People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 20

May 19, 2013


Gujarat Growth Story: Myth and Reality


Balchandra Mungekar


WHEN any region of the Indian Union makes a remarkable progress in any of the areas, say, economic development, or improvement of human conditions that is nowadays known as Human Development Index, it is a matter of gratification for the entire nation; because, in the end, it adds to the overall progress of the nation.  But when the success story is deliberately so much inflated that the rest of the people tend to believe what, in reality, is an illusion. The growth story of Narendra Modi’s Gujarat is a case in point. The reason for singling out Gujarat is that, of late, Modi is projected in every possible way as a Vikas Purush (man of development), whereby the better-doing states remain unduly overshadowed. 


Let me begin with growth of industry. During the period from 2001-04, the average rate of net state domestic product (NSDP) in industry for Gujarat was 3.95 per cent, and for 2005-09, it was 12.65 per cent.  During these two sub-periods, the same rates for Odisha were 6.4 and 17.53 per cent; for Chhattisgarh – 8.10 and 13.3 per cent; and for Uttarakhand – 18.84 and 11.63 per cent. Thus, so far industrial growth is concerned, all three hitherto industrially backward states have far surpassed Gujarat.


Of late, Foreign Direct Investment (FDI) is a crucial determinant of industrialisation. In this respect, too, Gujarat has not been a leading state. For instance, from 2006 to September, 2010, Gujarat signed MOUs worth Rs 5.35 lakh crore with employment potential of 6.47 lakh people. But Maharashtra with Rs 4.20 crore worth MOUs, expects employment generation of about 8.63 lakh people.  Tamilnadu is still a better example. With capital investment of Rs 1.63 lakh crore, the state is expecting 13.09 lakh employment opportunities. The story of Chhattisgarh and Odisha is the brightest. Chhattisgarh has MOUs worth Rs 3.61 lakh crore and Odisha worth Rs 2.99 lakh crore more than Gujarat. And that too, without much fanfare and mind-boggling industrial summits.


Credit-deposit ratio is considered as one of the major indications of economic development. Gujarat is far behind the other major states. For instance, in 2010, Gujarat’s share in total deposits of the scheduled commercial banks was 4.70 per cent, as against 5.42 per cent of Andhra Pradesh, 6.20 per cent of Tamilnadu, 6.34 per cent of Kanataka, and 26.60 per cent of Maharashtra, ie, six times higher than Gujarat. The same holds good for the relative shares in total credit disbursed by these commercial banks and credit-deposit ratio. The figures for Gujarat were 4.22 and 65.28 per cent, respectively; while for Maharashtra, Karnataka and Taminadu these were: 29.75 and 81.30; 6.71 and 76.93; and 9.61 and 112.65 per cent, respectively. The figures of per capita deposit and per capita credit for Gujarat were: Rs 37, 174 and Rs 24,268. At the same time, the figures for other states were: Tamilnadu: Rs 42, 580 and Rs 47,964; Karnataka: Rs 49,598 and Rs 38,154; and Maharashtra: the staggering level of Rs1,10,183 and Rs 89,575. Even Kerala did better than Gujarat with Rs 43,890 and Rs 27, 912.


In terms of per capita income, in 2011, Gujarat ranked sixth among major Indian states with PCI of Rs 63,9961, after Haryana (Rs 92,327), Maharashtra (Rs 83,471), Punjab (Rs 67,473 ), Tamilnadu (Rs 72,993) and even Uttarakhand (Rs 68, 292).


Gujarat cannot take pride in tackling the issue of poverty either. For instance, according to the official statistics released by the Planning Commission, though Gujarat did better than Maharashtra and Karnataka, the two states that were born along with Gujarat in 1960, with their respective total poverty (both rural and urban taken together) levels (head count ratio) of 38.1 and 33.4 per cent, it lagged much behind Kerala, Punjab, Himachal Pradesh and Haryana, where poverty levels were 19.7, 20.9, 22.9 and 24.1 per cent respectively.  The level of poverty level in Gujarat was 31.8 per cent.


With respect to three important social variables, viz, life expectation at birth (LEB), mean years of schooling (MYS) and school life expectancy (SLE), Gujarat is far behind some other states. For instance, as the NSS data show, in Gujarat, the LEB during 2002-06 was 64.1 years and it ranked the ninth among major Indian states. In the area of MYS during 2004-05, it ranked the seventh; and in the area of SLE, it was again at the ninth place. With respect to all these three variables, states such as Kerala (everywhere first),Maharashtra, Himachal Pradesh, Punjab, Haryana, Tamilnadu and Karnataka did much better. 


