The Gujarat Model of Growth, Development and Governance

Gujarat is hailed as a great success story of neo-liberalism resulting in a much higher rate of economic growth during the last decade than in the years before, or elsewhere in the country. Moreover, the rapid increase of the state domestic product was accompanied by a sharp fall in poverty and major improvement in social sectors such as health and education. A development performance made more laudable because good governance saw to it that the outcome was inclusive and fair. All this, of course, according to those who believe a priori in the healing power of state-led market fundamentalism. As, for instance, Jagdish Bhagwati, who rejects other schools of thought as economic apostasy.¹ But this declared wisdom on the “Gujarat Miracle” does not go uncontested. Social scientists based in the state and astute students of its track record came together in a seminar at the end of 2012 to discuss their dissenting views on the transformative trajectory of Gujarat. The book under review is the outcome of their critical deliberations.

The growth part of the story is least challenged. In an introductory chapter, the editors confirm that there was indeed a major spurt in economic growth from 2002-03 to 2011-12. They dispute, however, that this process can be written up as having resulted in development, understood as expanding the choices for all people in society. Tim Sebastian denies in an econometric exercise that Gujarat stands out as a different model, and subsequent authors clarify that its growth rate is equal to Maharashtra, Karnataka, and Haryana. Indira Hirway argues that Gujarat became one of the fastest growing states in the country precisely by ignoring or even sacrificing major development goals. The policy frame has been one of exclusion rather than social inclusion. To realise his ambition to make Gujarat “the most attractive destination for investments in the world”, its high-profile driver went out of his way to placate corporate business with favours, and easy access to land, credit, and infrastructure. The chief minister of Gujarat thus ushered in a climate of crony capitalism, and the overt plus covert support he got from this lofty corner is meant to enable him now to proceed in the same direction countrywide. The huge expenditure on tax breaks and subsidies granted has been at the cost of public funding for the social sectors, which helps to explain why on this expenditure Gujarat ranks closer to the bottom of the major states in India. The overall decline between 2000-01 and 2009-10 in the percentage of public expenditure to gross state domestic product (GSDP) spending on primary education, health, family welfare, and social protection has been the steepest in Gujarat.