In Gujarat public funds are committed to supporting private investment.( From livemint SUN, APR 06 2014. 07 29 PM) This does not benefit the poorEven more pertinent are the terms on which Gujarat attracts private investment. Its gold standardreputation as an investor-friendly government derives from the alacrity with which it provided land for Tata’s small car factory, contrasted with long futile years of bitter public struggle in West Bengal. A right to information application revealed that the Tata investment was Rs.2,900 crore, and the state government awarded it a loan of Rs.9,570 crore at 0.1% rate of interest, repayable on a monthly basis after 20 years. In addition, it received land at much cheaper than market, and the state paid stamp duty, registration charges and electricity. It has been calculated that the total subsidy element of the cheap car is half its total market price. This is the basic template of the policies of Modi’s government for other large industrial houses as well. Economists such as Indira Hirway question whether this is good governance or crony capitalism. It turns on its head welfare principles of taxing the rich to provide a better life for the poor: the Gujarat model is of taxing the poor to subsidize the super-rich. Sood also worries about the implications of completely handing over both investment and decision-making regarding all new infrastructure projects—ports, highways, rail—to profit-led large industry, and that Gujarat now has among the worst records of labour unrest among states in the country.
Posted on: Mon, 07 Apr 2014 02:56:14 +0000