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Home > English > NEWS AND ANALYSIS > Non Inclusive Growth and A Divisive Social Perspective: The Untold Story of (…)

Non Inclusive Growth and A Divisive Social Perspective: The Untold Story of Gujarat

Monday 14 April 2014, by Atul Sood

The current ruling coalition’s inability or failure to manage the Indian Economy is a point of discussion in the recent political commentaries. Attention is also being drawn to specific policies that the incumbent prime minister of India, after the 2014 elections, should implement. A recent Globe and Mail (Canadian English Daily) article “India Rising: Mr. Fix It and Desire for Economic Strength", April 10, 2014 shares the perception of gloom about the economic environment in India, quoting the leaders of the opposition grouping, NDA. There is also a reference to the fall of investment climate in India and euphoria and success of investment boom in Gujarat. The aspiring India, the young India, is buoyant with expectations and Mr. Modi is expected to lead ’development’ agenda in India to meet these aspirations, so we are told.

There are two fundamental things that the international media has failed to notice. First, the real development experience of Gujarat that Mr. Modi supposedly represents, distinguishing facts from fiction and its meaning and implications for India. And, secondly, the links between 2002 and the success of ‘the Gujarat Model’ or the ‘no nonsense’ image of governance that has been carefully constructed. The Globe and Mail article also misses these two points.

In this response, let me talk about these two things i.e., the elements of governance in Gujarat and the experience of development in Gujarat.

Elements of Governance

Investment boom and industrial confidence are the most quoted instance of the ’success’ of governance in Gujarat. What remains hidden usually from the public eye is that the investment boom in Gujarat in reality is the result of the combined effect of tax concessions, investment subsidies, low interest credit, cheap cost of land and a pro-business labour policy. It is not the effect of the much touted good governance Gujarat style. In addition, investment in Gujarat is also characterized by very low employment (It is ranked first in direct industrial licenses but seventh in employment) and also declining sheen of this boom, notwithstanding the hype about ’Vibrant Gujarat Global Investors Summit’ (’projects implemented’ and ’under implementation’ have continuously declined, from 73 per cent in 2003 to 13 per cent in 2011). Another interesting dimension of the essence of governance in Gujarat is discernible when we read the Economic Survey, GOI, 2011, and find that Gujarat witnessed the highest number of strikes and other forms of labour unrest in the recent times. Why do investors continue to go to a state which is reporting highest number of labour unrest incidents? The investors’ faith is perhaps reinforced by special favours offered to the corporate groups ( and the severely compromised ability of the Labour Department to implement labour laws. A recent CAG report indicted the Gujarat government and the Gujarat High Court sent notices to several corporate houses in response to a PIL alleging undue favours to corporate groups leading to massive losses to the state exchequer. (‎). The absence of public protest after land acquisition, which is often seen as a feather in Mr. Modi’s cap, reflecting his good governance, has also less to do with efficiency, transparency and fairness and everything to do with allocation of government land to the private industries.

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 and its responsibility towards education and health. Gujarat is one of the worst performing states in Public Distribution System (PDS) of food. The per capita PDS consumption is not only low, it is falling and it has the highest rate of food grain diversion. In terms of participation in employment guarantee scheme in 2009-10, only 19% of the households participated for more than 60 days in a year in Gujarat, a figure far below the national average. The performance of the Mid-Day Meal Scheme measured in terms of one member of the family benefiting during last 365 days and utilization of Integrated Child Development Scheme in Gujarat is just close to all India average and it does not fall amongst the group of best performing states. The ranking of Gujarat state in terms of per capita education and health expenditure has worsened in comparison to other states between 1990 and 2010.

