There is a corporate look about the state secretariat of Gujarat. Unlike most other state capitals, political | workers of any hue are conspicuous by their absence in ' Gandhinagar. Instead, smartly-dressed business executives from across the country and the world buzz around in the corridors of the state capital. This is what differentiates Gandhinagar from any other abode of power - it looks more like a business district of a metropolis. At the helm of the Gujarat Incorporated is Narendra Modi, chief minister of the state, who has set for himself the goal of making 'vibrant' Gujarat the world's favourite investment destination. For the last two months, he has been globe-trotting, with senior bureaucrats and top business honchos from his state in tow, holding road shows to market Gujarat. Modi appears least worried about the possible adverse impact of global recession on the fourth biennial Vibrant Gujarat Global Investors' Summit 2009. On the contrary, he is looking at converting the global recession into a golden opportunity for India in general and Gujarat in particular. He has a formula to fight recession and claims that, if the 'Gujarat model' is followed, the rest of the country too can progress and prosper. Modi talks to Business India's Daksesh Parikh and Nachiketa Desai about the secret of his magical formula that has helped catapult Gujarat to the number one position as industrially the most advanced state in the country. You must be busy with the preparations of the Vibrant Gujarat Global Investors' Summit, which is less than a fortnight away... Not at all. This time round, I am not spending much time on the Vibrant Gujarat Summit, the way I had done for the summits in 2003, 2005 and 2007. We have now institutionalised the event. Vibrant Gujarat is on auto pilot. I have created a system of governance that has instilled faith among people. Industrial investment in Gujarat will come on its own. My entire focus is now on human resources development. It is said that there is something in the soil of Gujarat, which makes it an industrially advanced state... It is a fact that the people of Gujarat have entrepreneurship in their genes. The role of the government is to proactively provide good governance. We have created a development-friendly environment and infrastructure. Before investing, people would like to be assured of the safety of their investment and its returns. An investor looks at all the factors - social and political climate, the state of infrastructure. He compares Gujarat with other states. It is only when he feels that his investment is safe and would fetch him good returns that he decides to invest. We have created such an environment. How else Gujarat could become the country's top most industrialised state? Gujarat is not bestowed with abundant natural resources. It does not have coal or iron ore. Yet, Gujarat today is the number one manufacturer of steel pipes in the country. The state does not have a diamond mine and yet 80 per cent of the polished diamonds are made in Gujarat. This is only because people of Gujarat are enterprising, there is good governance, transparency, as well as sound financial and physical infrastructure. Does Gujarat have adequate energy resources to fuel its growth? Gujarat will become an energy surplus state by 2012. We had projected the energy needs of the state in 2001 and adopted a holistic approach, which included development of energies - thermal, solar, wind power and bio-fuel. Today, Gujarat has the fastest growing energy sector. With the latest natural gas reserve finds in the Krishna-Godavari basin, Gujarat will soon become the petrochemical capital of the country. Who, for instance, could have predicted that the state-owned Gujarat State Petrochemicals Corporation would start competing with the Oil and Natural Gas Corporation? In 2001, Gujarat enacted the public-private partnership law for commissioning and managing power projects in the state. Today, major projects for power generation are being implemented by large- and medium-sized private companies. We also visualized the world's largest sweet water reservoir project called Kalpasar on the Gulf of Cambay, which will become a pilgrimage centre for all those fighting global warming. With an investment of Rs70,000 crore, the project will not just made vast stretches of barren coastal land of the state fertile, but also reduce the travel time between South Gujarat and the Saurashtra region, thus saving the cost of fuel now being used by trucks and other means of road transport. What impact will the global recession have on the Vibrant Gujarat Global Investors' Summit? Recession, like a tsunami, was bound to impact the Indian economy sooner or later. I had urged Prime Minister Manmohan Singh to convene a conference of all political parties and leaders of business, industry and finance to discuss the possible impact of recession on the Indian economy and measures to tide over the crisis. I had also expressed the fear of dirty money finding its way in a big way into world and national financial institutions. My views on recession are different. I strongly believe that India can convert the global recession to its advantage. This is the time to tell leading global companies to shift their manufacturing facilities to India. India has cost-effective environment such as cheap land and labour. Surely, no big player wants to close down its manufacturing facilities because of recession. They can tide over the crisis caused by recession by opting for more economical ways of manufacturing. This is also an opportune time to make investment in infrastructure development - on construction of roads, ports, airports, industrial estates, power plants. The prices of steel and cement have come down drastically. Take advantage of the situation and implement major infrastructure development projects. Major infrastructure projects would not only help the steel and cement plants remain in business but would also provide employment to thousands of people and keep the economy moving. When the Delhi-Mumbai Industrial Corridor was mooted, Gujarat decided to invest Rs3,300 crore to construct as many as nine horizontal roads to link the hinteland with ports. By the time the DMIC is completed, there would be a network of roads and logistical support system in place in Gujarat for the industries to take advantage of. Global recession has had negligible impact on Gujarat. The fact that we are going to lay the foundation of two SEZs at an investment of Rs25,000 crore each is a pointer to this. If global recession had impacted Gujarat, why would world's biggest manufacturer of railway engines and carriages, the Bombardier, decide to expand their facility near Vadodara and make it into a hub for the entire Southeast Asia? The state has become an attractive investment destination for companies of japan, Korea and Taiwan because of the opportunities the proposed DMIC offers. As much as 60 per cent area of Gujarat falls in the catchment area