'Gujarat has learned from its mistakes,' economist Bibek Debroy tells Rediff.com's Sheela Bhatt in this eloquent interview.Bibek Debroy is a distinguished economist whose opinions expressed through his newspaper and magazine columns, papers and through Twitter matter. The outspoken and succinct Debroy is a professor at the Centre for Policy Research, a New Delhi think-tank.
In 2005, he resigned as director (research) of the Rajiv Gandhi Institute for Contemporary Research. His colleague Laveesh Bhandari and he had then published a paper rating Gujarat on the top for economic freedom.
Gujarat Chief Minister Narendra Modi made good political use of Debroy and Bhandari's paper. The Congress party found it discomforting that an institution attached to the Rajiv Gandhi Foundation had published a paper strengthening Modi's claims as an architect of development.
Debroy travelled all over Gujarat this year to write a book, Gujarat, Governance for Growth and Development.
In his book, Debroy reviews the issue of resource distribution, bijli, sadak and pani, infrastructure, health and education in Gujarat. He examines Gujarat's governance template to become an 'upper middle class' state by 2020.
Interestingly, Debroy avoids mentioning Modi in his book while discussing development under the chief minister's tenure.
He believes a mention of Modi would have made some readers subjective about Gujarat's actual achievements! He makes a strong case for people to see Gujarat's data objectively and not through the prism of Narendra Modi.
The first of a two-part interview with Sheela Bhatt:
Congratulations on your book. Is Gujarat's template of governance, which you have discussed in detail, very different from the central government's template or the template of successful states like Tamil Nadu, Maharashtra, Karnataka and Delhi?
If one is looking at it as a template for development, then this is a template for development that every state should be implementing.
The question is how many states have implemented this kind of development template. I am not just talking about GSDP (Gross State Domestic Product) growth, because you can get GSDP growth even if you do a few things correctly.
Take Bihar. It has phenomenal growth rates based essentially on services, and based essentially on construction, but Bihar has still got problems with agriculture, you have still got problems with electricity.
So if you are talking about a development template, little bits and pieces have been implemented in other states also. There is a governance issue as well. But to the best of my knowledge, Gujarat is the only state where the development-oriented template has very largely been implemented, actually.
How would you define the Gujarat development template? What are its main ingredients?
I would probably say four or five elements make the Gujarat development template. Number one is private enterprise, the entrepreneur spirit, and linked to that, a degree of scepticism about the government.
Gujaratis don't look to the government for handouts and this makes it very easy for the government to do various things that is in the nature of public-private partnerships.
When I say public-private partnerships, I am not just talking about the corporate sector. I am talking about the NGOs, even in the social sectors.
One part of the Gujarat story is about entrepreneurship, which makes me wonder if this model is really completely replicable in every other state.
Second, something that often people outside Gujarat don't appreciate is that Gujarat has a very long tradition of Panchayati Raj. And many of the social sector things we are talking about are actually implemented by the panchayats.
The government involves the panchayats. Decentralisation exists here. Now to decentralise I need the capacity in the panchayats.
In most Indian states, we don't have the capacity in the panchayats, which is why governance in India is so very bad. But Gujarat has had this since the 1960s.
The third element, which, of course, is replicable in other states, is the improvement in governance defined as the bureaucracy's delivery capacity. And there are several elements that have gone into that.
There is decentralisation, there is empowerment, and there is an attempt to insulate it from political inference...
Now that part is certainly replicable everywhere else.
The fourth one is difficult to replicate elsewhere. I think Gujarat has been a little lucky. Gujarat is favourably located. Its geography helps. It has got speed with liberalisation happening, with trade opening up, you have a reliance on ports.
Of course, Gujarat has the foresight to recognise that it must do something about minor ports. Then, it got the Delhi-Mumbai trade corridor, the industrial corridor. These are favourable circumstances.
I would add to it the road network. Roads in Gujarat have always been good. Yes, they have improved over the last ten years.
The final one I would say, we all know that there are problems with the rigid templates of centrally-sponsored schemes. The Centre is very rigid. You cannot do this, can't do that with the Centre's funds, and yes there are some broader issues of changing those schemes, making them flexible.
Gujarat has been able to do many things because of the fiscal space it has created for itself. They are able to plug in their own money to make good use of central funds.
