An Introduction and main features of Gujrat Economy | Gujarat State PSC (GPSC) Preparation: All subjects - GPSC (Gujarat) PDF Download

Introduction to Gujarat's Economy

Gujarat, located on the western coast of India, boasts the longest coastline among Indian states, stretching 1,600 km. It shares borders with Rajasthan, Madhya Pradesh, Maharashtra, and the Union Territories of Daman & Diu and Dadra & Nagar Haveli, with the Arabian Sea flanking it to the west and southwest.

Industrial and Economic Overview

• Gujarat is a major industrial hub in India. In the 2015-16 fiscal year, the state's Gross State Domestic Product (GSDP) was approximately USD 158.2 billion. From 2004-05 to 2015-16, Gujarat's GSDP grew at an average annual rate of around 12.02%. 
• By June 2016, the state had an installed power generation capacity of 30,188.75 megawatts (MW).

Petroleum and Diamond Industry

• Gujarat is recognized as India's petroleum capital due to its significant refining capacity, established by both private and public sector companies. As of December 2015, Gujarat was the second-largest producer of onshore crude oil in India, contributing 24.7% of the nation's total production.
• The state is the largest global producer of processed diamonds, accounting for 72% of the world's share and 80% of India's diamond exports. Additionally, Gujarat leads India in denim production, contributing 65-70% of the country's output and ranking third worldwide.

Infrastructure and Investment

• Gujarat has advanced infrastructure with 45 ports, 18 domestic airports, and one international airport. It is home to 106 product clusters and 60 special economic zones (SEZs). The state is set to attract substantial investments as part of the USD 90 billion Delhi-Mumbai Industrial Corridor (DMIC).
• According to the Department of Industrial Policy & Promotion (DIPP), Gujarat received Foreign Direct Investment (FDI) inflows totaling USD 13.28 billion from April 2000 to March 2016, representing about 4.6% of India's overall FDI. The Vibrant Saurashtra Expo and Summit held in Rajkot in January 2016 saw MoUs worth USD 341.88 million, focusing on various state sectors.

Key Sectors

• Agriculture Produce Market Committees (APMCs): As of December 2015 in the 2015-16 period, Gujarat had 213 APMCs with 213 main yards and 187 sub-market yards operating across the state.
• Textile Processing Standards: The state government has announced initiatives to develop both brownfield and greenfield projects to establish environmentally friendly processing standards for textile units.
• Budget Allocation for Energy and Petrochemicals: In the 2016-17 state budget, the Government of Gujarat proposed an allocation of USD 1.20 billion for the Energy and Petrochemical Department.
• Engineering Output Target: Gujarat aims to increase its share of engineering output from auto and auto components to 10% by 2020, up from the current 3.7%.
• Diamond Polishing: Surat is responsible for polishing eight out of every ten diamonds worldwide.
• Medical Device Park: The Central Government plans to establish a medical device park in Gujarat and aims to start construction before the Vibrant Gujarat Global Summit 2017, with a high-level committee already formed to oversee the project.

Key Industries

• Key Sectors:
  • Agro and Food Processing
  • Dairy
  • Chemicals and Petrochemicals
  • Textiles and Apparels
  • Engineering and Auto
  • Gems and Jewellery
  • Oil and Gas
  • Pharmaceuticals and Biotechnology
  • IT
  • Minerals
  • Ports
  • Power
  • Tourism
• Agricultural Production:
  • Gujarat is a major producer of cotton, groundnuts (peanuts), dates, sugar cane, and milk and milk products. It also leads in tobacco, cotton, and groundnut production in India.
  • Other significant crops include rice, wheat, jowar, bajra, maize, tur, and gram.
  • Agricultural land covers more than half of the total land area of the state.
• Industrial and Mineral Production:
  • Gujarat is one of India’s most industrialized states, with key industries including general and electrical engineering, textiles, vegetable oils, chemicals, soda ash, cement, and petrochemicals.
  • Newer industries include fertilizer and petrochemical production.
  • The state is rich in minerals such as calcite, gypsum, manganese, lignite, bauxite, limestone, agate, feldspar, and quartz sand.
  • Gujarat produces around 91% of India’s soda ash and provides 66% of the country’s salt needs.
  • The state accounts for over 35% of India’s chemical production and 45% of the nation’s exports from Special Economic Zones (SEZs).

