China in our backyard

The mid-term appraisal of the Eleventh Five-Year Plan gives annual average real rates of GSDP growth for the states, actual figures for the Tenth Plan (2002-07) and expectations for the Eleventh Plan (2007-12). The table shows these numbers for major states. Since these are Planning Commission figures, they cannot be accused of having been doctored by the state governments. If one ignores small states like Delhi and Goa, Gujarat has shown the fastest rate of growth during the Tenth Plan and one of the two fastest (with Karnataka) during the Eleventh. In the context of the Vibrant Gujarat summit, questions have been raised in the media about whether the Gujarat growth story is real. It clearly is.

Small states like Delhi, Goa, Himachal Pradesh, Uttarakhand and even Kerala are relatively homogeneous. They do not possess large intra-state disparities. Planning development for them is relatively easier and it is also easier for them to jack up rates of growth. It is also relatively easier for historically backward states to increase rates of growth because there is plenty of slack in the system. If a few things are done right, growth picks up. Bihar, Chhattisgarh, MP and Jharkhand are instances. Between 2003 and 2007, India's growth rates approached 9% and one story there was of relatively backward states catching up, while growth petered out in advanced states like Punjab.

There is a difference between GSDP and GSI (gross state income) of a state, important for states that have remittances. But that's neither here nor there, since we don't have data on GSI. If relatively advanced states like Gujarat, Haryana and Karnataka register 11%, that's truly remarkable. There is a parallel with China, in two senses. First, in China's provinces, too, there is an issue of relatively backward provinces in the north-west catching up.

Second, that 11% doesn't compare unfavourably with some of China's coastal provinces, though in a few of them, real growth chugs along at close to 15%, not 11%. However, there are questions about the quality of Chinese data, not just in the aggregate, but at the level of provinces. Gujarat's is not just an industry, energy or petrochemicals story. At one level, given the fact that Gujarat was India's only state with a manufacturing/GSDP ratio of more than 50%, this is expected. But even there, reduction of procedural hassles and success with development of clusters (special investment regions, not just SEZs) and privatisation of ports are worth mentioning. It is true that many MoUs signed don't translate into actual investments. But that's a general malaise and Gujarat's conversion ratio is better than most.

The more interesting story is the agricultural one. While this has been written about (including in a paper by IFPRI), it doesn't seem to have recognised much. Roads, micro-irrigation and power have boosted agricultural growth, even in dryland areas. Participatory irrigation management and water users' associations have been mentioned by the Planning Commission also in that mid-term appraisal. "One of the most successful examples of PIM in India is being implemented jointly by the Government of Gujarat and Development Support Centre, Ahmedabad, since 1994 on the right bank canal of the Dharoi project on the Sabarmati river covering about 48,000 hectares. 175 WUAs and two Branch Level

Federations have been formed. Each WUA services a command area of about 300 to 500 hectares and has about 200 to 350 members. The Branch Level Federations service an area of 7,000-14,000 hectares. The WUAs in Dharoi are registered as co-operatives. Each farmer within the command area has purchased a share to become a member. There are about 35,000 members. They have carried out canal rehabilitation works worth Rs 55 million wherein the members have contributed about Rs 10 million ... They have installed gates at the outlet level with their own funds and devised a system of water distribution wherein no member is given water without a pass. They prepare an annual budget and decide the water charges which are often over and above the Government rate. The office bearers collect the water charges in advance from the farmers and pay them to the Irrigation Department." There is more along similar lines. We don't need the populism. Had we taken care of Indian agriculture without the populism, we wouldn't have needed MGNREGA either.

There is yet another interesting experiment that has been started—Mission Mangalam. With a Gujarat Livelihood Promotion Company, this seeks to integrate women's SHGs with the private corporate sector. While there is no need to be laudatory about everything and districts like Dang are still backward (without being plagued by Naxalism), with Gujarat's social sector outcomes below what it should have achieved, there is no denying that the state is vibrant and there is a strong sense of pride. There are useful developmental lessons for every Indian state. Being dismissive simply because the CM happens to be Narendra Modi gets the country nowhere. On the contrary, the development is probably happening because the CM happens to be Narendra Modi.

—The author is a noted economist
source;FinancialExpress