Narendra Modi’s Gujarat model

The Left-liberal media’s coordinated attempt to discredit the ‘Gujarat Story’, and thereby seek to question the quality of governance provided under the leadership of Chief Minister Narendra Modi, continues unabated. The world recognises the ‘Gujarat Story’ as one of remarkable economic achievement coupled with social development over the past decade. Hard-nosed investors and cynical industrialists acknowledge the rapid turnaround witnessed by this State on account of radical policy initiatives and their implementation by the Modi Government. Yesterday’s global economic power houses fallen upon bad times today are making a beeline for Gujarat to try and hitch their fortunes to those of this State in the hope that it would lead to a miraculous recovery for them.

All this and more is there for all to see but our blinkered Left-liberal media, controlled by an overweening commentariat dependent on crumbs from the high table of a status quoist and thoroughly corrupt New Delhi Establishment, will just not take note of facts as they exist. Instead, newspapers, journals and news channels continue to peddle fiction that is of a piece with their jaundiced perception of reality. It is a command performance – the morally bankrupt Pied Piper of New Delhi leads; the intellectually bankrupt intelligentsia which dominates the Left-liberal media follows.

Here’s an example of what results from this alliance: An essay, headlined ‘Mirage of development’, published in the latest issue of Frontline, sister publication of The Hindu which has long reduced itself to a competitor of the CPI(M)’s mouthpiece People’s Democracy, by a certain Lyla Bavadam, is a rehash of no-development-in-Gujarat articles that proliferated like mushrooms on the opeditorial pages of newspapers in the run-up to December’s Assembly election. It takes recourse to untruths and half-truths and cites ‘NSSO 2011’ statistics that do not exist – at least as yet because the large sample data has not been released or placed in the public domain.

The article begins with a treacly reference to the woes of a farmer in drought-hit Rajkot and then swiftly, strangely, moves on to how despite all efforts, Gujarat has not been able to attract foreign direct investment. Bavadam then makes the stunning claim that on FDI, Maharashtra tops the list while Gujarat is a lowly fifth. Here are the facts. It is difficult to compute actual inflows of FDI because there is a considerable time lag between the signing of an agreement and the funds flowing in. A study conducted by Assocham and released in August last year shows Odisha tops the list with Rs 49,527 crore in FDI, followed by Andhra Pradesh (Rs 33,936 crore) and Gujarat (Rs 20,258 crore). Chhattisgarh and Jharkhand occupy the fourth and fifth slots. Maharashtra (Rs 12,000 crore) is not even among the top five States.

Statistics apart, the comparison of States in attracting FDI is flawed on account of several factors. Odisha has natural resources that would make it attractive to foreign investors looking at a specific sector. Gujarat lacks those natural resources but has strengths in another sector that may have limited scope for FDI. That would be equally true about comparing Maharashtra and Gujarat – much of Maharashtra’s economy is driven by Mumbai, India’s financial capital, its ports and large industrial base; Gujarat is a late starter with a lower base and no comparable metropolis.

Seen from this perspective, critiquing Modi’s Vibrant Gujarat initiative makes little or no sense. Bavadam says Vibrant Gujarat has failed to deliver big ticket projects and as evidence cites how 8,300 MoUs were signed in 2011 but only 250 fructified into on-the-ground projects, fetching Rs 29,813 crore instead of Rs 20 lakh crore. What is not mentioned is that these are private sector projects; for a variety of reasons MoUs do not necessarily turn into on-the-ground projects; Vibrant Gujarat not only showcases the State’s potential but also offers a platform to industrialists (the who’s who of India Inc attends this programme)  to compare notes and plan ahead. Nor does Bavadam care to record that Japan and Canada were the country partners for this year’s Vibrant Gujarat which is an indicator of how the world views the State’s potential for economic growth and development. It would also be in order to mention that the Congress-led UPA Government in New Delhi had taken the extraordinary measure of scaring potential investors who attended Vibrant Gujarat 2011 by threatening them with income tax investigations (many of them actually received IT notices) that would amount to unwarranted harassment and asking public sector banks not to finance projects envisioned in the MoUs that were signed. Despite these obstacles, Modi has steered Gujarat towards greater investment, including FDI, a credit that he deserves but is denied to him by cussed analysts and commentators.

