#Factsheet on Gujarat as per #CAG Report

Members of a farming family plough a field in preparation for sowing cotton seeds in Kayla village, 70 km from Ahmedabad in July 2011. Rural communities in Gujarat remain outside the pail of development.Photo:SAM PANTHAKY/AFP

CAG reports and data on economic and social development from various sources make it evident that the much-touted “Gujarat model” of development is non-inclusive, socially divisive and highly ineffective in key areas.

  • The backdrop is ultra-nationalism and the 2002 massacre of Muslims, unbridled access of big business across political groupings and an ominous union of economic liberalism and Hindu nationalism, masquerading as the grand governance model of Gujarat.
  • Interestingly, while miles of footage is being devoted to the governance style and the economic model of Gujarat, the real issues of development are not part of the election debate.
  • Modi and the Bharatiya Janata Party (BJP), with the supposed lead in the current contest, have nothing much to say about their development model, development strategy or priorities.
  • Their only claim is that they will do more of what they have done in Gujarat.
  • The prime ministerial candidate has proclaimed so on numerous occasions.

Governance model

  • Numerous initiatives that the State of Gujarat has taken in recent years confirm the unqualified faith of the rulers in the workings of the market and in the capacity of the private investor to meet the development needs of the State.
  • Resultantly, governance in Gujarat has been fashioned to meet the needs of the private investor, with public investment taking a back seat.
  • The share of investment in Gujarat is reasonably high, its ranking in employment associated with this investment is relatively low.
  • The disconnect between investment and employment becomes clear when we look at the sectors in which investment is flowing.
  • Between 1983 and 2010, out of the total investment, 30 per cent of the projects, 42 per cent of the investment and 26 per cent of the employment were in the chemical and petrochemical sector alone.
  • Out of the memorandums of understanding (MoUs) signed every year, often seen as the successful outcome of the “Vibrant Gujarat Global Investors Summit”, data show that the share of “projects implemented” and “under implementation” has continuously declined: from 73 per cent in 2003 to 13 per cent in 2011 (numbers for 2005, 2007 and 2009 are 62, 63 and 31 respectively).
  • Ministry of Commerce data also suggest that the State’s share in investment intentions as reflected in industrial entrepreneurs memorandums (IEMs), letters of intent (LoIs) and direct industrial licences (DILs) has steadily declined from about 20 per cent in 2005 to less than 10 in 2011.
  • In other words, the failure rate of promised or projected MoUs and the State’s share in national investment are decreasing.
  • We clearly need a more realistic assessment of the “efficiency” of the State administration and the real strength of the “investor-friendly governance” model.
  • What explains the investment boom in Gujarat is the combined effect of tax concessions, investment subsidies, low-interest credit, cheap cost of land and a pro-business labour policy and not the much-touted good governance, Gujarat style.

Labour unrest

  • The essence of governance in Gujarat is discernible from one more fact. Economic Survey, Government of India, 2011, reveals that Gujarat witnessed the highest number of strikes and other forms of labour unrest in recent times. However, this has not deterred the investors’ interest in the State.
  • The investors’ faith is reinforced by the severely compromised ability of the Labour Department to implement labour laws and the special favours offered to the corporate groups.
  • It is evident in recent Comptroller and Auditor General (CAG) reports indicating the Gujarat government and the Gujarat High Court notices to several corporate houses in response to a public interest litigation (PIL) petition alleging undue favours to corporate groups leading to massive losses to the State exchequer.
  • In Gujarat, large tracts of government land which were under the commons or were meant for fishing and grazing have been acquired for the use of industrial operations, such as in Mundra and Kutch, or for the Tata’s Nano project.
  • For projects where the State government has tried to acquire private land, there have been public protests. Acquisition of land for the Special Investment Region in north Gujarat is a case in point.
  • This notification faced protests from farmers, and the government had to withdraw the notification from many villages. So the claims to unhindered project implementation have more to do with the transfer of public land to private hands.

