We were sitting in the office of the CMD of a midsized Company in Mumbai. While we were discussing some important matters, his Secretary came in and requested him to take an urgent call from the Head of his Factory in Gujarat. He apologised for the interruption and took the call. After speaking for some time, he narrated the gist of the conversation too.
The Factory Head was seeking his permission to travel to Ahmadabad, on the next day, for attending the Vibrant Gujarat meet. He was being pressurised by the Gujarat government officials to attend the meet and also to execute a MoU that promises a project involving investment of Rs 1,000 Cr! The CMD was agitated and asked how he can agree to sign such a MoU without clearing it from the Head Office, that too when there are no such projects planned or funding available. However, the Factory Head reassured him that even the officials are aware of it and only they want to complete the quota of amount targeted for the meet.
We had a good laugh on the games that politicians play to get media coverage. A Factory Head could enter into a MoU with Government of State with such casual manner, fully knowing that the MoU is non-binding on his Company and his Company was not in a position to implement the projects included in the MoU.
Readers would appreciate that I can’t share the names of the persons or the company involved, for obvious reasons. However, having read the news about Income Tax Department issuing notice to the Government of Gujarat to find out about the details of all major investment proposals, and BJP protesting against the Notice in the Parliament, this incident came back to my mind and I am sharing it with you.
I do not know if the IT Notice will be of any use at all since many of the proposals could well be like the one I narrated above. A MoU is merely recording an understanding and therefore not binding on either party. If the proposed projects have to take off, it will be according to the extant rules including rules relating to Environment, foreign Direct Investment, Industrial licensing etc.
However, it would be interesting if the concerned Government issues a whitepaper on the details of all MoUs executed in these Meets along with the current status of each proposal. At least that will reassure the people that these MoU s are not fake MoUs, unlike the fake encounters allegedly carried out by the same Government.