From this point on, the essay descends into gobbledygook and becomes a mishmash of stray statistics from diverse and disputable sources. For instance, it absurdly compares Gujarat’s per capita income to that of Delhi which is nearly twice that of Maharashtra. Given the low base from which Gujarat started moving forward in the last decade or so, at Rs 52,708 it does not compare unfavourably to Maharashtra’s Rs 62,729. The gap would have considerably reduced – or indeed Gujarat may have taken the lead – if new data were to be compiled. Similarly, it is laughable to claim, as Bavadam does, that Gujarat has an employment problem, basing it on NSSO 2009-10 figures. The NSSO figures show a slowdown for every State, not only in Gujarat, a fact that does not find mention. Three other points have been slyly avoided. First, Gujarat has the lowest unemployment rate (one per cent) among all the States compared to the national unemployment rate of 3.8 per cent as per the Labour Bureau of India’s July 2012 report. Gujarat also has the lowest unemployment among urban women. Second, computing unemployment in rural India is a tricky affair as it really is an issue of underemployment more than employment. Third, the low demand for MGNREGA in Gujarat indicates low joblessness among rural poor.

Bavadam makes a sweeping comment that there has been negligible poverty reduction in Gujarat and that the State has low wages. Planning Commission data shows there has been a steep reduction in poverty in Gujarat with the percentage of people below the poverty line declining from 31.6 per cent in 2004-2005 to 23 per cent in 2009-10. The reduction in rural poverty has been spectacular – from 39.1 per cent to 26.7 per cent in five years. As for wages, it would be best to wait for NSSO 2011 large sample data (no, Bavadam, it is not yet out). But what can be said with certitude is that market wages in Gujarat are high and there is, contrary to what Bavadam claims, low immigrant labour competing for jobs and pushing down wages. Here too one must factor in Gujarat’s low wage base from where it has steadily increased.

The critique of Gujarat’s social development indices in Bavadam’s nothing-good-about-Gujarat essay is flawed on several counts. Take, for instance, malnutrition. It makes little sense to target Gujarat alone for malnutrition when it is a countrywide phenomenon and a national problem. The difference is that while the issue goes unnoticed and unattended in States like Uttar Pradesh, in Gujarat there is a sustained effort by the Modi Government to identify and address specific problems related to malnutrition – or, for that matter, education and child welfare. At 886, there has been a remarkable turnaround in Gujarat’s sex ratio with Modi personally leading the campaign for the girl child and to empower women through diverse means. There has been more than a perceptible fall in infant mortality rates (at 41 lower than most States) with the introduction of pre-natal and post-natal medical assistance and care provided by the State Government; fresh data would push Gujarat’s performance on this front to the top.

Economist Bibek Debroy, whose book ‘Gujarat: Governance for Growth and Development’ was recently published, has summed this up pithily: “One of the building blocks of the Gujarat model, so to speak, is to free up space for private sector expenditure in capital formation. One cannot expect capital expenditure, as a share, to increase overnight. The bulk (76 per cent) of capital expenditure is developmental, with social services accounting for 55.2 per cent. Of the total expenditure, 66.41 per cent is also developmental; 63.2 per cent of revenue expenditure is developmental. To the extent this reveals a prioritization according to sectors, the major ones are education, sports, art and culture and water supply, sanitation, housing and urban development, in that order.”

On Wednesday, the Modi Government presented its Budget for 2013-2014. Some of the salient features of the Budget proposals that would be relevant in the context of Bavadam’s bizarre all-is-bad-about-Gujarat essay, merit mention:

 »  75 per cent rise in planned allocation for Labour and Employment Department Budget;

»  5,000 new seats to be added in ITIs and new ITIs in tribal areas to be opened this year;

»  48 new English medium primary schools to be opened; 18 of them in tribal areas;

»  Chief Minister Scholarship Fund to be set up to provide financial support to need students; and,

»  22 hospitals to have special infant care and nutrition care units.

For a fair and unbiased understanding of the ‘Gujarat Story’ we should read it with an open mind and look at the State’s performance against the backdrop of the low socio-economic base from where it started its journey to rapid growth and spectacular development. The ‘Gujarat Story’ is a story in the making, much like the Thousand-and-One Nights, not a story that concludes here and today. Noted economists Jagdish Bhagwati and Arvind Panagariya of Columbia University make this point in their new book ‘India’s Tryst With Destiny: Debunking Myths that Undermine Progress and Addressing New Challenges’: “Gujarat inherited low levels of social indicators (at independence) and it is the change in these indicators where Gujarat shows impressive progress. The literacy rate has risen from 22 per cent in 1951 to 69 per cent in 2001 and 79 per cent in 2011. The infant mortality rate per thousand has fallen from 144 in 1971 to 60 in 2001 and 41 in 2011.”

Anybody reading the ‘Gujarat Story’ with an open mind would see it is a story of immense success that inspires hope and determination to achieve greater success. But an open mind is something that is alien to our Left-liberal media and the intellectually bankrupt commentariat that controls publications which lay greater stress on fiction over fact.

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