With respect to HDI, Gujarat’s story is devastating. For instance, according to government of India’s Economic Survey, 2011-12, the HDI for Gujarat, in 2008, was 0.527 and it ranked tenth among the major Indian states. Kerala stood the first (HDI: 0.790), Himachal Pradesh (0.652), Punjab (0.605), Maharashtra (0.572) and Haryana (0.552). The Economic Survey also gives the three components of the HDI, viz. income, health, and education index. With respect to all these three components of the HDI, Gujarat does not present a shining story at all. For example, in the case of income index, Gujarat ranks the fifth with index 0.371; while Kerala ranked the first with 0.629, followed by Punjab (0.495), Himachal Pradesh (0.491), and Haryana (0.478). In the case of health, its index was 0.633 compared to 0.817 of Kerala, 0.717 of Himachal Pradesh, 0.667 of Punjab, 0.650 of Maharashtra, and West Bengal, and 0.637 of Tamilnadu. The same was the story about the education index. The state fares poorly with index of 0.577 vis-ŕ-vis 0.924 of Kerala, 0.719 of Tamilnadu, 0.715 of Maharashtra, 0.624 of Punjab, and 0.622 of Haryana.


Gujarat also suffers from all sorts of inequality.


The UNDP has recently developed methodology for adjusting HDI against inequality of income, education and health and given separate country-wise indices of without and with inequality. Every country suffers on this count as the inequality-adjusted indices are lower than those without inequality.


Some researchers have adopted this methodology and estimated Indian state-wise HDIs with and without inequality with respect to income, education and health. Without adjusted against inequality, these HDIs were higher than Gujarat for the states like Haryana, Punjab, Tamilnadu, Maharashtra etc. When adjusted against inequality with respect to income, education and health, for Gujarat, the index numbers were 0.413, 0.243 and 0.475, respectively. For Kerala, the same were: 0.449, 0.410 and 0.764, respectively; and for Punjab: 0.445, 0.265 and 0.572, respectively. Inequality-adjusted HDIs with respect to education and health were higher than Gujarat for the states such as Maharashtra (0.279 and 0.562), Himachal Pradesh (0.287 and 0.527), Tamilnadu (0.278 and 0.550). Thus, inequality with respect to income, education and health is higher in Gujarat than some of the major states in the country.


In certain areas, the matter is still worse. For example, according to ‘India State Hunger Index 2008’, Gujarat is shockingly ranked 13th among 17 big states and worse than Odisha. Gujarat is only above Jharkhand, Bihar and Madhya Pradesh, which are globally equal to the hunger situation in Ethiopia.


One of the indices of poverty, prevalence of anemia, is very revealing on this count. The percentage of women suffering from anemia has risen from 46.3 per cent in 1999 to 55.5 per cent in 2004 (Third round of National Family Health survey report 2006) among women. Amongst children it rose from 74.5 per cent to 80.1 per cent. Some of the reports point out the conditions of dalits and women has deteriorated during last decade. The conditions of the Muslims and tribals are not better either.


Now the last point. All states are annually getting financial assistance from the central government for undertaking various development activities. For instance, the Planning Commission gives grants for central sector schemes, centrally sponsored schemes, and towards central assistance to the state plan on the basis of certain criteria and considerations. On the basis of my personal experience of working in the Planning Commission as its member for a five year period from 2004-09, I had an opportunity to interact with Modi during finalisation of annual states plans in the Planning commission. During the three-year period from 2009-10- to 201-12, Gujarat got from the Planning commission total financial assistance worth Rs 23,179.23 crore for the above-mentioned schemes. In addition to this, under the resource sharing as per the recommendations of the Thirteenth Finance Commission, the finance ministry, for the years 2010-11 and 2011-12, transferred total resources worth Rs 24, 653.69 crore.


Thus, the growth story of Gujarat presented supported with the official data prove contrary to what Modi has all along been claiming. And what is surprising, probably everyone in the country has accepted the myth of Gujarat growth story as a reality. It is therefore imperative that Modi no longer remains unduly complacent with illusion and corrects the distortions in the interest of the people of his state. Earlier the better.


(The author is a nominated member of Rajya Sabha and former member of Planning Commission and former vice chancellor of University of  Mumbai)