'Gujarat model'

Fiction and facts

Print edition : April 04, 2014

Members of a farming family plough a field in preparation for sowing cotton seeds in Kayla village, 70 km from Ahmedabad in July 2011. Rural communitiesin Gujarat remain outside the pale of development. Photo: SAM PANTHAKY/AFP

From a protest march against the land acquisition policy of the government, in Gandhinagar on March 17, 2011. Photo: AMIT DAVE/REUTERS

CAG reports and data on economic and social development from various sources make it evident that the much-touted “Gujarat model” of development is non-inclusive, socially divisive and highly ineffective in key areas.

NARENDRA MODI AND GUJARAT ARE THE pivots around which the 2014 elections in India are being contested. At least, so it appears if you see the print and the visual media in India. How far this is true for the real Indian voter, spread across diverse social, physical and economic geographies, is difficult to tell. But notwithstanding the uncertainty of what ultimately works in the Indian voter’s mind before she presses the electronic voting machine’s button, one thing that is certain is that this election is significant for the sheer transformations against which it is being contested. The backdrop is ultra-nationalism and the 2002 massacre of Muslims, unbridled access of big business across political groupings and an ominous union of economic liberalism and Hindu nationalism, masquerading as the grand governance model of Gujarat.

Interestingly, while miles of footage is being devoted to the governance style and the economic model of Gujarat, the real issues of development are not part of the election debate. There is no discussion in these elections around strategies for poverty reduction or improvement of health care or access to housing and sanitation, etc. No contestant is making an effort to convince the electorate that his economic thinking will bring better jobs to so many vulnerably employed informal workers in comparison to his opponents’. Clearly, there is an implicit consensus on economic policy amongst the mainstream political groupings. They are on the same side of the economic divide, with the big corporations and the affluent middle class. Consequently, we witness only faint noises around development issues but not a strong raging debate.

Debate on Economic Issues and Political Parties: Which Way?

Modi and the Bharatiya Janata Party (BJP), with the supposed lead in the current contest, have nothing much to say about their development model, development strategy or priorities. Their only claim is that they will do more of what they have done in Gujarat. The prime ministerial candidate has proclaimed so on numerous occasions.

Let us look at the other major political party. Outcomes of the Congress’ economic strategy in recent years have been below par, to put it mildly. Rights-based programmes may have made a good beginning under United Progressive Alliance-I, but they have all lost their sheen in the loot and expropriation that followed in UPA-II. The UPA has neither displayed any understanding nor shared anything with the electorate so far to suggest that it has learnt any lessons and that it will correct its mistakes in the future. Has this loot something to do with its larger development strategy, where the transfer of public resources to the private sector is the inevitable consequence? The UPA appears to be suggesting that it will also either do more of the same or copy “good” ideas from others, including from the Gujarat model and the Aam Aadmi Party (AAP). The overlap of economic policy with the BJP is hard to miss.

The Third Front looks like a marginal player in the electoral arithmetic. The partners of the front have often raised rights issues, say, on economic issues, especially on land acquisition, sought policy focus on agriculture and greater government regulation of the private sector, and questioned the policy on foreign direct investment (FDI) in retail, but they have had negligible impact in influencing the debate on economic issues in the 2014 elections. There was hope from the Left, but it has disappointed by not sharing a comprehensive and convincing framework. The Left parties have not laid down the specifics in a language that common people understand on exactly how they are different from the two main parties in economic strategy and thinking. The new political force, the AAP, has only given mixed (read confusing) signals on economic issues and therefore is not in a position to give leadership to the debate.

Based on this weak, disappointing, confused and half-hearted articulation of economic issues by the major political parties, the dominant media-led chorus on Gujarat’s model of development is the major lead on development issues in the 2014 elections. This is a very worrying development because in presenting “governance”, the style of Modi’s governance in particular, the real development issues have been marginalised further. This agenda has helped in successfully veiling who the real beneficiaries of the development process are and on whose behalf it is being led.

Governance Model

What are the elements of the governance model of Gujarat that are being projected as a panacea for the future of India? Mentioned foremost is the “capacity to take quick and clear decisions” (a general good is implied in this principle, though never established), a “superior” approach in comparison with the indecisive and tardy decision-making at the Centre. There is no mention, however, of what this governance entails, how participative or representative it is, how transparent the decision-making is, and on whose behalf this is being done.