Decline of PDS

  • 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.
  • While many States have shown improvement in the public distribution system (PDS) over the past five years, Gujarat is one of the worst-performing States.
  • The per capita PDS consumption is not only low, but it is falling and it has the highest rate of foodgrain diversion.
  • Claims of efficient governance notwithstanding, evidence suggests that half of the poorest in Gujarat do not get any subsidised grain because of poor coverage and the exclusionary nature of targeted PDS.
  • Gujarat is also the only State which shows a decline in the per capita purchase of PDS grains.
  • In terms of participation in Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in 2009-10, only 19 per cent of the households participated for more than 60 days in a year in Gujarat, a figure far below the national average.
  • The average NREGA wage in the State is also close to the lowest that prevails in the country.
  • As per the recent National Sample Survey Office (NSSO) Employment and Unemployment Round 2011-12, the average real wage (including regular and causal) in both rural and urban Gujarat is lower than the national average.
  • It stands at Rs. 112 (at 2004-05 prices) for rural areas and Rs.177 for urban areas, while the corresponding figures for all-India are Rs.144 and Rs.231 respectively.
  • The performance of the Mid Day Meal Scheme, measured in terms of one member of the family benefiting during the last 365 days and the utilisation of Integrated Child Development Services in Gujarat, is just close to the all-India average and it does not fall amongst the group of best-performing States (Report of the third National Family and Health Survey (NFHS) and NSSO, 2004-05).
  • If we look at expenditures on health, the ranking of Gujarat has worsened in comparison to other States between 1990 and 2010, and the trend is similar in the direction of expenditure in education.
  • Thus overall, the governance model of Gujarat is all about aggressive implementation of development on behalf of the big private investor.
  • It is not a model built on the historical legacy of Gandhian Trusteeship and the cooperative movement in Gujarat.
  • It is a model that works for the rich and against the poor. It is not a model which is entirely market-led, but one where the state is working on behalf of the big private investor.

Social development

  • The Human Development Report of India, recently released by the Institute of Applied Manpower Research, New Delhi, places Gujarat at the 9th rank.
  • States like Tamil Nadu, Maharashtra, Haryana and Himachal Pradesh have performed much better than Gujarat.
  • There has been no improvement in Gujarat’s rank ever since the first human development index (HDI) was done in 1999-2000.
  • Gujarat has fared poorly in comparison with other States, in spite of its high growth, in basic health indicators.
  • For instance, the maternal mortality ratio (MMR) for Tamil Nadu is 97, for Maharashtra it is 104, while it is 148 for Gujarat.
  • Similarly, in measures such as the infant mortality ratio (IMR) and the Under 5 mortality ratio (U5MR), States like Tamil Nadu and Maharashtra have performed better than Gujarat. The IMR was 71 in Tamil Nadu, 56 in Maharashtra and 86 for all India in 1992-93.
  • This has now come down to 22 in Tamil Nadu, 25 in Maharashtra and 44 nationally. The corresponding figures for Gujarat are 72 and 41 respectively.
  • In nourishment, or rather, undernourishment, the experience of Gujarat has not been encouraging either.
  • Fifty per cent of the children were undernourished in Gujarat in 1992-93 and in 2005-06 even more children (51.7 per cent) were undernourished.
  • When we compare health indicators for marginalised groups, Gujarat did not fare better than other comparable States.
  • For instance, in 1992-93, the IMR for Scheduled Castes in Tamil Nadu was 90 points, which came down to 37 in 2005-06. In Gujarat, it marginally changed in this period from 70 to 65. Similarly, the IMR for Scheduled Tribes is no better in Gujarat. It was 86 in 2005-06 in Gujarat, while it was 62 nationally.

