Gujarat is no torch bearer

The ascendance of Narendra Modi to the national scene has evoked passionate responses, either supporting his candidature for PM or foretelling disaster for a nation. Those supporting him, see him as a saviour for a country badly in need of good governance.

Those critical, apprehend danger to the secular fabric of the county given his unapologetic stance on the Godhra killings in 2002.

Further, they find him receiving more media applause than what is due to him, as the economic success of Gujarat is more a product of the entrepreneurial instinct of its people than Modi.

How has Gujarat actually performed under the leadership of Modi?

Growth Performance

The growth of State Domestic Product in Gujarat during 2000-12 was 9.6 per cent, the highest among all States. This overall growth came from agricultural growth of 6 per cent and 10 per cent growth recorded by both industry and services during 2000-12.

The high growth has led to an increase in Gujarat’s share in combined SDP of all States from 6.6 per cent during 2000-03 to 7.4 per cent during 2004-08 and 7.8 per cent in 2009-12. Its contribution in combined SDP growth also increased from 8 per cent in 2000-03 to 8.7 per cent during 2009-12.

Manufacturing accounts for around 28 per cent of the output in Gujarat, one of the highest (next only to Goa) among all states.

Notwithstanding its very good record on growth front, critics of Gujarat’s development model point to the poor social achievement in Gujarat. Modi counters this criticism on the ground that though social achievements have been less than economic performance, Gujarat has made considerable progress on the social dimension during his tenure.

It would be fair to assess both these assertions so that we get a clear picture of the Gujarat’s development experience under Modi’s leadership.

Measure of progress

Progress in social and economic infrastructure can serve as a basis for such assessment. This author has created a composite infrastructure index capturing both the social and economic dimensions to study Gujarat’s performance vis-a-vis the for 17 other States during the period 2000-01 to 2009-10. (Misra, 2013 (forthcoming) Revisiting Regional Growth Dynamics in India in the Post Economic Reforms Period ).

The economic infrastructure components considered are water, electricity and road and the social dimension of infrastructure are health and education.

Water access is considered through gross irrigated area as a proportion of gross area under cultivation. Similarly, electricity access is measured through per capita electricity consumption, roads by surfaced road length as a percentage of total road length, health by infant mortality rate and education by literacy rate.

For each infrastructure indicator, the index for a particular State in a given year is computed as in case of the human development index.

In arriving at the composite index, the composite indices need to be given weights. Since water is a primary player in agriculture, electricity in industrial production and roads in services, the relative importance of agriculture, industry and services in the state domestic product were considered as weights, respectively, for water, electricity and roads.

Social infrastructure was directly measured through literacy and infant mortality rate and the two were given equal weights.

Finally economic and social infrastructure indices were given equal weights in the composite index.

Gujarat’s Record

It is observed that Gujarat had the first rank in economic infrastructure in 2000-01 which slipped to third rank by 2009-10. It had the seventh rank in social infrastructure in 2000-01 which did not change in 2009-10. In terms of overall infrastructure, Gujarat’s rank slipped from second to fifth.

Thus, seen in a relative context, Gujarat has actually fared worse in 2009-10, compared to 2000-01, both in the provision of social and economic infrastructure.

Empirical estimates indicate that social infrastructure has a larger influence on growth than economic infrastructure. Given its poor record in social infrastructure, one doubts the sustainability of Gujarat’s high growth.

NDA versus UPA

NDA lost the election plot in 2004 when its slogan of ‘India shining’ was challenged by the equally catchy slogan aam aadmi of the Congress. The NDA regime helped the economy to steer out of the East Asian financial crisis in 1997-98, without much collateral damage, though growth remained subdued.

Further, the NDA had taken concerted efforts in privatising many of PSUs and had initiated the National Highway Development Project.

The UPA-I reaped the benefits of the stable macroeconomic conditions created under NDA. The economy grew smartly during the first term of UPA also benefiting from the buoyant world economy.

Growth during UPA-1 provided resources to finance welfare measures. However, economic policymaking took a back seat during UPA-1. Weak economic policy during UPA-1 coupled with the externalities from the global financial crisis has led to lacklustre performance during UPA-II.

The dismal economic performance is an outcome of inaction in economic policy making, emboldening of the civil society armed with the Right to Information Act and the severe erosion of governance both during UPA-I and UPA-II.

Irrespective of who forms the next government, sound economic policy needs greater attention than populism. Further, the Gujarat model of development cannot be the torch bearer as it ignores the social dimension and hence, is not sustainable.

(The author is Acting Dean, Xavier Institute of Management, Bhubaneswar. The views are personal.)

COMMENT NOW