Is the Gujarat 'model' superior to other 'models' of development?
The recent defeat of the BJP in the rural elections in Gujarat has encouraged numerous experts to question the Gujarat 'model' of development. The argument being put forth is that the model has failed the poor and the farmers in Gujarat. Supporters of the Gujarat 'model' argue that the comfortable win for the BJP in Urban elections showes the success of the Gujarat 'model'. Therefore, two questions arise out of this, a. Has the Gujarat Model failed rural Gujarat? and b. Is the Model superior to other development models?
First a bit of interesting trivia. Over a 40 year period, the best performing major State is 'Tamil Nadu' whose per capita ranking increased from 10th to 3rd. The worst performer was Punjab, followed by Bengal & Rajasthan.
Coming to the period between 2009 and 2014, the period between the last two elections, the State level picture is interesting -
Gujarat was the 7th best performing State behind many States including West Bengal.
Amongst affluent States with 7 or more Lok Sabha Seats, Gujarat which is the 5th most affluent State is ranked 3rd on growth with TN and Haryana ahead. However, compared to the TN and Haryana, Gujarat starts with a lower base.
One good to reason to appreciate the Gujarat Model is that the State has managed to deliver a high level of performance inspite of the education levels within the State. Gujarat has the lowest % of Graduates (as a share of population) when compared with other affluent States. This is remarkable because the correlation between % of Graduates and Per Capita GDP is extremely high at 0.92 (2013, Max is 1).
That other interesting aspect of the Gujarat 'model is the high reliance on 'Manufacturing'. At 26% share of the GDP it is closer to the 31% share in the Chinese economy (India Share is about 18%)
When it comes to Incomes, the average waged worker in Gujarat made far less than each of the other affluent States. In fact, the average farmer makes much more than the average farmer in most States and also saves much more than the average farmer in Tamil Nadu and Maharashtra. However, TN and Maharashtra have three major advantages over Gujarat a. Both the States are more urbanised than Gujarat, so dependency on farming is marginally lower, b. Both the States have double of Gujarat's rural female work participation rates thereby delivering more incomes to the average rural household c. Land ownership is more concentrated amongst the most affluent farmers in Gujarat when compared with Maharashtra and Tamil Nadu creating disparities within rural Gujarat
Gujarat is the lowest amongst all the affluent States when it comes to Internet Access and Television ownership. However, Gujarat is marginally ahead of two states when it comes to Car ownership and is the second highest when it comes to Motorcycle ownership. This applies to both rural and urban Gujarat suggesting wider income disparity than the other States given that its per capita income is only ranked 5th amongst the 6 most affluent States.
Conclusions
a. The Patidhar agitation has probably emerged due to a variety of reasons - Political, Historic (Income disparities due to land ownership and low female work participation) and low levels of education and skills. The low levels of education and skills in rural Gujarat is a clear downside of the Gujarat Model
b. Gujarat clearly stands out on Manufacturing and its ability to deliver a high performing economy inspite of a relatively less educated populace. This is certainly something that must be emulated by all States
c. The ability to sustain the growth momentum after having lost its per capita rank to Tamil Nadu in the 1990s seem to suggest that the Gujarat 'Model' has created a positive environment for the enterprising Gujarati and has the put the State to a sustained level of growth. This is something that must be emulated by all States
d. The consumption data seems to suggest that benefits of the economy have not reached many in rural Gujarat. This may have to do with lower rural incomes due to lesser education, lesser female work participation and so on. However, the relatively higher Car ownership suggests that the gap between the poorest and rich are probably higher in Gujarat than most of the affluent States. On these aspects, Gujarat has a lot to learn from States like Tamil Nadu.
There are a few good things to copy from the Gujarat Model and there are a few good things to learn from the Tamil Nadu model of development (Caste Empowerment, Gender and Education). The PM should replicate the Gujarat Model in India along with the Tamil Nadu Model of development because India's population mix is quite different from Gujarat's population mix . India is a lot more like Karnataka when it comes to its demographic mix. A combination of the two models would mean - Great education, Empowering all social classes, Encouraging Female work participation, excellent environment for businesses and manufacturers (Make in India) and continuous supply of skilled workers (Skill India) - The India Model of Development.
Data Sources: Census, Various NSSO Reports 2012-14 (Consumption, Employment, Agriculture, Education), CSO GSDP Data
Rust | Systems Software
8 年Excellent piece - Facts and opinions without prejudices!!
GOTS , GRS , OCS TEXTILE WEAVING COMPANY SUPPLYING BLACK OUT SATIN AND GREY FABRICS
8 年Gujarat have lowest circle rate of land compared to prevailing market prices , Gujarat is hub for black market land deals
Human Resources
8 年excellent article
Member of Institute of Directors. Founder Owner: The Pearl Collection
9 年Since the eruption of the financial crisis in 2008,much of the public debate has focused, after decades of silence, on developmental economics: how to sustain growth, create lasting jobs, generate incomes , thus eradicating the scourge of poverty and preventing social polarization and fragmentation. Manufacturing sector has always offered more jobs to the economy followed by the financial service sector. It is witnessed that major economies of the world have moved to being called as "Developed Economies" by transitioning labour forces from agriculture to manufacturing and urban areas and later into services. So I agree with you that education is the tool to empowering all the social classes and the genders to move on to a fast paced development. To add to what you have said on TN and Maharashtra , Education helps here... it allows you to move to hi value services than only depending upon low value services.
CHIEF OF PARTY at TechnoServe ( USDA WEST AFRICA CASHEW PROJECT)
9 年Subhash- Well written. Hugely informative and interesting analysis. I have a few observations to share..... 1. Correlation between educational level and GDP of Gujarat is possibly a kind of misnomer. High level of youth don't pursue graduation because they become entrepreneur. Creating wealth and pursuit for it is embedded in the culture and most of the young minds direct their energy in creating value rather than acquiring degrees. A sharp contrast to many other states like Tamil Nadu. This may not have anything to accessibility to college or ability to pay. 2. Setting up a strong manufacturing base, I think would be the most significant achievement of this model. The ability to create value in house is quite remarkable when compared with some other states like Kerala which lost out on industrial development yet GDP improved owing to remittance from Gulf. 3. Average wages of agricultural and manufacturing labour is a function of supply and demand. It is also a reflection of the bargaining power of the labour union in the state. In Kerala, labour cost is high, possibly highest in the country because of lack of supply. In Bengal, it would be expensive because of the collective bargaining power of the union. However as you have pointed out, no two states would have similar socio political fabric hence may need different approach. Getting the model or strategy right is important albeit the follow through with execution is what really matters...