Demolishing The MODI Myth

Since, the independence of this country, Gujarat has been one of the states in the forefront with respect to development and more so in the last three decades. Even before the pre-liberalisation period Gujarat was counted amongst the developed states, based on different economic indicators. During the liberalisation period, the state showed consistent growth. During the tenure of Congress Chief Minister – Chamanbhai Patel – Gujarat registered 15.4% growth rate while in the Modi regime, between 2001 and 2011, it registered 10.3% growth rate. The growth in Gujarat in the last three decades has also shown a healthy balance between the agriculture, industrial and service sectors; while, nationally, bulk of the growth in recent years has come from the service sector. The growth rates are suggestive of the fact that, the growth trajectory of Gujarat is not Narendra Modi’s ‘success’. 

After economic reforms, Gujarat doubled its growth rate from 3.67% to 7.41%. After Modi became CM,, growth rate picked up from 7.41% to 10.28, a step-up of about 40%. But, in the same time, Maharashtra was able to step up its growth from 6.39% to 9.90%; that is a step up of about 55%, narrowing the gap with Gujarat. Most other states did just as well. Now, in the last five years, states like Andhra Pradesh and Tamil Nadu have more or less equalled Gujarat’s growth rate while, Maharashtra has actually raced ahead at 10.34% to Gujarat’s 9.34%. Based on the NDP values of 2010-11, Bihar emerges the clear winner. Gujarat not only fares much worse than Bihar, but also worse than Andhra Pradesh, Maharashtra, Haryana and Tamil Nadu. Going by these numbers, we can conclude that, a) the big jump in growth rates – for all states – came after the economic reforms and must not be attributed to any particular chief minister’s tenure; b) in the decade that Modi has been CM, Gujarat has done well, but so have other states. In fact, some have closed the gap with Gujarat, mainly in the last five years.    

One of the successes of the Gujarat Model under the Modi regime is said to have been the fact that Modi cuts an investor-friendly picture. In private investment, Gujarat is the third most popular destination for investors, after Odisha and Chhattisgarh. So, even though Gujarat is one of the states on the top rungs, it is not the first or a ‘miracle’ state, as is claimed by the ardent advocators of Modi as the next Prime Minister of India. It is also interesting to note that, foreign direct investment is not the highest in Gujarat but rather Maharashtra leads that list while; the former comes in at the fifth position. According to the Government’s own “Socio-Economic Review, Gujarat State, 2011-12”, the promised investments in 2011 were over Rs. 20lakh crores, but, only about Rs.29, 813 crores was actually invested. In the same year, of the more than 8,300 MoUs signed, only about 250 became a reality. The share of projects implemented and under implementation has come down from 73% in 2003 to 13% in 2011. 

Gujarat is said to have enjoyed ‘investor confidence’ in the last three decades. An important factor that supposedly strengthens investor confidence is ‘peace’ in the industrial relations or less labour unrest and the belief in the state’s administrative capacity to control any undue disturbances and maintain industrial harmony at all times. But, in the Economic Survey of India, 2011, Gujarat was listed as the ‘worst’ state for labour unrest. The strikes and lockouts were carried out demanding better wages, bonus, personnel, indiscipline, violence and financial stringency. 

A top expert with the Carnegie Endowment for International Peace, a foreign-policy think tank with centres world over, has strongly disputed those who tout Gujarat’s growth over the last decade as exemplary, whether it is foreign direct investment, overall investment in the economy or governance, the state has been an average performer. 

At the cost of sounding clichéd, Gujarat’s development must be compared with two sides of a coin. Though, the share of investment in the state is reasonably high, its ranking in employment associated with this investment is relatively low. Gujarat might rank first in terms of direct industrial license, but ranks seventh in employment; on the other hand, in Tamil Nadu, the numbers are reversed. It ranks seventh in investment in Industrial Entrepreneur Memorandums (IEMs) but tops in the country in its share of creating employment from this investment. 

Another example maybe the fact that, the manufacturing sector in Gujarat has done very well, the sector has grown faster than other states in the country but this growth rate hasn’t brought about commensurate benefits of employment. 

It is also pertinent to point out here, that in the last five years, the average annual agricultural growth rate in Gujarat has doubled, while the employment growth has been negative. This probably has to do with the fact that, the Modi Government largely focuses on corporatisation of agriculture. This caters to the interests of big farmers’ lobby, ignoring the interests of the small and marginal farmers. 

