The myth and reality of Gujarat's growth story

Through a series of ground reports from Gujarat, with expert opinions and data analyses, Business Standard tries to unfurl the secret of the state's growth across sectors.

At first glance, nothing about Ahmedabad may suggest it is the centrifuge of one of the country's most celebrated growth stories in the past decade.

Its buses are few and creaky, its malls underwhelming, its traffic sedate and buildings possess an old-world aura. Yet, the capital of Gujarat has powered the state into becoming a darling of industry and a pioneer of efficient governance and infrastructure.

Despite that, many have begun to ask searching questions about the nature of Gujarat's development: How different has its growth really been from its peers'? Whom has this growth benefitted? Moreover, can Modi take credit for all of it?

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Examining Gujarat's growth model is important for two reasons: It could shed some light on whether the state's development trajectory can be a role model for inclusive growth — arguably, the kind that India needs; and, a related one, about whether Modi can effectively transplant it on to the national stage, if he swings for the fences.

How does Gujarat's growth fare versus other states? A comparison of states that are in the same league in terms of size and level of industrialisation shows Gujarat is the leader, but not by much.

Between 2000 and 2010, Gujarat posted a 10.5 per cent growth rate, but this was just marginally ahead of Maharashtra (10 per cent), with Haryana (9.17 per cent) and Tamil Nadu (8.49 per cent) nipping at its heels.

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Moreover, says Indian Institute of Management Ahmedabad ( IIM-A) professor, Sebastian Morris: "When India grew rapidly, Gujarat also grew rapidly; and when India's rate collapsed following the global crisis, Gujarat's also collapsed."

Modi's accomplishments look even less stellar if you consider, for instance, the previous decade (1990-2000), in which, also, Gujarat led the pack - under different chief ministers - posting a growth rate of 8.3 per cent.

And, if you take just the last five years of Modi's rule, Planning Commission figures show Maharasthra outstripping Gujarat by a percentage point, and Andhra Pradesh and Tamil Nadu keeping pace with it.

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Could Modi's claims of modernising the state and transforming it under his watch simply be smoke and mirrors?

Not entirely, if you consider the mammoth overhaul of the power sector, reviving a cashbleeding Gujarat Electricity Board included. Today, residents of urban Gujarat enjoy electricity 24 hours a day and seven days a week, and pay just Rs 5 per unit on an average - almost a utopian dream for many other parts of India.

"Many companies in Chennai are planning to leave and come here even as we speak," says Sunil Parekh, a strategic advisor to Gujarat- based Zydus Cadilla and Jubilant Energy.

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This has also boosted the fortunes of the agriculture sector here. It still gets cheap power from the old line but is also able to buy private power on demand.

This has enabled arevival of a long- suffering sector, though experts point out growth here is closer to five per cent than the 10 per cent the Gujarat government claims.

Other infrastructure building efforts - excellent highways and ports, for instance - have complemented Gujarat's power revolution.

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But could the Modi era have got more credit than necessary from these gains? After all, Gujarat has a natural advantage with its long coastline that is relatively close to urban centres, points out IIM's Morris.

The state also has an abundance of non- productive land, a boon for companies, which tend to fight debilitating land- acquisition battles to house their production plants in other states.

A highly urbanised Gujarat is also home to India's largest business and trading community, which has always been enterprising and industrious, even before Modi became chief minister.

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However, the biggest reason to question Modi's brand of growth, say academics and social workers in Gujarat, is the state's dismal showing in the sphere of human development.

"It's been miserable," says Morris. While poverty has reduced in the state in general, economists say many pockets of it exist throughout the state. Gujarat's rank in poverty reduction is 11th among 20 major states, according to the Planning Commission, with a slight increase in poverty last decade among the state's tribals, who comprise 17 per cent of its population.

What is worrying is that Gujarat's under- five mortality rate hasn't improved and is far behind its peers'. While infant mortality has come down, the rate of decline tracks the national average.

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Child mortality is significantly higher among girls than boys and that differential hasn't narrowed over the years. Also, malnutrition is severe among children and women.

"There have been efforts and schemes launched, but implementation is very, very poor," says Leela Visaria, former professor and director of Gujarat Institute of Development Research.

"The state basically wants to abdicate its responsibility through the public- private partnership model," she adds.

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No surprise that in a recent study by UNDP, Gujarat has ranked 8th among the major Indian states in human development.

The Planning Commission's Human Development Index has placed Gujarat as 18th in its rankings.

These paint a very paradoxical picture of Modi's reign and development model, where high growth has apparently only benefitted select segments of the population, thereby questioning growth's implicit 'trickle down' effect.