Numerous initiatives that the State of Gujarat has taken in recent years confirm the unqualified faith of the rulers in the workings of the market and in the capacity of the private investor to meet the development needs of the State. Resultantly, governance in Gujarat has been fashioned to meet the needs of the private investor, with public investment taking a back seat. So unquestioned is the faith in the private investor that the investor is not just bringing the investment but also deciding the priorities of development. This is the core essence of this governance model which has serious implications for sustainability and distributive justice.

In private investment (measured both through intentions and proposals) Gujarat is the third-most-popular destination for investors, after Odisha and Chhattisgarh. Though the share of investment in Gujarat is reasonably high, its ranking in employment associated with this investment is relatively low. The disconnect between investment and employment becomes clear when we look at the sectors in which investment is flowing. Between 1983 and 2010, out of the total investment, 30 per cent of the projects, 42 per cent of the investment and 26 per cent of the employment were in the chemical and petrochemical sector alone. Out of the memorandums of understanding (MoUs) signed every year, often seen as the successful outcome of the “Vibrant Gujarat Global Investors Summit”, data show that the share of “projects implemented” and “under implementation” has continuously declined: from 73 per cent in 2003 to 13 per cent in 2011 (numbers for 2005, 2007 and 2009 are 62, 63 and 31 respectively). Ministry of Commerce data also suggest that the State’s share in investment intentions as reflected in industrial entrepreneurs memorandums (IEMs), letters of intent (LoIs) and direct industrial licences (DILs) has steadily declined from about 20 per cent in 2005 to less than 10 in 2011. In other words, the failure rate of promised or projected MoUs and the State’s share in national investment are decreasing. We clearly need a more realistic assessment of the “efficiency” of the State administration and the real strength of the “investor-friendly governance” model. What explains the investment boom in Gujarat is the combined effect of tax concessions, investment subsidies, low-interest credit, cheap cost of land and a pro-business labour policy and not the much-touted good governance, Gujarat style.

Labour unrest

The essence of governance in Gujarat is discernible from one more fact. Economic Survey, Government of India, 2011, reveals that Gujarat witnessed the highest number of strikes and other forms of labour unrest in recent times. However, this has not deterred the investors’ interest in the State. Why? Because of the State’s implicit guarantee and convincing commitment to stand on the side of capital. The investors’ faith is reinforced by the severely compromised ability of the Labour Department to implement labour laws and the special favours offered to the corporate groups. It is evident in recent Comptroller and Auditor General (CAG) reports indicting the Gujarat government and the Gujarat High Court notices to several corporate houses in response to a public interest litigation (PIL) petition alleging undue favours to corporate groups leading to massive losses to the State exchequer.

In Gujarat, large tracts of government land which were under the commons or were meant for fishing and grazing have been acquired for the use of industrial operations, such as in Mundra and Kutch, or for the Tata’s Nano project. This quiet, peaceful acquisition in Gujarat, with no public protest or contestation, the kinds of which are witnessed in other parts of India around land acquisition, is often claimed as a success of Gujarat’s efficient, transparent and fair governance. However, the absence of public protest has nothing to do with efficiency, transparency and fairness and everything to do with allocation of government land to private industries. For projects where the State government has tried to acquire private land, there have been public protests. Acquisition of land for the Special Investment Region in north Gujarat is a case in point. This notification faced protests from farmers, and the government had to withdraw the notification from many villages. So the claims to unhindered project implementation have more to do with the transfer of public land to private hands.

Decline OF PDS

What this governance model means for the poor can also be understood in terms of how the State has performed in implementing various welfare schemes. While many States have shown improvement in the public distribution system (PDS) over the past five years, Gujarat is one of the worst-performing States. The per capita PDS consumption is not only low, but it is falling and it has the highest rate of foodgrain diversion. Claims of efficient governance notwithstanding, evidence suggests that half of the poorest in Gujarat do not get any subsidised grain because of poor coverage and the exclusionary nature of targeted PDS. Gujarat is also the only State which shows a decline in the per capita purchase of PDS grains.

