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Riots destroy Gujarat economy

The continuing violence in Gujarat that recently entered its third month has not only created havoc among Muslims of the state, but also state's economy. In fact the unabated violence has taken its toll too badly on the state economy that has been one of the fastest growing economies of the nation. Gujarat's annual economic growth far surpassed other states and national average with around 7.5-8 percent annual growth. The national economy has been far sluggish when compared to this prosperous state with annual growth rate of only around 5.5 percent. 

Though the BJP government in the state and at the centre has been claiming that riots will not affect the Gujarat economy, indications are that the state may be heading towards a major economic breakdown. Riots have severely dented India's image in the industrial circuits. Not only the factories hotels and other business establishments owned by Muslims have been targeted, even Multinational companies have also faced the ire of the Sangh rioters and have suffered major losses. The loss in the plant of the automobile major General Motors in Halol near Godhra alone is estimated to be in millions of dollars. The whole plant was set on fire destroying dozens of luxury cars that were ready for delivery to the showrooms. There are rumors that the company is weighing the option of shifting out of the state. General Motors was planning to further invest Rs 1000 crore in its second generation investment. 

Industrialists from both India and abroad are increasingly shelving their plans of expansion and fresh investments in the riots ravaged state. Ballarpur Industries has three plants in Kutch and Vadodara and was planning to further invest Rs 1400 million in Gujarat. Now it has put its expansion plan on hold. Gautam Thapar managing director of Ballarpur Industries says, 'the reaction of the government has left much to be desired. The state has to provide at least minimum of services...it cannot discriminate on any condition. We have lost our right to call ourselves a democracy.' TATA group chairman JJ Irani says, 'Multinationals will stay away as for them Gujarat and Bihar don't matter, it is India as a whole. The secularism we were all proud of has blown away. It is a failure of the administration.' Several NRI's have also shelved their plans of investing in Gujarat after the outbreak of violence in the state.

The same panic was seen among the organizers of annual summit of Confederation of Indian Industries (CII). Not only the industry leaders who met in New Delhi on 26-27 April snubbed the government by inviting Leader of the Opposition in the Parliament Sonia Gandhi instead of Prime Minister Atal Behari Vajpayee to inaugurate the two day summit they also organized a full fledge session on Gujarat riots during the CII summit. Two clear signals emerged from the summit which was the most political than any event organized by the Confederation. The first signal was that India's image as a stable, democratic and liberal country has taken a beating. The other was that a section of the Indian industry that had gravitated towards the BJP and the RSS over the years is now preparing for a new regime at the centre. 

Anu Aga chairperson of Pune based Thermax Ltd. who is also the chairperson of CII Western Region under which Gujarat falls said, 'there was great brutality and inhumanity. If there was governance, would violence have continued for two months?' She recently toured the state extensively including the most affected areas of the state. She also said, ' Gujarat represents the failure of the political and administrative machinery in protecting human lives.'

Newly appointed president of the CII Ashok Soota said, 'if normalcy is not restored and corrective steps are not taken it would have an adverse impact.' He also said that Gujarat is a human tragedy and added 'some people have tried to justify while stating that there would be no impact. There has been an impact and more than anything else each life lost was valuable.'

Meanwhile the industry in Ahmadabd, the state capital and other major cities is incurring huge losses. CII's Ahmadabad office has estimated that the industry is incurring a daily loss of around Rs 500 crore-Rs 350 crore as the turnover of the organized sector and Rs 150 crore in unorganized sector. CII also said that the state is also losing Rs 120 crore in sales tax and octroi and Rs 200 crore in excise every week. The daily retail business in the state is estimated to be worth Rs 100 crore. It is also facing the brunt. 

Hospitality industry has been the major loser in the state. Reports show that around 500 hotels have been destroyed in the state. RM Kaul regional manager of the National Insurance Company Limited in Ahmadabad says that a large number of Muslim restaurants were insured by his company in Ahmadabad. As many as 38 of them were gutted in the initial days of the riots. It is the number of restaurants insured by only one company and in one city alone. There are several others and figures are just trickling in.Ahmadabad is one of the three important centres of Gold trade in the country besides Jaipur and Mumbai. Now with the continuing curfew in the city the gold traders are incurring major losses. The estimates say that the loss in Gold business alone is around 20 percent. 

Transport business in the state has also suffered tremendously. Muslims who owned major transport companies have either lost all of their fleet or have been able to save just a few. It is said that in Panchmahal district alone 1000 trucks owned by Muslims were torched. Muslims not only owned transport companies but they also controlled the ancillary industries in the trade too. Now with their not being able to open their workshops other transporters are also not able to continue their business.

'Of 50 vehicles I have managed to put barely 15 back on the road' says Nimesh Patel honourary secretary of All Gujarat Truckers Association. A large number of drivers are Muslims and with their security concerns other transporters are unable to continue their operation. 

The way Gujarat riots are affecting the industry in other parts of the state could be gauged by the panic among tea industry of Assam and North East. The communal frenzy in Gujarat has robbed the state's tea industry of its best customers. Between 30 and 40 percent of the tea produced in the state goes to Gujarat and is then smuggled to Pakistan for distribution in West Asian countries. Buyers from Pakistan purchase truckloads of tea at auction centres in Gujarat and Punjab and smuggle these out through the porous border. 'We have not had a single buyer from Gujarat since the beginning of March. If the trend continues for a few weeks more the industry will be down in the dumps' says KK Saikia, an upper Assam based tea planter.
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