DEVELOPMENT DYNAMICS IN GUJARAT
Summary of the Findings
Is Gujarat the lucky star rising on the Indian horizon! Or Is Gujarat a story of Rousing Growth Amidst Raging Disparities? A recent study, conducted by researchers from the Jawaharlal Nehru University and supported by the Institute of Development Communication, Chandigarh suggests that there is more to worry about Gujarat then some decades ago. Today, 21st century ‘developed’ India is more concerned about ethics, justice, and sustainability of development. Evaluating the experience of development in Gujarat, particularly in the last decade or so, the study tell us that Gujarat is a story where goals like social equality, sustainable livelihoods, access to education and health, justice and peace have been missed by governance in high-speed lane.
The findings of the study are based on careful analysis of information provided by the Government sources. The study (in press currently) has been conducted by a team of young scholars from JNU, under the leadership of Dr. Atul Sood. Following papers are part of this study: Rousing Growth Amidst Ragging Disparities – Atul Sood; Dynamics of Growth in Gujarat – Ruchika Rani; Sources and Patterns of Private Investment in Gujarat – Santosh Kumar Das; Public-Private Partnership: Insights from Infrastructure Development – Pankaj Vashisht And Gaurav Arya; Selective Development in Gujarat: A Study of the Manufacturing Sector- Sangeeta Ghosh; Ynderstanding Gujarat’s Agricultural Growth in a Liberalizing Environment: Signs of a Redefined Margin – Sucharita Sen and Chinmoye Malik; Work and Livelihoods: Mapping Regional and Social Differences – Kalaiyarasan. A; Growth with Limited Outcomes: Poverty and Inequality in Gujarat- Nidhi Mittal; An Analysis of State of Education in Gujarat- Sourindra Ghosh ; and Rich State with Poor Health: Disappointing Status of Public Health in Gujarat- Sandeep Sharma
The study on Gujarat is an eye opener for those who believe and suggest that India needs to replicate Gujarat’s economic model. The study dissects the experience carefully, it does not deny the facts, but reallocates them. The study highlights how the current model of development, in Gujarat, is anti poor, anti dalit, anti women and against all minorities and people on the margins.
Private Investment led Growth
The study reveals that the performance of the state of Gujarat on investment, infrastructure, agriculture and manufacturing looks impressive on a first look. However, there is nothing to boast about, if we look at the outcomes on employment, poverty, inequality, consumption, education and health. In fact, the poor performance of the state on those fronts, that matter the most to people, compel us to relook at the growth strategy itself. Numerous initiatives that the state has taken in the recent years confirm that rulers in Gujarat have unqualified faith in the workings of the market and the private investor. Some examples that are highlighted in the studies and those that reflect complete dependence of the current regime on the private sector for growth and development are: legislative changes in the land use norms that have reinforced the speculation in land; prioritizing infrastructure development towards those project that strengthen investments and profitability of the investor, instead of creating infrastructure to meet the needs of the ordinary people; neglect of human habitations in improving access through rail and road and facilitating access of SEZ, SIRs and other private investment; dependence on private initiative in the social sector and neglecting public expenditure in the social sector; selective nature of manufacturing growth and reinforcement of capital intensive manufacturing; neglect of employment and wages in the manufacturing sector; corporatization of agriculture, marginalization of small farmers and privatization of village commons; and neglect of socially iniquitous outcomes in the development strategy to remove poverty, increasing consumption and reducing inequality.
The authors suggest that one consequence of this unqualified faith on private investor has meant that the investor is no longer the source for resources but one who is deciding the priorities of development. The researchers suggest that the reasons for the much talked about ‘confidence of the investor’ in the state, also needs to examined very carefully. The fact that Economic Survey of 2011 lists Gujarat as the worst labour unrest state in the country does not square up with the ‘confidence of the investor’ story! How and why do investors remain convinced of the ‘rule of law’ in the state, given the unrest? Dr. Sood suggests that this confidence of the investor appears to be inspired more by the authoritarian assertion of the state in the recent years, the brash pride of the state to demonstrate brute force, rather than the ‘success’ of ‘better’ governance. It is this culture of authoritarianism, which gives faith and belief to the investor, to invest in Gujarat, even when this authoritarianism has manifested itself more recently in spectacular form in acts of violence against the religious minorities, scheduled tribes and lower castes. The harnessing of state resources, in Gujarat, towards crushing resistance is not new. It has been seen in the state for many years now, including the days of resistance to development projects like Narmada dam. Ruling regimes, across the spectrum, have contributed to construct this ‘image’ of the state. The study draws out the following main points about the state’s growth performance and its outcomes.
