment assurances were made prior to GIM from January 2022 until November 2022 when the GIM was held.
Besides, according to minister Nirani, in another press note, only Rs. 1.57 lakh crore assurances were made in the three days of the GIM and only two memorandum of understanding (MoUs) actually signed.
Thus the Bommai government in a typical Modi way, combined the old figures and the new (recent ones) together and declared that a total of Rs 10 lakh crores of investments were assured during the three day-long event!
Even out of Rs 8.25 lakh crores that was “assured” since January this year, a whooping 60% , around Rs 5.5 lakh crores has not even crossed the MoU stage which is only a non-binding declaration of interest. The balance Rs 2.5 Lakh crores has received “in principle” approval by the high level committee, which is also not qualitatively different from a non-committal binding .
Hence it is clear that the GIM itself has attracted only Rs 1.57 lakh crores in investment and with only two MoU being signed despite the three day-long global fanfare. Which, according to the Government’s own expectation, would mean only 30% of the expected Rs 5 lakh crores of assurance projected to be received from the GIM . Which, in turn means that the GIM was a 70% failure! This is a very poor performance when compared to the previous GIMs where in 2010, Rs. 3.94 lakh crores were assured, Rs. 7 lakh crores projected in the GIM of 2012 and a Rs 3.05 lakh crore assurances during the GIM days of 2016.
By whatever standard applies or yardstick, the Bommai-led GIM was a colossal failure and not a resounding success.
2. Conversion Claims
Claims: 80% of the assurances will be converted to reality.
Facts- Given the global and national economic situation and the prevailing investors’ confidence hardly 5-10% realisation might be possible.
Generally the GIMs generate enthusiasm in the Government and not in the investors. The pragmatic and profit oriented private capital would like to invest only in markets where there is a possibility of “Highest Returns in Safest Heavens” as one CEO remarked a few years before.
The process of conversion of assurances in the GIMs to actual investments starts from the MoUs which is the First Stage. The next stage is the concretisation of the proposals from both the investors side and the Governments side, i.e., the Statutory approvals stage , where even if red-tapism is avoided by the political leadership, would take 8 to 9 months. Even then it is non-binding stage. The third stage is of allotment of land and other resources to the satisfaction of investors. Even then, the fourth stage of commissioning and production would take place if only the capital flight does not take place to a more greener pastures.
Thus hardly few percentage of the approvals would only be realised. In the last three GIMs the conversion rates were only 14%, 8% and 15% respectively that too from the MoU to the third stage. There is no credible and consolidated figures for the fourth stage for any GIMs!
But now according to Union Finance Ministers own admission, the investors’ confidence is lacking even after providing tax rebates and Production Linked Incentives (PLI). Since there is no demand recovery in the economy, even after the Covid the private capital is not confident in making new investments or expanding the old.
At the international level there is no boom for commodity or agricultural market. The IMF has predicted that there would be a recession for the next two years.
The 70% fall in the expected assurance of investments in the present GIM can only be attributed to this gloomy investors’ confidence and the depressing economic atmosphere.
Thus it is but logical to expect that there would be a 70% fall in the conversion rate from the previous average of 10% which is only 3-5% and not 80% as claimed by the Bommai government.
3. Job Creation
Claims: More than 6 lakh jobs would be created
Facts: No basis . Exaggerated claims
On the job front too, the Bommai government claims that the GIM would lead to the creation of 6 lakh jobs, a lakh more than the earlier expectation since the capital flow is more than expected.
As already discussed the investment assurance in the GIM is Rs 1.57 lakh crores and over all assurance put together since January amounts to Rs 9.82 lakh crore. Out of which more than 75% of investment assurances are still in MoU stages and not even reached the second approval stage. Given the investment confidence it would be safe to expect that hardly 5-10% will reach the production stage that too after few years. Which means one can only expect a realisation of less than a Rs one lakh crore of investment.
Secondly more than 40% of assurances are in the Green Hydrogen and Renewable energy sector. While the green hydrogen sector is highly risky, capital intensive industry providing fewer jobs per capita investment, the renewable energy sector is hardly a job providing industry. According to a study by Azim Premji university while every Crore Rs of investment created 90 jobs in 1983, in 2018 it created hardly 9 jobs. It is even fewer, less than one job, in capital intensive industry like Green Hydrogen and renewable energy industry.
On both the counts hardly few thousands of jobs could be expected to be generated if and when the assurances are converted to investment and reach production after few years.
That apart, the BJP government has brought amendments to land acquisition laws and has created a land bank of more than 50,000 acres to give away to industries. Even though it claims they are non-cultivable land there are hardly any such land in the state. Even the government land categorised as Kharab or waste land is today being cultivated predominantly by the landless Dalits without being granted a proper ownership record to date. The new amendments by the BJP government empowers the district administration to acquire such land for industrialisation (and snatch away livelihoods of the landless peasants).
In Karnataka the average land holding is less than 0.44 hectares. Which means at least 2 to 3 lakh people are dependent on the 50 thousand acres of land going to be acquired from these marginal farmers. This would destroy their lives and livelihood. Thus the net job creation by the GIM would be negative.
Earlier, GIMs and big ticket investments have been proved to be a big real estate land scam in the name of industrialisation.
Clearly, the GIM 2022 is being used as a big political GIMMICK by Bommai lead BJP government to bail out itself from the prevalent image which is heavily tainted by corrupt administration, scams and communal polarisation and social unrest.
Views expressed are the author’s own. The author is an activist and freelance journalist who was also a columnist for Gauri Lankesh’s publication.
Other pieces by Shivasundar:
Mohan Bhagwat and Indian Muslims
Bharat Jodo pragmatism of the Congress & illusions of the progressives
Adani’s capital Modi’s power in Sri Lanka
Modi’s eight years: Eight acts of shameful disgrace
How a state suffocated by Saffron got a new breath from Blue
Never Ever Forget