So, it’s official now. Till the other day, Gujarat Chief Minister Narendra Modi would have liked you to believe that the post-Godhra riots had absolutely no impact on investments in the state.On Monday, a rattled Modi issued stern warnings to Gujarat Industrial Promotion Board (GIPB) officials that their ‘‘performance’’ would be taken into account in their confidential reports (CRs). The provocation: a Centre for Monitoring Indian Economy (CMIE) report that there was virtually no Foreign Direct Investment (FDI) in the state from September 2002 to March 2003. Modi, who heads the GIPB, told the officials bluntly: ‘‘It’s time for officials to impress upon (prospective investors) the Government’s incentive-oriented approach to the industrial development in the State.’’Rattled by a huge loss to trade and industry in the wake of post-Godhra riots, Modi had announced the setting up of GIPB at a meeting he had at Gandhinagar on April 11, last year, with presidents of various chambers of commerce and industry and representatives of the Confederation of Indian Industry (CII). The CMIE report indicates that between March and August 2002 there were 36 proposals for FDI, which declined as the months passed. In March 2002, proposals worth Rs 888 crore were received. This sharply fell to Rs 101 crore in May, and further to a paltry Rs 53 lakh in July, before rising to Rs 5.25 crore in August 2002.FDI fell the most during periods of worst rioting, with the seige of the arterial National Highway 8 by mobs that looted and burnt vehicles not lost on the world. What also stood out was the burning of a batch of Opel Astra cars from the General Motors factory in Halol.But during Modi’s Gujarat Gaurav Yatra — a precursor to the election campaign — he had time and again said the violence hadn’t affected investment. His favourite examples were British Gas and Shell — though these companies had pledged investment much before Godhra.And early this year, when the law and order situation was raised by industry captains Rahul Bajaj and Adesh Godrej at a CII meet in New Delhi, an angry Modi had asked them to mind their own business. Only recently did Modi cool down — after a virtual apology from CII.The industry — the spat with Modi fresh on its mind — is reacting guardedly to the CMIE report. Rajeev Singh, head of the Gujarat chapter of CII, which has mended fences with Modi and is now offering suggestions to improve industrial investment, simply refused to comment.And GCCI president Mahendra Shah was wishy-washy: ‘‘There are several reasons for FDI slowing down. I can’t pinpoint any one. The report itself doesn’t give any reasons.’’ Dr Bakul Dholakia, director of the Indian Institute of Management, Ahmedabad, said it was premature to link FDI fall to law and order. ‘‘The report indicates that FDI started decreasing after August, by which time there was demand for elections in September. It is a general phenomenon that FDI is put on hold when elections are happening, whether it is in the country or state,’’ he said. ‘‘But yes, it would be a very serious matter if this continues.’’Prof V P Bhardwaj, head of the economics department of Gujarat University, put it differently. ‘‘All events that occurred in the last one year have cast a shadow over investment and development works in the state,’’ he said. ‘‘The situation created an environment that was negative for FDI and potential investors either backed out or completely bypassed the state.’’ But he said the situtation now is such that ‘‘we can look forward to positive developments in the second quarter.’’