of the DMIC in which Japan is a major stake-holder. Because of the world-class infrastructure the state offers and good connectivity of DMIC to ports, companies engaged in manufacturing of automobiles and auto ancillary and other export-oriented products are showing keen interest in making Gujarat their hub. If there were an adverse impact of recession, why is that the Tata Motors decided to set up the mother plant of their dream small car Nano in Gujarat and why is there a rush of tenders from multinational companies to develop and manage greenfield ports in Gujarat? It is a matter of pride for us that Japan has chosen to become the country partner of the forthcoming Vibrant Gujarat Global Investors' Summit. You had said that capital is a scarce commodity and that your government will ensure that no industry in Gujarat suffers from liquidity crisis... It is wrong to conclude that recession means shortage of capital. It only means that the capital is stuck somewhere. One needs to change the priorities to overcome liquidity crisis. This no theory I am talking. I am speaking from my own practical experience. When a devastating earthquake hit Gujarat on 26 January 2001, the world thought the people of Gujarat would never be able to stand on their own feet. We proved the world wrong by bouncing back with a vengeance. There was another calamity, potentially worse than the earthquake, the very next year in the form of the collapse of a co-operative bank. In the beginning, just one co-operative bank - the Madhavpura Co-operative Bank - collapsed. But it triggered a chain reaction, pushing over 200 other co-operative banks to the brink. Already, 29 co-operative banks have pulled down their shutters. Co-operative banks form the backbone of small and medium scale enterprises in Gujarat. Had 200 banks collapsed, it would have had more devastating impact on the industries than an earthquake. This was when the responsibility of heading the state administration fell on my shoulders. We took immediate corrective steps. We initiated action against the culprits and put behind the bars those who had embezzled the banks. Strict financial discipline was enforced. We enacted a law barring the directors of the banks from taking loans. This is how we saved ourselves from a financial earthquake. What is the secret of the success of your public sector undertakings? Is it because you don't allow political interference that the PSUs are doing phenomenally well in Gujarat? It is widely said in our country that things go wrong because of political interference. I don't agree with this. We have a democratic system where political input is a must. I have brought about a positive change in the PSUs by taking political action. We should not allow vested interest groups to interfere in the working of PSUs. Today, Gujarat is progressing because we are providing political vision. Things are good because of my proactive political interference. It is my political decision to allow the PSUs to run like any other private business institution. They should be managed professionally. One needs to set out parameters to make them cost-effective. There were two models before us. One is that a PSU closes down because of financial and managerial mismanagement. Either close such a sick unit or privatise it. I gave a third alternative. We should infuse a new life into such PSUs and make them compete with the corporate world at large. The country has now begun to explore this third alternative. Do you plan to dilute the minority stake in the sick PSUs? We have set up a high-powered committee of professionals headed by former IPCL chairman Hasmukh Shah. We will follow the advice of this committee on this matter. Your vision for Gujarat... Gujarat is occupying the number one position in the country in industrial development since last three years. Since inception in 1960, it had never achieved this position. We occupied the top slot only after 2003. Our real strength is vested in small-scale industries. That's why the focus this time of Vibrant Gujarat is on small-scale industries. We want to encourage and strengthen small-scale industries all across the state. I don't believe in developing a golden corridor in a radius of 100 km. For me, the entire Gujarat is a golden corridor. We need to sustain growth. For this, we need to develop our own model in which overall development comprises one-third industries, one-third agriculture and one-third service sector. If all these three sectors achieve balanced development, the strongest of recession cannot slow down the economy. The common man will never be in difficulty. We are trying to achieve this and have almost succeeded in this endeavour. We believe in inclusive growth. We want mass production and also production by masses. This will take the money to the poor. Wealth creation is not the function of the state. The function of the state is wealth distribution. This can be done through value addition. For instance, if a farmer grows mangos and sells them, he earns less. However, he makes pickles and sells them, he earns more. So also, Tomato fetches the farmer less than ketchup. I want to introduce a value addition chain at the grassroots level. Gujarat's 40 per cent population is urban. And the remaining 60 per cent population resides in villages that are fast changing. So, I have come up with the concept of Rurban - Rural Urban - model, in which a village will have the facilities of a city, but the soul of a village. We want to develop this concept so that people do not feel like deserting their village to migrate to cities. The 'Jyoti Gram' project was introduced with a view to provide uninterrupted electricity to villages. This enables a villager to run his TV, computer and iron; and he does not feel the need to flee from his village. We are also focussing our attention on education. We have provided broadband connectivity in rural areas of Gujarat. I want to make use of this for long-distance education. We have hired EduSat (educational satellite) and we will be bringing qualitative change in education by combining broadband with satellite communication. We have completed providing basic infrastructure such as school buildings and recruitment of teachers. We need to now stress on quality of education. In higher education, our focus is on technology. We want to have the most advanced technology. We have introduced new topics such as forensic science, port and SEZ management at post-graduation level. We are soon going to have a forensic science university. We also propose to have a teachers' training institute, which would prepare world-class teachers. We are aiming to have skilled manpower to tap the potential of land, sea and sky. We will have automobile engineers to manufacture and repair automobiles, marine engineers, naval architects and port managers, aviation engineers and pilots. Gujarat would realise the potential of becoming a global hub of all these three sectors - roads and rail, shipping and aviation. ?