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Riots+economic growth=?

Narendra Damodardas Modi appears to dominate Gujarat, election-bound now, like no other political leader dominates his immediate constituency.

Written by Laveeshbhandari |
October 15, 2007 2:45:00 am

Narendra Damodardas Modi appears to dominate Gujarat, election-bound now, like no other political leader dominates his immediate constituency.

Modi has been assigned many adjectives, efficient, dictatorial, and ruthless. But, first and foremost, Modi will always be remembered because of the 2002 Gujarat riots (though many prefer to call it a pogrom). His famed administrative efficiency was not displayed in saving the lives innocents. Equally, it would be impossible not to acknowledge his role in making Gujarat an economic powerhouse.

Before he took over, Gujarat’s pre-eminence was declining. Economic growth was on a downtrend, and from the greater than 15 per cent growth in gross state domestic product observed in the mid-nineties, it had fallen to nil in 2000-01. But it was not just economic growth — industrial investment, infrastructure improvements, and so on, also appeared to be on a decline. This was due to a range of factors, not just related to state-level governance. But around the time the Modi government took over, a resurgence of the Gujarati economy began.

It is indeed difficult to assign responsibility for improvements or impairments on a single individual, even if he is the CM. But individuals can and do catalyse changes, and energetic politicians have been known to energise governance, even if it is limited to the economic front. And by most accounts Modi has been instrumental in Gujarat’s success though he has been aided by many factors that just gathered momentum around the time he came in.

The Indian economy entered a high growth phase in the early 2000s, and Gujarat with its large industrial, financial, and infrastructure base, access to the sea, and a large skilled workforce, was highly suited to benefit from these opportunities. No doubt, states such as Maharashtra, Tamil Nadu and, to a lesser extent, Andhra had somewhat similar characteristics. But Gujarat has also been known to have a relatively efficient bureaucracy. The combination of base conditions, an efficient bureaucracy, and a CM willing to circumvent standard rules, regulations and procedures paid dividends rather quickly.

Within a year or so, Gujarat’s GDP growth took off, to higher than national GDP growth. Investments took off, the speed with which approvals were received accelerated, the delays that typically characterise large investments reduced dramatically. And this was sustained for the following years. There are many stories in the informal circuit on how the government aggressively wooed the investors, circumvented procedures, pressured antagonistic pressure groups, to ensure rapid investments. This is by no means an easy task, ask the Bengal CM. And rightly or wrongly, it requires the bending of many rules and procedures.

But investment is only one part of the story. Many other successes have occurred in Gujarat, Modi didn’t cause them, but he catalysed them through action or deliberate inaction.

Take agriculture. Around the time Modi came to power, BT cotton had already entered Gujarat. There are broadly two types of BT cotton. The legal and illegal. The legal variety is one that is sold by one international company that holds the international patent on the seed. The illegal one is sold by a multitude of smaller operators and was much cheaper (and reportedly of somewhat lower quality). The Gujarati farmer quickly took to the illegal BT cotton varieties. Cotton production shot up dramatically, and today it is hard to find a farmer in Gujarat who would use a traditional (or indeed a legal variety) if he can help it. The role of Gujarat government was that of a silent spectator. The farmer benefited, and so did the agro-economy of the state. But the laws were broken once again.

Then take the famed Narmada dam. Gujarat was better at building some part of the water distributive infrastructure than MP. Water flowed into this system and Modi made full use of this PR opportunity. But unlike some other governments, Gujarat pushed on. They fought and won the battle to get the height of the dam raised. Again the forces preceding Modi had an important role to play in this, but he made them stronger. And Modi became even more popular.

But Modi’s energies were not only seen in activities where the vote-related PR value is high, but also those that electorates normally do not care much about.

The social sector is not something that is politically sexy. By all accounts, elections are not won or lost due to improvements in the social sector. But here as well the Modi government came up with a simple yet powerful innovation. Many women and children in Gujarat (as in other states) are highly under-nourished. The Central government adopted the mid-day meal scheme in primary schools and implemented it at the all-India level. But the mid-day meal typically consists of nutrients rich in carbohydrates and to a lesser extent proteins. A large part of the under-nutrition in children is however due to the lack of micronutrients in their diet, and women and children not in the school-going age do not benefit from the mid-day meal.

Consequently wheat flour supplied through the PDS is fortified with iron and folic acid. Moreover vitamins are mixed in edible oils (reportedly this costs merely three paise per kg of oil). As a result, reportedly, the number of women and children suffering from anaemia has reduced considerably in less than two years of the scheme’s operation, and reduced night blindness and other malnutrition-related diseases.

Modi is not only ruthless and efficient; he is also hungry and ambitious. He is looking for acceptance. He wants everyone to forget the riots.

The writer heads the economic research firm, Indicus Analytics

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