Let’s also look at what the ‘strong administration’ has meant for statistics on crime and violence. A glance at the data for conviction rates for crimes against women released by the National Crime Records Bureau for the year 2012 shows a frightening story of how crime against women go largely unpunished in Gujarat. For instance: for Dowry Deaths the conviction rate is near zero, lowest in the country, the national average is 31.9; Assault on women with intent to ‘outrage her modesty’ (sic), conviction rate is 1.6, once again lowest in the country, national average is 23.5; Rape, conviction rate is 15.3, ranks 20th in 28 states, national average is 23.1; Cruelty by Husband or his relatives, conviction rate is 3.5, ranks 22nd in 25 states, national average is 14.8; Kidnapping & Abduction of Women, conviction rate is 6.5, ranks 20th in 28 states, national average is 20.4; Insult to the modesty of woman (sic), conviction rate is 20.0, ranks 17th in 23 states, national average is 36.9. So while crime is on the rise every year, the conviction rate remains alarmingly low. Where is Governance efficiency when it comes to convictions? Governance in Gujarat has meant steering clear of Gandhian humanism, liberal welfare programs and democratic social engineering, a few vital principles for which the state of Gujarat was earlier known for.

On the development front, what is witnessed is monumental failures of the Gujarat government in providing for the basic needs and welfare for the vast majority of the population. This includes both the marginalised sections and the middle classes. Human Development Report of India, recently released by Institute of Applied Manpower Research, places Gujarat at the 9th rank. States like Tamil Nadu, Maharashtra, Haryana, and Himachal Pradesh have performed much better than Gujarat. In basic health indicators, pace of decline in mortality rates has been slow, rural urban gap has not been bridged, gender disparity ratio is comparable to supposedly poor states like Bihar. Fifty percent of children were undernourished in Gujarat in 1992-93 and in 2005-06 even more children (51.7) were undernourished. What is disturbing is the performance of the state in improving literacy between 1999-2000 and 2007-08 comparable to other Indian states. During this period, Gujarat’s ranking, in comparison to 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. The gender difference in the state is of 20 percentage points, which is higher than the gap in the literacy rate between men and women at the national level. Gujarat has gained 22 percentage points in poverty reduction in the rural areas during the last two decades, while nationally the gain is of around 25 percentage points. The gains to the marginalised and disadvantaged social groups in poverty reduction were also lower in Gujarat compared to the national average and other comparable states.

The biggest causality of the ’successful’ growth in Gujarat (and least discussed) is employment. Overall, employment growth in Gujarat, between 1999-2000 and 2011-12 equals the national average. In the last five years, employment in rural Gujarat has declined more than the national average in spite of exceptionally high growth in this sector. The loss in rural employment has 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. Manufacturing sector employment, better than national average, is characterized by: slow growth in wages (1.5% in decade of 2000 compared to 3.7% all India); increasing use of contract workers (from 19 to 34 between 2000 and 2008) and lowest share of wages in GVA along with increasing profitability in this sector and doubling of its share in value added. Even now more than 50 percent are self-employed in Gujarat and nationally, high growth of Gujarat notwithstanding. What is disturbing to note is that amongst the self employed women 56 percent of women were absorbed as unpaid family labour in Gujarat compared to 41 percent nationally in 2011-12 in the poorest quintile. Interestingly, around 75-80 percent of employment within the self-employment is in small jobs as market gardeners & Crop Growers, shop salespersons; Street Vendors; and Textile, garment and related trades Workers. Thus, there is nothing in the employment experience of the Gujarat model that can meet national aspirations of youth. The rural urban differential in youth employment (15 to 29) in Gujarat is also very glaring.

What does this all mean?

For the dominant media-led chorus on Gujarat’s model of development, there is no interest in separating facts from fiction. On the contrary, they are wholeheartedly contributing to concealing the identity of the real beneficiaries of the development process and on whose behalf the whole project of growth is being led. A ‘strong and decisive leader’ and ‘Governance’ are two planks through which this is being achieved. In reality, the two major political formations – The UPA and NDA - are on the same side of the economic divide, joined by the big corporations and the affluent middle classes. Ultra-nationalism of BJP, the 2002 massacre of Muslims, unbridled access of big business across the political groupings and an ominous combination of economic liberalism and Hindu nationalism, masquerading as the grand governance model of Gujarat, all need to be hidden from the voters. As a result of all this, 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.

(This article is based on a volume edited by Atul Sood, who teaches at the Centre for the Study of Regional Development, Jawaharlal Nehru University, New Delhi, India. Most of the statistics used in this note are drawn from: Atul Sood (ed.), Poverty amidst Prosperity: Essays on the Trajectory of Development in Gujarat, Aakar Publications, 2012)