The real disagreement over Gujarat's 'economic miracle'
Few words in the English language are as evasive as “divisive”. It merely indicates a disagreement, and avoids explaining it. Yet that’s the standard description of Gujarat Chief Minister Narendra Modi, apparently about to win another election, which could catapult him to the leadership of the Bharatiya Janata Party (BJP).
Another other word, albeit much-attacked, apparently indispensable when discussing Mr Modi is “hype”. Is there a Modi Hype? Worth examining. But it’s easy a priori to believe there is — because nobody else in Indian politics today uses public relations as skilfully. His army of crazed amateur defenders is complemented by an articulate, swift and angry response by his government to any and all criticism.
And, finally, is there any truth to that third common phrase that’s applied to Mr Modi’s Gujarat, an “economic miracle”? When I hear those two words put together, I immediately disbelieve half of what I’m being told and question the other half. Economics is dismal. Like real life, it has no place for miracles.
Let’s try and disentangle the questions that come up when Mr Modi is discussed.
1. Is Gujarat doing better than comparable states?
2. If so, has it done even better in comparison in recent times, under Mr Modi, than it did after reforms, but before him?
3. And if that’s true, too, then what’s Mr Modi’s contribution to this performance?
Examine these one by one. Is Gujarat’s economic growth really as outstanding as the, er, hype would have us believe? The indispensable website indiaspend.com has examined Planning Commission figures for growth, and shown that between 2004 and 2012, Gujarat’s GDP growth left the national average, 8.3 per cent, far behind. It grew at 10.1 per cent. But, in the same period, Maharashtra grew at 10.8 per cent and Tamil Nadu at 10.3 per cent. Yet, for some reason, we don’t hear quite as much about the Karunanidhi/Jayalalithaa Growth Miracle. The argument falters at Step One. Perhaps you worry that income growth is deceptive? Well, let’s look at growth in per capita consumption. In urban areas, at 2.13 per cent per annum, it’s actually lower than the all-India average growth of 2.4 per cent; in rural areas, it is much lower than comparable states and close to the all-India average.
Consider Step Two anyway. Has Mr Modi’s Gujarat done a better job of raising growth rates? Again, Gujarat in 2004-12 grew 3.6 per cent faster than it did in 1994-2002. Meanwhile, Bihar grew 6.5 per cent faster, if from a lower base. But better-off Maharashtra’s growth was 5.8 per cent faster in that period, and Tamil Nadu’s was 4.7 per cent. Arguing Gujarat’s exceptionalism is, thus, difficult. Caveats: you can change these numbers slightly by taking different origin and concluding years from the ones indiaspend.com chose, but the fact that Gujarat is not as exceptional as we are led to believe does not change.
So you’ll be forced to argue, perhaps, that distributional considerations make Gujarat’s experience better than, say, Maharashtra’s. But that’s not ground that Mr Modi’s supporters will wish to retreat to fight on. It is marshy and treacherous. Because it is now widely accepted that, in terms of most human development indicators, Gujarat has actually fallen down the list, in relative terms, in Mr Modi’s tenure. True, much attention has focused on its poor malnutrition statistics. (Perhaps because Mr Modi, characteristically, blamed those on girls dieting.) And malnutrition statistics for India are fatally flawed by a dependence on incorrect parameters, as economists Arvind Panagariya and Jagdish Bhagwati have pointed out. But even Mr Modi’s stoutest defenders are forced to accept that Gujarat has done less well than it should have on social indicators.
Bibek Debroy, the author of an excellent new book on Gujarat’s economy, explains why: the state administration only started focusing on social outcomes around 2007. Since indicators change with a lag, the effects are not yet visible in the data. This makes perfect sense — and as a defence of Gujarat’s effectiveness as a development model, it’s unanswerable. But remember Professor Debroy is discussing that model, not the person who sets the government’s focus, and ignored social outcomes for six years. That person’s Mr Modi, and the fact that Gujarat’s social indicators haven’t kept up with its growth is, indeed, still an indictment of his leadership and priorities.
The problem is that three things are generally conflated in public discussion, causing much – heh – divisiveness. The first is Gujarat’s market-led, decentralised development model. This is what economists including Professors Debroy and Panagariya are defending, and they are right to. Absurdly, some of those critical of Narendra Modi blame him for the Evils they always see in neo-liberalism, too. This is fuzzy thinking, but then we can wait till the Revolution for clarity from people who use the word“neo-liberal” seriously. The second is Gujarat’s historical advantages: an enormous amount of land with the state government; a long shoreline; a middle class well disposed to markets and all things mercantile. And the third is the Modi Effect. As Harsh Sethi persuasively argues in this month’s Seminar: “to reduce Gujarat to Narendra Modi and his political practice does great disservice to the former and unnecessarily elevates the latter.”
Note: naturally, confusing other things to overstate the Modi Effect is exactly what his supporters want us to do. Given that it’s clear growth and governance could be delivered by someone who doesn’t refuse to apologise for standing around while his state turned on its Muslims, one supposes that most people energetically backing Mr Modi’s ambitions are doing it for reasons other than a dispassionate approval of growth and development. I shall leave the reader to work out what these reasons may be.
Still, is this chief minister somehow special? The evidence seems indisputable that Gujarat’s bureaucracy is responsive, decentralised and innovative. It is possible that Mr Modi is somehow personally responsible for this; Professor Debroy says to deny him all credit would be unfair and uncharitable. I agree. Though I do note that less objective observers of Mr Modi than Professor Debroy are hypocritically happy to suggest that he is individually responsible for the emplacement of every handpump in north Gujarat, but somehow had nothing whatsoever to do with the complete failure of the entire state machinery in 2002.
Yet, while it is important to dissociate the effects of a market-focused, apolitical and decentralised (almost China-like) model from the hype of Narendra Modi the Wonder Administrator, there is one question that too few of his attackers ask, though it, in truth, underlies much of the anxiety and ecstasy over Mr Modi: is the fact that Gujarat can single-mindedly implement this development model easier than can most other states, distracted as they are by economic populism, also part of the Modi Effect?
And that’s the true division. If that’s the real Modi Effect, is it worth it? If asmita-based development is to be financed by political space bought by a harsh subnationalism, communal-ethnic triumphalism, a leader vastly intolerant of disagreement and dissent and an artificial, restrictive homogeneity imposed on politics and society, then some of us believe the price is too high for India. It always has been.
For a fresh take and a nuanced, reported evaluation of the questions discussed here, read Rajiv Rao’s series of excellent articles from Gujarat in Business Standard.
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