In terms of participation in Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in 2009-10, only 19 per cent of the households participated for more than 60 days in a year in Gujarat, a figure far below the national average. The average NREGA wage in the State is also close to the lowest that prevails in the country. As per the recent National Sample Survey Office (NSSO) Employment and Unemployment Round 2011-12, the average real wage (including regular and causal) in both rural and urban Gujarat is lower than the national average. It stands at Rs. 112 (at 2004-05 prices) for rural areas and Rs.177 for urban areas, while the corresponding figures for all-India are Rs.144 and Rs.231 respectively.

The performance of the Mid Day Meal Scheme, measured in terms of one member of the family benefiting during the last 365 days and the utilisation of Integrated Child Development Services in Gujarat, is just close to the all-India average and it does not fall amongst the group of best-performing States (Report of the third National Family and Health Survey (NFHS) and NSSO, 2004-05).

If we look at expenditures on health, the ranking of Gujarat has worsened in comparison to other States between 1990 and 2010, and the trend is similar in the direction of expenditure in education.

Thus overall, the governance model of Gujarat is all about aggressive implementation of development on behalf of the big private investor. It is not a model built on the historical legacy of Gandhian Trusteeship and the cooperative movement in Gujarat. It is a model that works for the rich and against the poor. It is not a model which is entirely market-led, but one where the state is working on behalf of the big private investor. The discontents produced as a result are dealt with either by focussing on regional pride or by creating the falsehood of “inclusiveness” around communal lines.

The model of development in Gujarat is an extension of and a more committed implementation of the model that the ruling classes of India have chosen for the country since the mid-1980s.

The development strategy of deregulation of the domestic economy and greater integration with global markets has meant that the poor, the marginalised, women, the backward social groups, and underdeveloped regions remain at the receiving end.

Social Development

The Human Development Report of India, recently released by the Institute of Applied Manpower Research, New Delhi, places Gujarat at the 9th rank. States like Tamil Nadu, Maharashtra, Haryana and Himachal Pradesh have performed much better than Gujarat. So much for the success of this model. There has been no improvement in Gujarat’s rank ever since the first human development index (HDI) was done in 1999-2000.

Gujarat has fared poorly in comparison with other States, in spite of its high growth, in basic health indicators. For instance, the maternal mortality ratio (MMR) for Tamil Nadu is 97, for Maharashtra it is 104, while it is 148 for Gujarat. Similarly, in measures such as the infant mortality ratio (IMR) and the Under 5 mortality ratio (U5MR), States like Tamil Nadu and Maharashtra have performed better than Gujarat. The IMR was 71 in Tamil Nadu, 56 in Maharashtra and 86 for all India in 1992-93. This has now come down to 22 in Tamil Nadu, 25 in Maharashtra and 44 nationally. The corresponding figures for Gujarat are 72 and 41 respectively.

In nourishment, or rather, undernourishment, the experience of Gujarat has not been encouraging either. Fifty per cent of the children were undernourished in Gujarat in 1992-93 and in 2005-06 even more children (51.7 per cent) were undernourished. When we compare health indicators for marginalised groups, Gujarat did not fare better than other comparable States. For instance, in 1992-93, the IMR for Scheduled Castes in Tamil Nadu was 90 points, which came down to 37 in 2005-06. In Gujarat, it marginally changed in this period from 70 to 65. Similarly, the IMR for Scheduled Tribes is no better in Gujarat. It was 86 in 2005-06 in Gujarat, while it was 62 nationally.

Disparities in education

Literacy is the simplest indicator to get a sense of aggregate characteristics in the field of education. It is no surprise to note that the average level of literacy in the State is higher than the national average. What is disturbing is the performance of the State in improving literacy between 1999-2000 and 2007-08 (NSSO 55th and 64th rounds) in comparison with other Indian States. During this period, Gujarat’s ranking, in comparison with 15 major States of India, has deteriorated in literacy levels, for both those above six years and those in the age group of six to 14. This sluggish growth in Gujarat is disconcerting since the gains in literacy at the national level have been much better. Another way to look at that State’s achievement in the education sector is to examine the rate of current attendance. Here again, the rank of the State has worsened during this time period from 21 to 26, in current attendance in the age group six to 14. Not only in aggregative terms; the educational outcomes in Gujarat across social groups further add to the gravity of the crisis in the education sector there. The gender difference of 20 percentage points in the State is higher than the gap in the literacy rate between men and women at the national level. The gap in literacy outcomes between those belonging to the general category and other marginal social groups was also greater than the national average in 2007-08. Thus, social disparities in education in Gujarat are higher compared with other States in educational outcomes and in participation and access to education.

