November 28, 2017

Modi’s Gujarat Model of Development: A Reality Check


Narendra Modi website
Modi on a podium

India Prime Minister Narendra Modi (Former Chief Minister of Gujarat)

New York – Narendra Modi rode the wave of Gujarat Model of development in 2014 to catapult himself to the most powerful office in India. The social media campaign, most probably waged with the help of Madison Avenue agencies, that heralded the State’s economic performance nothing short of spectacular and credited its success to the visionary leadership of Narendra Modi started years earlier.

Is the “Gujarat Model” of development a myth or reality?

As the Gujarat state elections scheduled for December are only a few days away, it is an imperative that the voters are better informed and the cloud of doubts that is hanging over the claims and counterclaims be removed.

Maitreesh Ghatak, a professor at London School of Economics, characterized as such: “Gujarat is a proverbial case of darkness under the lamps.” According to an article written in Scroll.in, “Over the years, the high growth figures have covered up a dark underbelly of poverty, inequality and poor performance on human development indicators” said Ghatak.

To Gujarat’s credit, the World Bank has listed it as the top state on the ease of doing business. In the early 90’s, during the Congress rule, Gujarat has been at the forefront regarding both level and growth rate of income as well as infrastructure development.

However, an analysis of social data reveals the true underbelly of Gujarat, which is far behind other States in Human Development Index. If states are ranked in terms of people below poverty line, Gujarat is No.13 and has made it quite obvious that the prosperity from the high growth rate is not trickling down fast enough to make any substantial difference.

Looking at other social indicators such as Infant mortality rate and life expectancy, Gujarat ranks 17th and 10th respectively. In terms of sex-ratio, Gujarat is at 21st and in literacy, it ranks at 7th. Overall, if states are compared on the Human Development Index, Gujarat only stands at number 10. If one examines the entire period in which Modi was the Chief Minister of Gujarat, these numbers more or less remained the same.

On the other hand, a study conducted by Bangalore-based NGO Public Affairs Center rates the three south Indian States Kerala, Tamil Nadu and Karnataka as the best-governed states in India. The ranking was done by the Public Affairs Index computed on ten equal parameters including human development, law and order and basic infrastructure.

In a story on the State of States awards reported by India Today, Kerala grabbed the number 1 position as the best state topping three categories such as Law and Order, Health and Environment. It topped all States in categories for Literacy, Life Expectancy, Infant Mortality and Sex-ratio. Tamil Nadu was reported to be the most improved state in eight of the ten categories and developed into an innovation-based economy with a strong performance in Manufacturing and Services.

Even when it came to economic growth, states such as Maharashtra, Tamil Nadu, and Haryana increased their growth performance by a bigger margin than Gujarat. Modi may have a higher rate of economic growth than the national average, however, he may not stake any claim to the fame as it has also been true during the pre-Modi era. Why then there are no Maharashtra or Tamil Nadu models of development?

If the high economic growth and development does not translate into the better living conditions for its ordinary citizens by creating more jobs, increasing their wages, improving educational opportunities for the poor and the disadvantaged or providing better healthcare to its citizens and in general succeeding in poverty reduction as a goal; what is there to boast about? It might have been at best simple “crony capitalism” favoring a group of powerful people with capital-intensive industries that did not generate necessary jobs for the masses.

When it comes to infrastructure development, one needs to take a look at the borrowing the Government has been engaged in the Modi-era. When Narendra Modi stepped into the State’s Chief Ministership in October 2001, Gujarat debt stood at roughly around 53,000 crore rupees ($8.23 billion). When he left his post to become the Prime Minister, the public debt of the state was 165,000 crores ($25.62 million). These figures once again question the much acclaimed “Gujarat Model” of development especially considering all the ongoing social upheavals in the state particularly among the Dalits and the Patidars.

In today’s Gujarat, 49% of the children are malnourished, and 6 million Gujarati youth including 80% of the engineering graduates are unable to find suitable jobs, and the unemployment rate stood at around 6.8% which is above the national average. As a matter of fact, conditions in Gujarat have only deteriorated for the workers in both rural and urban areas. The major increases in the agricultural income that was accounted in the growth story in the previous years appeared to have leveled off. Meanwhile, small and medium-size (SME) industries suffered heavily under the disastrous demonetization policies and half-baked implementation of the GST. The state also has seen the closure of more than 60,000 small scale industries in 10 years and a massive mounting of debt.

Although much of the nation and the majority of the Diaspora have bought into the “Gujarat Model” story in 2014, there was plenty of early skepticism, including from this very author (http://www.pravasi.com/varthaFull.php?newsId=65667). However, the opposition parties including Congress were unable to capitalize on the available information from Gujarat government’s own Department of Economics and Statistics.

According to Alpesh Thakor, leader of “Ekta Munch” in Gujarat who has once announced plans to boycott the vibrant Gujarat Summit at Gandhinagar, “Vibrant Gujarat was always media hype and a flawed model of Gujarat was highlighted as the development model.”

The “Gujarat Model” of development was a mythical and fictitious tale that is not in sync with the reality. It was primarily the result of the large incentives given to big corporate houses in terms of land, water, and other resources with little regard to environmental concerns or even adverse fiscal consequences that almost left the state treasury almost empty to spend on uplifting of masses from basic poverty and inequality.