23 Mar 2018 19:22 IST

The Gujarat model under question

Gujarat spends less than 2 per cent on education, as against an average norm of 5-6 per cent | Vijay Soneji BL on Campus

Despite high growth rate, there is near unanimity among economists that its social indicators are poor

NITI Aayog Vice-Chairman Rajiv Kumar, during a recent visit to Gujarat, had some interesting observations to make about the State’s social progress. He said that though the State’s performance on industry and infrastructure are to be lauded, it lagged behind in social development, especially education and health.

He also expressed satisfaction over the State’s increased allocation on these crucial social sectors, adding that it had asked the district collectors to pay special attention to child malnutrition and maternal mortality.

Now, this is an interesting and crucial observation from the head of the government’s most important think-tank. Is this finally an admission from the powers that be, that the much-touted Gujarat model of development crucially ignored social development? Will the NITI Aayog Vice-Chairman’s remarks lead to an introspection in people who have been relentlessly tom-tomming the virtues of the Gujarat model of development?

The acrimonious debate

This issue brings back the rather acrimonious debate that played out in the mainstream media in 2013 between two of India’s best known economists — Amartya Sen and Jagdish Bhagwati.

The debate, in a nutshell, was that Bhagwati (and his associate Arvind Panagariya) was advocating the model of development where growth was given prime importance. His argument was that in a developing country like India, boosting the growth and per capita income was of paramount importance and the government’s economic policy must be tuned to that.

Here, both Bhagwati and Panagariya lauded the Gujarat model of development — where the State had achieved rapid economic growth and industrial development along with infrastructure development, such as good roads and 24x7 electricity, by easing investment rules and cutting red tape.

The other side

Sen, on the other hand, was questioning this obsession with growth and argued that social development was equally, if not more, important than growth and industrialisation.

For him, providing primary education, good healthcare and clean drinking water were paramount and the state need not wait for growth to pick up to enable social development of its citizens. In fact, Sen held up the example of Kerala, a State that did not have a very high growth rate and yet, ranked at the top in social indices. To him, social development was something that could be achieved independent of economic growth and here, the state had an important role to play.

Of course, it is important to remember the political context in which this debate was played out. It happened in 2013, at the fag end of the UPA-II’s rule, which was beset with corruption scandals and slowing growth. The BJP was gearing up for the 2014 elections and had chosen Narendra Modi as its Prime Ministerial candidate, not without a few murmurs from the party’s old guard.

Sen had made his displeasure over Modi known in the media, saying he did not want him as the Prime Minister. Bhagwati and Panagariya, on the other hand, had come out in open support of Modi, impressed with his economic achievements during his stint as the Chief Minister of Gujarat.

Panagariya went on to become the first Vice-Chairman of the newly founded NITI Aayog, the think-tank that replaced the decades-old Planning Commission. It was during the 2014 elections campaign that the BJP went to town over the Gujarat model of development, selling it as the panacea for all economic problems of the country.

An admission?

So is the current NITI Aayog Vice-Chairman’s observations on Gujarat a rather belated attempt at acknowledging the Gujarat model’s shortcomings?

Though Gujarat’s growth rate and per capita are among the highest, there is now a near unanimity among economists that its social indicators are poor, which has now been validated by the NITI Aayog.

This clearly shows that the high growth in the State has not trickled down to the poor. As economist Indira Hirway argues, though the State government, especially during Modi’s stint as Chief Minister, went out of its way to attract investments, doling out massive sops by way of cheap land, power and tax breaks, it hasn’t led to significant employment generation, thanks to the capital-intensive nature of industrialisation.

She also argues that the huge incentives doled out to industry have left the State with little funds for the social sector. Gujarat spends less than 2 per cent on education, as against an average norm of 5-6 per cent and 0.8 per cent on health against the norm of 4-6 per cent, says Hirway. She goes on to add that 45 per cent of the children in Gujarat are undernourished and the pace of decline in maternal mortality rate has slowed down.

Given these alarming figures, it’s not surprising that the bureaucrats in the State are being asked to focus on child malnutrition and maternal mortality.

So, will the BJP government in Gujarat swallow its pride and learn a few lessons from the Left Front government in Kerala on social development?