Inequality, Poverty and Employment

In 1993-94, the proportion of people who were poor in rural Gujarat was 43.3 per cent. This percentage came down to 21.5 per cent in 2011-12. Gujarat has gained 22 percentage points in poverty reduction in the rural areas during the last two decades, while nationally the gain is around 25 percentage points. If we compare Gujarat with other developed States such as Tamil Nadu, its performance is dismal. The incidence of poverty in Tamil Nadu was 51.2 per cent in 1993-94; it drastically came down to 15.8 per cent in 2011-12, with a gain of 34 percentage points in poverty reduction in the rural areas during the past two decades. It is worth mentioning here that Gujarat was better placed in the 1990s than Tamil Nadu in the 1990s but ended up behind the latter in 2011-2012. The gains to the marginalised and disadvantaged social groups in poverty reduction were also lower in Gujarat compared with the national average and with other comparable States. Between 1993-94 and 2011-12, the gain to S.C./S.Ts in poverty in rural Gujarat was 20.7 percentage points, while nationally, poverty reduced for the marginalised by 27.6 percentage points. Urban Gujarat did no better either. In the period between 1993-94 and 2011-12, the incidence of urban poverty came down from 28.2 per cent to 10.2 per cent in Gujarat. The corresponding figures nationally are 31.6 and 13.6 per cent respectively. During this period, urban poverty reduced in Tamil Nadu, for instance, by 27 percentage points, compared with 18 percentage points for Gujarat. Likewise, the gains to the marginalised and disadvantaged social groups in urban Gujarat are very low in comparison with other States and also all-India figures (see tables 1 and 2).

Stagnant employment growth

The biggest casualty of the “successful” growth in Gujarat (and least discussed) is employment. The aggregate employment in Gujarat has remained stagnant. The stagnant employment growth in the last five years in Gujarat is better than the decline in employment experienced at the national level but lags far behind that of Maharashtra, for instance. During the 17 years from 1993 to 2010, growth rates of employment for rural Gujarat and rural India were on a par, while urban Gujarat performed slightly better compared with the all-India figure. In the last five years, employment in rural Gujarat declined in spite of exceptionally high growth in this sector. The loss in rural employment happened along with reduced participation of small farmers in the fast-growing, high-value crops and reduced access to cultivated land because of changes in the norms for sale and purchase of land. Whatever marginal growth has happened in employment in recent years has occurred mainly in the services sector, especially in the urban areas, and mostly this job creation has been casual in nature. Gujarat’s contribution to India’s manufacturing employment has also remained almost stagnant over three decades, in spite of doubling its share in gross value added.

Conclusion

There are three clear messages. First, the silence of the two major political parties on bringing core development concerns to the forefront of the election discussion reflects the entrenchment of the big corporations’ agenda across the political spectrum. The media chorus and euphoria on Gujarat have facilitated this by letting only growth be the focus of the debate, without looking at its impact and keeping the content of governance unexamined. Secondly, the muddled and selective presentation of facts in the mainstream media on Gujarat, which does not highlight the failure of the Gujarat government to provide basic needs and the welfare requirements of the poor, has helped to project the Gujarat model as an “alternative” for India.

And finally, the connect between the non-inclusive growth model and divisive social perspective has been completely ignored by the media and has facilitated the projection of authoritarian and pro-business administration as “universally” good administration.

Atul Sood teaches at the Centre for the Study of Regional Development, Jawaharlal Nehru University. Kalaiyarasan A. is a research scholar at the centre. Most of the statistics used in this article are drawn from Poverty amidst Prosperity: Essays on the Trajectory of Development in Gujarat, Edited by Atul Sood, Aakar Publications, 2012.

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