Fiscal incentives and industrialisation: the case of Kachchh, Gujarat

Kachchh had suffered a major earthquake in 2001, resulting in extensive destruction of the area and a large number of fatalities. The economic activities had come to a standstill. In order to regenerate the economic activities and employment in the district, industrial development was promoted by offering fiscal incentives. The central government had extended a waiver of excise, and central sales tax and the State Government offered other significant fiscal benefits like waiving of state sales tax and extending capital investment subsidy. This paper describes the growth of the industry in the region during the incentive period. It explores if the location-based fiscal incentives have led to attracting investments to the region on a sustained fashion. The consequences of this development on the local livelihoods, employment and environment have also been studied. We have relied on personal interviews with various stakeholders, unpublished data from the industries department and other published data and literature for the analysis.