Business-Friendly Gujarat Under Narendra Modi: The Implications of a New Political Economy

In Gujarat, close relations between a robust business community, politicians and the bureaucracy crystallized at an early date and survived under the Nehruvian system. In the 1990s, Gujarat liberalized its economy more quickly than most other states. In the 2000s, the economic policy of the new chief minister, Narendra Modi, gave a new dimension to the state’s business-friendliness because it benefited SMEs, the entrepreneurial basis of Gujarat, less than large corporate houses. This “model” had implications not only for the economy (as evident from the problems that the SMEs started to face—as well as the exchequer for fiscal reasons), but also for the society (big firms need fewer workers than SMEs), the polity (grand corruption was a corollary of this pattern), and the environment (big companies were allowed to breach rules and regulations in that domain too). These issues are illustrated by relations between Narendra Modi and Gautam Adani.