Agriculture

• Agriculture is a significant component of Gujarat’s economy, serving as the primary livelihood for many in the state. It supplies essential food grains and contributes substantially to the surrounding regions.
• Challenges Affecting Agriculture:
  • Poor Soil Quality: The soil in Gujarat is often less fertile, impacting agricultural productivity.
  • Inadequate Rainfall: The state experiences insufficient rainfall, which limits crop growth.
  • Frequent Droughts and Floods: Gujarat is prone to extreme weather conditions that disrupt agricultural activities.
  • Fewer Rivers: The limited number of rivers reduces water availability for irrigation.
  • Underdeveloped Irrigation Facilities: Insufficient irrigation infrastructure hampers effective water management.
  • Dry-Arid Climate: The predominantly dry and arid weather poses challenges for consistent agricultural output.

Transportation

• Gujarat boasts excellent transportation infrastructure, supported by both government and private operators. The Gujarat State Road Transport Corporation (GSRTC) is the primary government body responsible for bus services within the state and to neighboring states such as Rajasthan, Madhya Pradesh, and Maharashtra. 
• Additionally, GSRTC extends its public transportation services to the Union Territories of Daman and Diu.

Mining

• Modern Technology and Facilities: Tamil Nadu's mining industry utilizes advanced technology and modern amenities for efficient extraction of minerals and raw materials.
• Rich Mineral Resources: The state is endowed with a variety of mineral resources, significantly contributing to its industrial growth.
• Graphite Reserves: Tamil Nadu has substantial reserves of graphite in districts such as Kancheepuram, Salem, Erode, and Dharmapuri, known for its diverse colors.
• Iron Ore Deposits: Rich deposits of iron ore are found in Salem, Tiruvannamalai, and Namakkal districts, supporting various industrial applications.
• Other Minerals: The state also has bauxite, silica, and clay distributed across different regions.
• Oil and Natural Gas: Tamil Nadu has some oil and natural gas reserves in the sea off Nagapattinam and Ramanathapuram, where the Oil and Natural Gas Corporation (ONGC) operates exploration plants.
• Industrial Impact: The state's extensive mineral deposits make it a key location for heavy engineering, iron and steel, electrical, glass, and cement industries, bolstering Tamil Nadu’s financial strength.

Industries

• Revolutionized Industry: Since its establishment in 1960, Gujarat's industry has undergone a significant transformation in both visual appeal and infrastructure.
• Post-Revival Success: The state's industrial sector has seen continuous growth and development, driven by the proactive efforts of the State Government.
• Support for Companies: The Gujarat Government has played a crucial role in elevating the state's industrial status by supporting both domestic and international companies looking to invest in Gujarat.
• Employment Generation: Gujarat's industries, especially those dealing with cotton and non-metallic mineral products, have created substantial employment opportunities for the local population.
• Future Prospects: Upcoming industries, including petrochemicals, chemicals, engineering, fertilizers, and electronics, are poised to make a significant impact on Gujarat's market.

Tourism

• Diverse Attractions: Gujarat offers a wide array of tourist attractions, including forts, museums, wildlife sanctuaries, temples, mosques, and other points of interest.
• Historical Significance: The state's tourism is enriched by numerous forts and palaces that reflect India’s historical grandeur.
• Notable Forts and Palaces:
  • Pawagadh Fort
  • Dabhoi Fort
  • NazarBagh Palace
  • Kusum Vilas Palace
  • Uparkot Fort

Banking and Financial institutions

• Overview: Gujarat's banking and financial sector provides a range of financial services and operates under government regulation.
• Types of Institutions: The sector includes banks, stock brokers, asset management firms, and other financial businesses.
• Primary Function: These institutions serve as intermediaries between capital and debt markets, channeling funds from investors to companies in need of financing.
• Economic Role: They ensure a smooth flow of money throughout the regional economy, supporting economic activities and development.