Gujarat among industrial growth laggards in FY12

The state was the sixth-worst during the year, according to the Annual Survey of Industries data

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A set of government data released recently seems to puncture the Narendra Modi-led Gujarat government’s claim that the state’s industrial performance has been robust.

According to the data fron the Annual Survey of Industries (ASI), the industrial growth rate for the state’s organised sector slumped below one per cent in 2011-12. And, in fact, these figures could even be a little overstated as these are not adjusted for inflation.

Gujarat’s industrial output, computed in terms of gross value addition, increased only 0.9 per cent in 2011-12, despite a low base of 1.2 per cent the previous year.

The overall industrial growth for India during 2011-12 stood at 18.4 per cent, compared with 18.3 per cent the previous year. These figures are in current price terms —the numbers will be included in the country’s gross domestic product (GDP) growth after converting these into constant prices by applying price deflators.

In 2009-10, Gujarat had seen a massive industrial growth, of 44.8 per cent, but that could have been because of a low base of (-) 0.6 per cent the previous year due to the global economic slowdown.

According to experts, the share of manufacturing in Gujarat’s Gross State Domestic Product (GSDP) is quite significant. Therefore, when the overall economic environment is weak, the picture in Gujarat is also gloomy. Manufacturing, both organised and unorganised, accounts for more than 87 per cent of the state’s gross domestic product.

“Gujarat contributes highly to the country’s manufacturing sector. Whenever there is a low demand in the economy, states like Gujarat are adversely affected,” said CARE Ratings Chief Economist Madan Sabnavis.

Since Modi came to power in the state in 2002-03, its industry in the organised sector saw double-digit growth rates in six of the 10 years up to 2011-12.

Also, Gujarat’s industrial output growth was higher than the national average in five of these six years. The only exception was in 2004-05, when the growth was 20.9 per cent in Gujarat and 24.9 per cent at the all-India level.

However, in 2011-12, the state’s industrial growth was one of the lowest in India. The states that experienced contraction in industrial growth that year were Tripura (-37.2 per cent), Jharkhand (-10.6 per cent) and Uttar Pradesh (-13.12 per cent). Besides, Chhattisgarh (0.35 per cent) and Assam (0.58 per cent) saw lower growth rates than Gujarat in the year.

But some economists have doubted the authenticity of the ASI data. Rajiv Kumar, a senior fellow at the Centre for Policy Research (CPR), said ASI’s was not complete data and took into account only registered units. “So, this could be an outdated number,” he said.

Karnataka, in 2011-12, saw the highest industrial growth rate in the organised sector, at 130 per cent. It was followed by Rajasthan (101.5 per cent), Goa (93.8 per cent) and Punjab (55.7 per cent), the ASI data revealed.