Five reasons why Gujarat is different from other states: CLSA

The broking house says the state is one of the best in terms of improved governance

Much has been written about Gujarat and its growth models. Columnists have argued and counter-argued on Gujarat’s growth story. While some have criticised its growth by comparing it with a low base under developed state like Bihar, others have brought out the all-round performance of Gujarat economies. The latest to join this debate is the foreign broking house CLSA.

A report titled ‘Gujarat: Growth to sustain’ by Anirudha Dutta and Bhavesh Pravin Shah the authors have concluded that the state has one of the most unique growth models in the country. The report says that Gujarat is one of the best states in terms of improved governance in the past decade within the developed states. Results are visible with superior growth in state’s literacy levels, per capita income, drinking water and sanitation facilities. The report adds that some of the less developed states are witnessing faster improvement but that is because of low base effect.

Following are the five reasons why CLSA this Gujarat stands out among other Indian states.

 

• A number of Indian states have evolved directly from being an agrarian economy to a service powerhouse without going through a phase where manufacturing dominates, which resulted in no large scale creation of employment. In Gujarat however, manufacturing accounts for 40 per cent of the Gross State Domestic Product (GSDP) as compared to 27 per cent for India. The state also scores better than Maharashtra and Tamil Nadu, which have been witnessing fall in share of industry. Gujarat now accounts for 11-11.5 per cent of the country’s industrial output as compared to 8-8.5 per cent in 2001.
• While industrial growth of Gujarat has been thanks to industry friendly policies, natural advantage of a long coastline and entrepreneurial nature of its people, the present government’s initiative have enabled it to attract a diverse set of industries and industrialists.
• Agriculture contribution is significantly higher than industrialized states like Maharashtra and Tamil Nadu. Agriculture contributes 13 per cent to Gujarat’s GSDP and supports 53 per cent of the population while its contribution to the national agriculture has doubled over the last 10 years. This has been possible by increasing its yields and acreage under cultivation. Yields in food grains have increased from 827 kgs per hectare in 2001 to 1845 kgs per hectare in 2011, which is almost double the country’s average.
• Unlike other states, Gujarat’s dependence on central government fund is very low. Its own tax revenue as a percentage of total tax revenue is the highest in the country at 84 per cent.  Share of central taxes and grants from the centre account for less than 30 per cent of overall revenue receipts for the state.
• Unlike trends at national level Gujarat has not replaced spending in education and medical with social security and welfare. The state’s proportion of overall expenditure spent on development activities has remained range bound at 55-65 per cent of revenue expenditure. Spending in agriculture and allied activities has increased from 6 per cent of development expenditure in FY04 to 7.5 per cent in FY12.