The rapid growth of Stat Domestic Product (SDP) in Gujarat has been accompanied by a very low increase in wages, implying that, whatever growth and development has been achieved in Gujarat, the workers did not get the benefits of this development. In spite of the remarkable growth in agriculture in 2007-08, Gujarat slipped in ranking with respect to male wage rate and stood 14th while, 8th in case of female workers among 20 major states in India. The daily wage rate of casual male workers in Gujarat is lower than in India as a whole and so, it is not surprising that, Ahmedabad has lowest labour cost among major cities of India. The wage bill for industry in Gujarat only constitutes about 2.42 % of the invested capital. Another factor responsible for the bleak state of affairs of labour force in Gujarat is, the Labour Commissioner’s Office – body responsible for implementing labour laws and protecting labours’ interests – has been reduced in its strength, both in numbers and powers. So, it is but obvious that, the Gujarat’s governance is meant basically to appease the corporate sector to the detriment of the common people. 

According to the state government’s own data, between April, 2000 and June, 2012, the number of poor families in villages increased by 39.06%. Also, in spite of being the fastest growing state during 2004-05 – 2009-10, Gujarat slipped in its performance in poverty reduction. Between 2004 and 2010, the state had 8.6% reduction in poverty; this was greater than the national average of 7.4%.  Between 2010 and 2012, poverty reduction came down to 6.4%, now below the national average of 7.9%.  But, the worse figures are probably the following – between 2004 and 2010, Gujarat’s poverty reduction rate was higher than as many as 8 states while, the number of states which saw a higher poverty reduction in the 2010-12 period, went up to 10 out of 20 major states. 

Gujarat’s global hunger index (GHI) is comparable with that of Zimbabwe, Tanzania and Haiti. This makes Gujarat one of the hungriest states, fifth from the bottom, in a group of 17 major states. The malnutrition levels in Gujarat are higher as compared to other States including Uttar Pradesh. Child malnutrition levels in Gujarat are the same as in Chattisgarh and Orissa. A recent UNICEF report states that “almost every second child in Gujarat is malnourished and three of four are anaemic. One mother in three in Gujarat struggles with acute under-nutrition”. According to the Government of India’s Children in India report (2012) infant mortality rates considered one of the basic indicators for social advance, is high in Gujarat at 44 per every 1000, giving it a low rank of 11 among States. While the vibrant Gujarat summit showcases infrastructural development as being a priority, Gujarat has a very poor record in infrastructure for the poor. The vast majority of the rural population is denied sanitation and water facilities with 67 per cent having no access to toilets, only 16.7 per cent have safe drinking water.

The irregular nature of Gujarat’s ‘development’ under the Modi regime has more or less been established. This irregularity is also evident in the sustained high level of poverty among tribal communities, despite Gujarat’s faster economic growth. The tribal community has been bypassed in the process of poverty reduction. A little bit more than one-third of the tribal population (34.3%) in rural Gujarat is poor. The Muslim community in Gujarat also fares badly on parameters of poverty, hunger, education and vulnerability on security issues. The Muslim community which, at one time was dominating the diamond and textile industry, has been pushed behind. Poverty of Gujarat Muslims is 8 times more than high caste Hindus and 50% more than OBCs. 12% Muslims have bank accounts but only 2.6% of them get bank loans. They are also subjected to high levels of discrimination, even on the roll out of NREGA.

Gujarat today is a rich state with poor education and health outcomes. An evaluation of key education indicators over time reveals that the state’s improvement in terms of literacy rates has been sluggish as compared to other states. The state fell from being fifth to seventh for both 6 years and above and 6-14 years age group among 15 major states between 2000 and 2008. Also, in Gujarat, the disparity in literacy rate of the unreserved or general category and the overall literacy rate is higher than the national average, and also higher than states like Haryana and Maharashtra.

In the public health sector also, Gujarat paints a sorry picture. It ranks tenth 10th in the rate of decline in infant mortality rate (IMR). Also, the rural-urban IMR gap remains unabridged with no change in the ratio between 2000 and 2010.  In 1998-99, the incidence of under-nutrition in Gujarat was lower than the national average across all social groups but disturbingly, in 2005-06, under-nutrition worsened in comparison with the national average. The state ranked 9th with respect to health, in 1990-95 but it fell to 11th position in 2005-10 – and all this when the overall growth rate continues to soar. 

All the above data is believed to have very methodically and successfully demolished the belief that, Narendra Modi is imperative to the ‘miraculous’ economic development of our country much like the feat he is said to have accomplished in Gujarat. These facts also negate the mythical existence of the so-called ‘Gujarat Model’ which, based on all above figures, can be very aptly compared to a slice of Swiss cheese.