With GST, state government need PR push to attract attention, says Alok Kumar Dash
5th April 2017
At a coffee shop in Bengaluru with a friend the other day, the conversation veered towards the state of affairs in the country and the state of Karnataka. He remarked that it was appalling to see governments increasingly wasting taxpayers’ hard-earned money to organise lavish events in the name of attracting investments. More so at a time when crucial sectors like education and healthcare continue to remain largely neglected and under-funded across the country. As a communications professional who has worked on investment promotion campaigns in the past, this was an oft-heard crib in most media outlets and didn’t come as a surprise.
Contrary to what most people believe, the first global investors meet organised by a state government in India was not ‘Vibrant Gujarat Global Investors Summit ‘(VGGIS) organised in Gandhinagar in 2003. In fact, it was the Global Investors Meet organised in Bengaluru back in 2001 under the leadership of then Congress CM Mr SM Krishna1. However, it is safe to say that the success of Vibrant Gujarat (which recently concluded its eighth consecutive edition) made such events mainstream and now many states have emulated this, albeit on a much smaller scale.
In order to understand why such summits were needed in the first place, it may be worthwhile to understand the larger socio-economic and political context. When liberalisation started in 1991, the Centre deregulated many sectors of the economy and made it progressively easier to do business. However, a great many number of factors affecting investments and industrialisation lay with state governments. In order to compete with the industrially-advanced states like Maharashtra, Tamil Nadu and Punjab, other states realised that it is critical to showcase their strengths in terms of availability of land and natural resources, qualified manpower and a proactive government machinery to attract investments. With the Narendra Modi-led government coming to power at the Centre in 2014, there was a conscious push from the Centre to spur healthy competition among states to attract investments and strengthen the pace of economic growth.
Coming to the politics of investors’ summits, it is fair to say that the public knowledge of industrialisation efforts in the pre-summit era was less than ideal. Since state governments had to win elections after every 5 years in order to stay in power, it became extremely important for them to be seen making proactive efforts to create jobs by getting private domestic and foreign investors to set up factories and offices in their states. Even today, private companies setting up offices continues to be a key talking point for incumbent CMs.
From a political communication viewpoint, investors’ summits are mega events that visibly demonstrate the state government’s proactive industrialisation efforts to the citizenry. At the same time, it gives a great opportunity for prospective investors to have a first-hand understanding and deeper engagement with bureaucrats and ministers whose approvals and cooperation is a must to ground investments. These are not just publicity events that are done periodically.
From a marketing standpoint, it would be apt to compare these events with the sales funnel approach. Larger the top line in terms of MoUs signed, greater will be the chances of a better bottom line in absolute terms, provided the government machinery works earnestly and cohesively to ground the investments. Every brand needs to invest in advertising and publicising its offerings to gain top of mind recall. It all costs significant amount of money. Hence it would be naïve to think that investments will flow into a state automatically without spending on marketing.
There has been constant criticism regarding the efficacy of such summits. As per a Mint analysis, 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 Rs. 76 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 2014-15.2 This is not confined to Gujarat alone. The ratio of investments realised to total investments attracted remains anywhere between single digits in a few states to 65.86% claimed by Government of Gujarat which is the highest.3
With GST proposed to be implemented sometime this year, attractive incentives and tax holidays are likely to cease to be the single most attractive proposition for investors. In such a scenario, a truly proactive government machinery across levels (not just at the top) and constant engagement with prospective investors to hard sell the states’ strengths become critical. For instance, Telangana, which was ranked first in the latest World Bank Ease of Doing Business Rankings in 2016 (along with Andhra Pradesh) has started hiring MBA graduates from IIM-A with an aim to start a dedicated investment promotion team that will market the state’s investment potential to investors across the year.4
I think investors summits are here to stay and we will see more states organising them in the coming years. The focus of all the stakeholders – state governments, investors, industry chambers, partner countries and central government – should be on working cohesively to remove the bottlenecks and help build an industrially developed India. That would be a win-win for all.
Alok Kumar Dash is is a Bangalore-based communications consultant. Views expressed here are personal and have nothing to do with his employer or clients.
1 http://epaperbeta.timesofindia.com/Article.aspx?eid=31806&articlexml=The-interview-Ill-apologize-to-Bosch- chief-ensure-07082015005080
2 http://www.livemint.com/Politics/DUArdx5enj9jeu6O2OUVYP/Vibrant-Gujarat-Marketing-gimmick-or- investment-driver.html
3 http://economictimes.indiatimes.com/news/economy/finance/mous-worth-30-lakh-crore-may-be-signed-in- vibrant-gujarat-2017-edition/articleshow/56370261.cms
4 http://www.business-standard.com/article/economy-policy/iim-a-s-students-keen-to-work-on-telangana-s- investment-promotion-programme-116110701143_1.html