It
could supplement central sector schemes with state schemes. Now to be able to do that you need to be fiscally sound. Unfortunately, the problem is many Indian states are not fiscally sound.
I found it very interesting that you hardly mention Gujarat Chief Minister Narendra Modi in your entire book even though you discuss the last ten years of development when he has been in power. Why are you shying away from Mr Modi?
I am not shying away. Actually, he is mentioned by name in two places. Once in the prologue. There is a book that goes by his name which is mentioned.
There is a reason for that (not mentioning Modi's name). If you look at the discussion on Gujarat, a lot of the discussion goes on, particularly outside Gujarat, which lacks certain objectivity. It lacks certain objectivity so people keep saying things without looking at the data.
If they don't believe the data -- for whatever reason -- there is a great lack of objectivity. I didn't find a good book on Gujarat. And therefore I wanted to say that 'Hey look, first let us recognise objectively... this is what is happening in Gujarat. And then we can debate the cause...'
Unfortunately, with the chief minister (Modi), when you mention him, everything gets very politicised. In any case, once I have written this book, I expect people will read the book.
If I had kept him in focus, people would have said it is a great book for the wrong reasons or they would have said it is a terrible book for the wrong reasons!!
The reason I didn't want to mention him by name is that I didn't want the book to get even more politicised, unnecessarily. So that is the reason the book is a little distanced from him.
Look, it is not a book about the chief minister; it's a book about the economy.
You don't want yourself to be associated with Mr Modi as a writer, thinker or economist?
No, it is not that. I recognise that many things that have happened in Gujarat, not everything, but several things that have happened in Gujarat are because of his intervention.
However, I want people to read the book. I don't want them not to read the book simply because his name has been mentioned.
Why has Gujarat's poverty level dropped more in the rural areas compared to the overall average between 2000-2005 and 2009-2010?
Normally, poverty remains higher in the rural areas and the urban areas see growth of the middle classes.
There are several reasons. One is that rural poverty really depends on what is happening to agriculture.
In the Gujarat growth stories, there is a very strong agriculture growth story.
Agriculture has been growing at 10 percent. So even if you go to the poorer parts, you will find agriculture diversification happening, you will find dairy happening, animal husbandry happening, horticulture happening, in all kinds of places.
Second, since the 11th Five Year Plan, the state government has had a specific focus on the social sectors with several schemes implemented with force.
Which is the reason I keep making the point that if you are looking at the social sector in Gujarat, please look at what has happened after the 11th Five Year Plan. Don't look at earlier data. That is misleading.
Why misleading?
Because Gujarat's focus on health, education, began in 2007. So what's the point in looking at 2004-2005 data?
I think another reason for the lower level of poverty in rural areas is something I mentioned earlier -- this I am sticking my neck out because I haven't exactly said this in the book.
In Gujarat, the problem areas are small towns, the ones that have the proper municipal corporations. Rural areas look promising because of the panchayats.
The problem areas in Gujarat, in my view, are the smaller cities. And I think, whichever government comes in now, the focus on poverty reduction should be in these smaller cities.
How do you explain that the state government that improves the electricity sector, but the same template of governance and the force of governance are not applied in other sectors?
I don't exactly agree with the question. Let me explain why. By the way, I should mention that the development in Gujarat is largely roads, electricity and water.
Now water is synonymous with the Sardar Sarovar Dam.
What they fail to appreciate is much of the Sardar Sarovar has not reached Gujarat yet. Gujarat boasts of water storage like check dams and smaller water storages.
They have created the water grid, the state-wide grid, the intention behind that is to take the water from the surplus areas to deficit areas. Without that grid, Sardar Sarovar would not have happened.
Similarly, in the electricity sector the real story is the Jyotigram scheme, the bifurcation of (power) lines has done good. Domestic, agriculture and industrial supply lines are separated. Domestic supply is 24 hours.
The improved distribution has made all the difference. The agro sector gets eight hours of ensured supply.
Gujarat has learned from its mistakes. And you have used the same bureaucratic machinery to address that. So that was done in the course of the 11th Plan.
During the 11th Five Year Plan, the dropout rates in schools has dropped phenomenally. I look at institutional deliveries that have improved phenomenally.
So post the 11th Five Year Plan, I think that same government machinery is delivering in the social sectors too.
Part 2: 'Gujarat will be one of the first places to implement FDI in retail'
