Faltering Gujarat

The state government needs to urgently reboot its economy

The July data for consumer price index-based inflation has shown that rural Gujarat experienced double-digit inflation. It is true that rural inflation, in general, has been higher than the urban areas. Yet the difference in the inflation in Gujarat's rural and urban areas was 1.96 percentage points, much higher than the national difference of 1.27 percentage points. The spike in inflation comes at a time when Gujarat is one of two states that seem to have missed out benefitting from the above-average monsoon that the rest of India is receiving at present. As it often happens, the rainfall has not been well distributed and as of end-July, rains in Gujarat were short by 48.3 per cent. According to Crisil's Deficient Rainfall Impact Parameter (DRIP) index, scores for Gujarat are "higher than last year/six-year average (the higher the worse)", suggesting it is one of the worst-affected states this year. Gujarat, which accounts for 11 per cent of India's bajra production, nine per cent of tur, 39 per cent of groundnut and 29 per cent of cotton, was the worst-affected as on July 25, according to Crisil. The rainfall deficiency will make some of the crops such as groundnut vulnerable to a production hit.

But these developments are just the first pointers of a larger economic slide that Gujarat is witnessing at the moment. Reports suggest that foodgrain production has fallen sharply over the past three financial years - from 98.82 lakh tonnes in 2013-14 to just 61.92 lakh tonnes in 2015-16 - a fall of almost 40 per cent. And this fed in to a more widespread fall in the economic growth rate from 10.8 per cent in 2012-13 to 7.7 per cent in 2014-15 and 7.6 per cent in 2015-16.

The fall in economic growth is bringing into sharp focus not Gujarat's economic model but also its performance in social development. At the best of times, the state lagged well behind other states on the human development index, including states far poorer than it. The growing Patel unrest since July last year, for instance, was fed by the economic slippages. The Patels have been central to the growth of small- and medium-scale industries in Gujarat but by 2012, NPAs in the sector had grown by 44 per cent.

With avenues of growth closing down, it is no surprise that even the well-off communities in Gujarat are asking for reservations in government jobs. Incidentally, Gujarat does not have much to offer on this front as the proportion of public jobs in the state is just 1.2 per cent, much below both the national average (4.5 per cent) and far below some of the other states such as Kerala (16 per cent). The Dalit protests, in the wake of the Una episode in July, where Dalit youths were stripped and flogged by cow vigilantes, add yet another dimension to the social unrest in the state.

Gujarat's economic success and its apparent all round prosperity was Prime Minister Narendra Modi's claim to fame. Unfortunately, as of now, it appears the model is under threat. Mr Modi realises this, too, as seen from the change of leadership at the state level. The new chief minister, Vijay Rupani, has his work cut out. He needs to urgently reboot the state's economy otherwise he will find it difficult to rein in the growing social unrest among various communities in the state.