Growth Performance
GDP growth in Gujarat has been impressive in comparison to all India level in the last two decades. The high growth rates in the state has been the result of good performance by all the sectors, particularly agriculture. The growth rate of the industrial sector was higher than the services during 80s and 90s in the state. But in the last decade both industrial and service sector grew at 11 percent per annum; which is distinct from the all India pattern of growth, wherein the service sector has been the chief driver of Growth.
Gujarat agriculture has recorded the fastest growth since 2000 among all states and this growth is more than three times higher than the all India growth levels. There have been notable shifts towards cash crops and high value agricultural products (which has lower participation of small farmers) at the cost of declining shares of food grains in terms of acreage, output and value. This remarkable agricultural growth in the state in the recent years has taken place in the backdrop of an extra-ordinarily liberalized agricultural land policy regime. There is evidence of further marginalization of the already vulnerable economic and social groups in terms of access to cultivated land over the last five years in the state as a result of corporatizing agriculture.
Gujarat has also encouraged the secondary sector through greater expenditures on physical capital than on human capital and has chosen the path of unbalanced and inequitable growth with emphasis on directly productive capital rather than creating social overhead capital. The Gujarat government has given an array of fiscal and financial incentives to attract industries. Most importantly, Gujarat developed its infrastructure for industries through an array of initiatives involving chiefly private participation. Industrial experience in Gujarat is one that has witnessed high concentration in industrial sectors, incomes and regions. While the state holds the first position in terms of contribution of the manufacturing sector to GSDP, and this share has increased over the decades, there is a distinct mismatch in the contribution of the secondary sector to GSDP and the employment generated by the sector which has been low and has remained stagnant over the decades. Post-reforms, Gujarat’s manufacturing sector has become tremendously capital intensive and has the most capital intensive manufacturing process in India.
Work and Livelihoods
In spite of successful growth in the state, the aggregate employment in Gujarat has remained stagnant. The Compound Annual Growth Rate (CAGR) of employment, for the period of 1993-94 to 2004-05, using NSSO data, suggests that employment grew at 2.69 percentages per annum, whereas for 2004-05 to 2009-10 it came down to almost zero. Employment has fallen in the manufacturing and primary sector between 2005-10. Whatever marginal growth has happened in employment, it has occurred mainly in services sector, especially, in the urban areas and mostly this job creation is casual in nature. Changes in the employment structure for the marginalised social groups, like scheduled tribes, are diametrically opposite to the changes in the growth structure – their dependence on agriculture has increased, particularly during 2005-10 and gains of diversification of the 90s have been lost. The distribution of employment across sectors for the STs and religious minorities has tilted towards traditional sectors like agriculture, while it has been stagnant for SCs and OBCs. Scheduled tribes have a marginal share in regular employment. For the STs it is 7% today, same as in 93-94 and for Muslims it is 14% today, it was 15% in 93-94. Overall, income structure in Gujarat has experienced a structural shift but this shift does not get reflected in the changes in the structure of employment (88% income comes from non agriculture but it provides only 47% employment).
Employment has also been the biggest causality of the ‘successful’ manufacturing growth in Gujarat. Manufacturing in Gujarat, has been capital intensive, is characterized by low employment generation, slow growth in wages (1.5% in the decade of 2000), increasing use of contract workers (increased from 19 to 34% between 2001-08), and overall reduced position of workers in the manufacturing sector. This worsening condition of workers is accompanied by increasing profitability and growing investment in these sectors.
Growth Outcomes
It is also true that Gujarat has lagged behind its competing states in terms of consumption growth, poverty reduction as well as decrease in inequality. The average monthly consumption expenditure in the rural areas was equal to the national average between 1993 and 2005. In the last five years, the rural monthly consumption expenditure grew at 2.05 percent per annum, which is much lower than what was achieved by states like Maharashtra and Tamil Nadu, but marginally more than the national growth in consumption expenditure of 1.97 percent per annum. In the urban areas, the growth in average monthly consumption expenditure in the state of Gujarat, was marginally less than the national average between 2005-10 (2.13 percent per annum compared to average of 2.4%) and the advantage that the state had between 1993-05 was lost during 2005-10. Overall, average monthly consumption expenditure in Gujarat during 2005-10, barely equaled the national average. Reduction in poverty in rural Gujarat between 2005-10 was reasonable (2.5 percent per annum compared to average of 1.7) but the head count ratio in 2009-10 (26.63) in Gujarat was higher than many comparable states. The changes in poverty levels in the Urban areas was much less in Gujarat between 1993-05 and 2005-10 (declined by less than half a percentage point, while the average decline was close to one percent per annum). Head count ratio of poverty in Urban Gujarat in 2009-10 (17.66) was less than the national average (20.85). Aggregate inequality has increased in Gujarat during 1993-05, as well as between 2005-10, though the increase is marginal in the last five years of 2000. The reason for this slowing down of increase in inequality is because of the decline in inequalities in the rural areas. In other comparable states inequality has fallen much faster during the years 2005-10.
