Figuring out Gujarat

Gujarat is a state that is generally in the limelight, for right and wrong reasons.

Gujarat is a state that is generally in the limelight, for right and wrong reasons. The recent election ending in victory for Narendra Modi has thrown up various issues 8212; whether the state has really done as well as has been projected by the government, whether such development has reached the grassroots, whether the people have genuinely benefited, among others. Using published data, one can see that the growth in the state has been of a phenomenal degree. This does not suggest that all classes of the society have benefited equally or that some have not become worse off. But the picture that emerges is of a state run better than most others.

Take economic growth, which averaged 7.7 per cent annually in the nineties. During the period 2001-2006, the economy has grown at an average of 10.2 per cent annually. Per capita income in constant prices has grown at a rate of 8.1 per cent annually during the period 2000-2006, the highest rate of growth amongst the large states. Natural calamities drought, earthquakes and manmade ones recession, riots, Gujarat has seen it all in the last eight years and the high performance points clearly to the resilience of the economy. In fact, growth in Gujarat has always been above the India average, except for the years of recession. Industrial recession hits the state hard since almost 30 per cent of the income generated in the state comes from the manufacturing sector and more than three-quarters of manufacturing income stems from the registered sector in the state.

Gujarat has always been active in attracting industrial investment, and while it lagged behind Maharashtra with the second largest share of industrial investment proposals in India till 2004, it was in the last three years that Gujarat8217;s share in investment proposals has zoomed up to first place in the country with Maharashtra and Chhattisgarh behind it. In recent months, there has been more interest in Chhattisgarh and Maharashtra but when it comes to the crunch of implementation of the proposals, Gujarat is way ahead of these states with an implementation ratio of 15 per cent the figures for Maharashtra and Chhattisgarh are 8 per cent and 3 per cent respectively. These figures gel with anecdotal and media reports of the ease with which industry translates its proposals into concrete form on the ground.

There has been a massive thrust on the infrastructure front in the state and Gujarat was the first in the country to privatise the construction of ports and to announce a separate port policy in 1995, integrating industrial development, power generation and infrastructure development. The results have come to fruit now and the famous 8220;It8217;s stupid if you are not in Gujarat8221; line attributed to Ratan Tata quite neatly encapsulates the relation between government and industry in this state.

One of the areas of concern has been agriculture with its high dependence on rainfall. But efforts to irrigate have raised the percentage of net sown area that is irrigated from 29 per cent in 2000 to 34 per cent in 2005, a five per cent rise every year. The government8217;s active efforts to bring the waters of the Narmada to fill the rivers in the state have done wonders in some parts and much more has been planned. But with almost 60 per cent of the population still engaged in the primary sector, this has not been enough to offset the rural-urban divide and on this front Gujarat has not been doing too well.

The Economic Census of 2005 showed that while the number of enterprises other than those engaged in crop production and plantation, grew at an annualised rate of 3.4 per cent, less than the national growth rate of 4.41 per cent, growth in employment in such enterprises grew marginally at 1.39 per cent, compared to the 2.49 per cent growth in India. More interestingly, the trend in most parts of India showed higher growth in the rural areas, which is in contrast to the higher growth in urban enterprises and employment in Gujarat.

The urban-rural divide also shows up in the recently released National Family Health Survey data. While 91 per cent of the urban households had piped drinking water, just 60 per cent rural households enjoyed this privilege. Though it must be said that this is much better than the all-India average of 71 per cent and 27.9 per cent respectively.

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Yet other health indicators also show a divide that should be bridged for the inclusive growth slogan to hold true. For instance, infant mortality has come down from 63 to 50 per 1000 live births during the period 1998-99 and 2005-06 but stands at 58 in rural areas and 36 in urban areas. To take another example, 55 per cent of children less than 2 years received all their vaccines in urban areas, but in rural areas this was 40 per cent. One disturbing number that emerges in the vaccination data is that while 53 per cent of the children less than 2 years were totally vaccinated in 1998-99, this number had dropped to 45 per cent in 2005-06, while the all-India data shows a rising trend from 42 to 44 per cent. There are, of course, many more instances where rural infrastructure and facilities could do with improvement.

Clearly, Gujarat is still more industry-oriented and more urban-oriented than is needed to provide inclusive growth and development in the state. The electoral battle may be won but the war against imbalances within the state will continue to rage.

The writer is chief economist, Indicus Analytics sumitaindicus.net