Disparities in education

  • Literacy is the simplest indicator to get a sense of aggregate characteristics in the field of education.
  • It is no surprise to note that the average level of literacy in the State is higher than the national average.
  • What is disturbing is the performance of the State in improving literacy between 1999-2000 and 2007-08 (NSSO 55th and 64th rounds) in comparison with other Indian States.
  • During this period, Gujarat’s ranking, in comparison with 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.
  • This sluggish growth in Gujarat is disconcerting since the gains in literacy at the national level have been much better.
  • Another way to look at that State’s achievement in the education sector is to examine the rate of current attendance.
  • Here again, the rank of the State has worsened during this time period from 21 to 26, in current attendance in the age group six to 14.
  • Not only in aggregative terms; the educational outcomes in Gujarat across social groups further add to the gravity of the crisis in the education sector there.
  • The gender difference of 20 percentage points in the State is higher than the gap in the literacy rate between men and women at the national level.
  • The gap in literacy outcomes between those belonging to the general category and other marginal social groups was also greater than the national average in 2007-08.
  • Thus, social disparities in education in Gujarat are higher compared with other States in educational outcomes and in participation and access to education.

Inequality, Poverty and Employment

  • In 1993-94, the proportion of people who were poor in rural Gujarat was 43.3 per cent. This percentage came down to 21.5 per cent in 2011-12.
  • Gujarat has gained 22 percentage points in poverty reduction in the rural areas during the last two decades, while nationally the gain is around 25 percentage points.
  • If we compare Gujarat with other developed States such as Tamil Nadu, its performance is dismal.
  • The incidence of poverty in Tamil Nadu was 51.2 per cent in 1993-94; it drastically came down to 15.8 per cent in 2011-12, with a gain of 34 percentage points in poverty reduction in the rural areas during the past two decades.
  • It is worth mentioning here that Gujarat was better placed in the 1990s than Tamil Nadu in the 1990s but ended up behind the latter in 2011-2012.
  • The gains to the marginalised and disadvantaged social groups in poverty reduction were also lower in Gujarat compared with the national average and with other comparable States.
  • Between 1993-94 and 2011-12, the gain to S.C./S.Ts in poverty in rural Gujarat was 20.7 percentage points, while nationally, poverty reduced for the marginalised by 27.6 percentage points.
  • Urban Gujarat did no better either. In the period between 1993-94 and 2011-12, the incidence of urban poverty came down from 28.2 per cent to 10.2 per cent in Gujarat.
  • The corresponding figures nationally are 31.6 and 13.6 per cent respectively. During this period, urban poverty reduced in Tamil Nadu, for instance, by 27 percentage points, compared with 18 percentage points for Gujarat.
  • Likewise, the gains to the marginalised and disadvantaged social groups in urban Gujarat are very low in comparison with other States and also all-India figures (see tables 1 and 2).

Stagnant employment growth

  • The biggest casualty of the “successful” growth in Gujarat (and least discussed) is employment. The aggregate employment in Gujarat has remained stagnant.
  • The stagnant employment growth in the last five years in Gujarat is better than the decline in employment experienced at the national level but lags far behind that of Maharashtra, for instance.
  • During the 17 years from 1993 to 2010, growth rates of employment for rural Gujarat and rural India were on a par, while urban Gujarat performed slightly better compared with the all-India figure.
  • In the last five years, employment in rural Gujarat declined in spite of exceptionally high growth in this sector.
  • The loss in rural employment 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.
  • Whatever marginal growth has happened in employment in recent years has occurred mainly in the services sector, especially in the urban areas, and mostly this job creation has been casual in nature.
  • Gujarat’s contribution to India’s manufacturing employment has also remained almost stagnant over three decades, in spite of doubling its share in gross value added.


There are three clear messages.

  1. First, the silence of the two major political parties on bringing core development concerns to the forefront of the election discussion reflects the entrenchment of the big corporations’ agenda across the political spectrum. The media chorus and euphoria on Gujarat have facilitated this by letting only growth be the focus of the debate, without looking at its impact and keeping the content of governance unexamined.
  2. Secondly, the muddled and selective presentation of facts in the mainstream media on Gujarat, which does not highlight the failure of the Gujarat government to provide basic needs and the welfare requirements of the poor, has helped to project the Gujarat model as an “alternative” for India.
  3. And finally, 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.