Exposed: Arvind Kejriwal’s lies about Gujarat SME sector


Last week Senior BJP leader Arun Jaitley remarked that if Goebbels is alive today he would be in Aam Aadmi Party (AAP). His assertion is spot on. Joseph Goebbels, the propaganda minister of Nazi Germany, believed that If you tell a lie big enough and keep repeating it, people will eventually come to believe it. Arvind Kejriwal is the modern day Joseph Goebbels. He tells big lies and keeps repeating them. Unfortunately, Indian media parrots the lies spread by Arvind Kejriwal without doing fact-check.

From the past couple of months Arvind Kejriwal has been ranting about Small-medium enterprises (SMEs) in Gujarat.  He said SMEs in Gujarat are in the pathetic state, and are closed down. He even shot an “open” letter to Narendra Modi in which he asked:

In the last 10 years almost two-third small industries have shut down in Gujarat. We found that in a small place like Mehsana alone 140 of the 187 small industrial units have shut down. under such circumstances, what is your model of development? Will you shut down all small, medium industries in the country and handover industry in the country select business houses?


He repeated the same lie in Maharashtra, Delhi, and Uttar Pradesh. He repeated it again and again in various fora. No one in the media challenged this blatant lie. Kejriwal doesn’t have even an iota of awareness of how industry actually works. He pontificated that nearly two-third of small-medium industries have shut-down in Gujarat in the last 10 years! He didn’t bother to quote his source. He even says 140 out of 187 small industrial units have shut-down in Mehsana alone. Here again he didn’t quote his source. If two-third of SMEs are really shut down then the industrial production index of Gujarat would have plummeted to abysmal levels. There would have been unprecedented recession, massive unemployment levels, chaos, and unbelievable misery in Gujarat. Even in recession hit Greece not more than 28% of SMEs were closed down. But Kejriwal has no qualms in saying that nearly 2/3 of SMEs were shutdown in Gujarat.

No doubt that Kejriwal is under delusion that the entry of Tatas, Birlas, Ambanis and Adanis in Gujarat will lead to exit of existing SMEs. By definition, if the investment in plant and machinery is less than 2 Cr, 5 Cr and 10 Cr then we call it Micro, Small,and Medium enterprises respectively. So SMEs play predominant role in sectors like food processing, pharmaceuticals, textile and garments, furniture, gems & jewellery, retail and other services. Moreover as per law certain items are reserved exclusively for small scale and cottage industries . The large scale enterprises are prohibited from manufacturing such items.

If TATA has set-up its NANO auto plant it will not harm the SMEs in anyway because No SME manufactures motor cars. TATA is not in competition with any SME in Gujarat. On the contrary, hundreds of new SMEs flourished in and around the TATA Nano factory as ancillary units which supply spare parts to Nano. Similarly, Ford, Maruti, Suzuki, GM, etc will help SMEs. The large scale industries are complementary to SMEs. If Ambanis, and Adanis develop SEZs, ports, refineries, power plants etc it will naturally help SMEs to prosper, after all, better infrastructure, logistics, electricity etc are lifeblood to the SMEs.

In 2006-07 Gujarat had around 3 lakh registered MSMEs. By 2011 it rose to over 400,000 registered SMEs employing more than 18,00,000 people. The SMEs are the backbone of Gujarat model. Gujarat contributes around 15% of operational MSMEs in India. As per ISED Small Enterprise Observatory, Gujarat stood first integrated overall performance of SMEs at the national level. According to the Fourth Census of SMEs done by Govt of India, Gujarat stands first in terms of the asset base of the SME sector. There has been a phenomenal reduction in the number of closed units from 22.04%(2001-02 3rd MSME survey) to 12.27%(2006-07 4th MSME survey). And as on 31st of March 2012 the percentage of closed SMEs came down further to just 5%.


 Arvind Kejriwal claimed 140 of 187 small units were shut down in Mehsana. He is nowhere close to the figure.  The new SMEs once start commercial production are  required to file EM-II form with DICs. As per Central Government’s MSME Annual Report 2012-13,  the growth rate of SMEs in india is 19.06% (2.37 lakh new units in 2011 to 2.82 lakh new units in 2012), while in Gujarat the growth rate in 85%!!( 27,939 new units in 2011 to 51,781 new units in 2012).

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Gujarat has 83 identified SME clusters. 56.13% of SMEs are located in the clusters with an employment contribution of 48.92% The duty on electricity is waived off in these clusters if they have common power source. The Gujarat government provides cash subsidies, cheap loans, assistance for technology acquisition, patent tracking, quality up-gradation etc. A 54,000 hectare Special investment region(SIR) was already under process in Dholera area. Industrial Estates and Parks(IPs) are developed. Several Special Economic Zones(SEZ) are developed to boost the export turnover of SMEs. ( Read more: SME policy of Gujarat Government). Gujarat Government organises SME Conventions (as part of Vibrant Gujarat Summits).

In the recent Vibrant Gujarat summit (2013), Out of 17,719 investment intentions signed during the summit, 12,886 investment intentions came from the SME sector.  The MSME sector accounted for 28 percent of the Gross State Domestic Product in 2011.