Gujarat is a rich state with poor education and health outcomes. The papers in this study suggest this in their findings. The comparative position of the state in literacy rates and percentage of children currently in school, both six years and above and six to fourteen, has deteriorated between 1999-00 and 2007-08. As an instance, the fall in the rank of the state for percentage of school enrollment six years and above was from 23 to 30, amongst all states of India. The ‘lucky star’ (Gujarat) on the Indian horizon ranks 23, 30, or 19, 21, 26 amongst 35 Union Territories and Indian states is a matter of great concern and shock. The story is no different if we look at the caste and gender gap in outcomes of education in the state. Things have worsened, instead of improving, in relation to the national average. One of the reasons of this poor performance seems to be dwindling government expenditure. Government expenditure on education as a proportion to total expenditure is lower in Gujarat than all states combined figures. and it is falling since 1999-2000. Government expenditure on education as a proportion to GSDP is lower in Gujarat than all states combined figures; it is falling since 1999-2000, and at a much faster rate than the all-states combined figures. State neglect of education is worrisome given the fact that 64% of currently going-to-school persons (5-29 years) are in government institutions, which is comparable to all-India level.
Gujarat’s health status clearly highlights the missing link between economic growth and its impact on human well being. Health status of the state clearly show that there is much to be done. Gujarat is ranked 10th in rate of decline in IMR. Tamil Nadu and Maharashtra with low level of IMR in 1990 compared to Gujarat have shown higher rate of decline. Decline in IMR not been able to bridge the Rural Urban Gap. Rural Urban Gap in IMR has increased between 1990 and 2004 and there was no change in the ratio between 2000 and 2010. There have been poor Gains in reducing Gender Gap in IMR. There has been an increase in disparity ratio during 1990-95 to 2000-2004. Disparity ratio for SC and others in 1998-99 at 1.48 was higher than the national average of 1.34. In 2005-06 it stood at 1.38 still higher than the national average of 1.36. Disparity ratio for ST and others have also shown increase between 1998-99 and 2005-06. Disparity ratio of 1.82 in 2005-06 is highest across all the states. Incidence of under nutrition in state of Gujarat for the year 1998-99 was lower than the national average; across all social groups. It is disturbing to note that in 2005-2006 under nutrition in Gujarat was higher than the national average. The level of under nutrition for SCs of Gujarat is close to the national average and for STs it is higher than the national average; for ‘others’ it is lower than the national average. Immunization of children in Gujarat has been above the national average in 1999 and in 2006. The social gap for Gujarat in immunization was better than the national average in both the time periods. However, social gap in ante natal care has increased between 1999 and 2006. The rank of the state has declined from 9th in 1990-95 to 11th in 2005-2010; Other developed states such as Tamil Nadu, Haryana and Maharashtra have done much better. These outcomes have to be seen in relation to the priority of the government towards health. Like other states share of health expenditure in total government expenditure has declined. However, the share of expenditure in the state is less than the national average. There is a very high reliance on the private sector in Gujarat both in rural and urban areas. This gets reflected in the fact that there is a decline in use of government health service across all the income groups, barring the lowest income group in rural areas. In urban areas we see a similar declining trend in use of government services but the decline has been quite significant in lowest income group. Unequal health achievement across social groups reflects the existing health inequity in the state. Government’s role in delivery of health services have been questionable and this trend calls for attention as poor in large number in rural areas still depends on government health services.
Way Out
All these facts compel us to ask how do we explain the socially exclusionary outcomes of growth? What is the root cause of these uneven outcomes? Are these unequal and unjust outcomes result of neglect and therefore by highlighting the plight of the neglected we try to achieve ‘recognition’ for them. Or are these outcomes just an unintended consequence of the existing model of development and we need to address the individual and group disadvantages (education, skills and social capital for better paid employment, stop overt discrimination etc.) so that ‘every one’ has equal access to gains from growth. Alternatively, we might argue that structural change must occur to overcome this exclusion. This implies that the roots of inequalities are in the neo-liberal economy that negates the possibility of a level playing field. This work on Gujarat model, a model which is a more ‘smoother’ implementation of the Indian model of development of recent years, argues that more than neglect or non recognition, social and economic disadvantages experienced in the state are rooted in the nature of economic models chosen by the state. We need to construct an alternative development strategy for the state. A strategy which recognizes that markets are not the only drivers of growth. Growth can also happen by limiting and harnessing the power of markets and fostering growth with social justice.
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