What is wrong with the Gujarat model of development?

The BJP has won for a record seventh term in the Gujarat Assembly elections held earlier this month. The win is no doubt historic, and it feeds on the image of a model of development that the BJP claims has brought good governance and direct benefits to the

The BJP has won for a record seventh term in the Gujarat Assembly elections held earlier this month. The win is no doubt historic, and it feeds on the image of a model of development that the BJP claims has brought good governance and direct benefits to the people of the State. Hard numbers taken from official sources, however, tell a slightly different story and raise questions on just how much of that development has benefited the poorest in Gujarat. For example, the average daily wage rate of workers in Gujarat is among the lowest in India. The rate is Rs. 295.9 for daily workers, when it is Rs. 837.7 in Kerala, Rs. 478.6 in Tamil Nadu, Rs. 519 in Jammu and Kashmir, 462 in Himachal Pradesh. In Bihar, the rate is Rs. 328.3, and in Odisha (Orissa), it is Rs. 313.8.

It is fair then to say that Gujarat has experienced a rapid increase in incomes in the last decades, but it is equally fair to argue that this comes at the cost of workers while money flows more to the rich and the upper echelons of society

The numbers are from table 105 titled: “State-wise Average Daily Wage Rates in Rural India” published by the Reserve Bank of India’s ‘Handbook of Statistics on Indian States 2021-22’ released in November 2022.  The share of informal unorganised workers in the total number of workers is high at over 80% and indicates that a large part of the workforce is less protected. Is it a sign of the skewed or uneven nature of development in Gujarat that while workers are paid relatively lower in the State, MLAs received a 65% hike in salaries in 2018, taking their monthly salaries and perks to Rs 1.16 lakh per month, among the higher brackets of MLA salaries in India. There was recently talk of MLAs salaries being cut. 

Gujarat, known as the “Jewel of Western India”, is one of the most prosperous States in the country, with its per capita income 70 per cent more than that of all India. Though the State population is only about 4.7 per cent of the national population, its GDP is 8.36 per cent of the national GDP, its industrial output is 17.44 per cent of the national industrial output and it receives 23 per cent of FDI of the national total.  Data comparing West Bengal and Gujarat, published in 2021 at the time of the WB assembly elections showed that the two States are among six that generate half of India’s economic output. 

70% of the workforce in Surat and 50% of the workforce in Ahmedabad, two top cities, was made up of migrant workers

It is fair then to say that Gujarat has experienced a rapid increase in incomes in the last decades, but it is equally fair to argue that this comes at the cost of workers while money flows more to the rich and the upper echelons of society. So much so that the number of billionaires in Gujarat has increased and at the last count was reported at 60. This is the Gujarat that is viewed as the growth engine of India.

The picture that emerges is of the prosperity of Gujarat being based on the sweat and blood of about 75-90 lakh workers, including 30-40 lakh migrant workers who come to Gujarat out of distress and survive on what are amongst the lowest wages in the country. A study done during the attack on Hindi-speaking migrant workers in Gujarat in October 2018 found that 70% of the workforce in Surat and 50% of the workforce in Ahmedabad, two top cities, was made up of migrant workers.

This gap then explains why Gujarat is seen by some as the home of crony capitalism where undue favours including undue subsidies and incentives rather than free market forces have pushed large corporate business houses to promote rapid economic growth in the State.  Today, a small number of these superrich business houses control all major sectors in the state.  For example, the Adani and Ambani business houses control petroleum refinery and its products, renewable power generation including solar power manufacturing, thermal power stations, natural resources including natural gas, food products, finance and real estate, ports, airports, credit and finance, news channels, mining and cement, and many of the major sectors of the economy.

Gujarat is seen by some as the home of crony capitalism where undue favours including undue subsidies and incentives rather than free market forces have pushed large corporate business houses to promote rapid economic growth in the State

No small units can survive when they enter a sector. It is not surprising that the conditions of the small and minor sectors in the State are miserable today. Indeed, the MSME sector in Gujarat is finding it difficult even to survive.  For example, speaking about the smaller sectors this June, Jaimin Vasa, president of the Gujarat Chemical Association said that Post Covid-19, an estimated 3,600 MSME (Micro, Small and Medium Enterprises) in the chemical sector, mainly dyestuff, paints, fine chemicals and pharmaceuticals, closed down in Gujarat while several others have turned sick.

The poor status of education in Gujarat is another pointer to growth and development that does not mean much for ordinary people.  According to the National Family Health Survey - NFHS-5 (2019-20), the literacy rate in Gujarat is 84.70 for men, 70.30 for women and 77.70 for men and women combined.  This shows that more than 22% people are illiterate in this model of development.

Technically qualified workers constitute only about 5-7 per cent of the total workforce

The official data from NFHS-5 also observes that the school dropout rate is high in Gujarat: 93.79 per cent students complete their primary schooling and 77.43 per cent students complete secondary school education (22.57 per cent drop out), and only 43 per cent completed higher secondary. Overall, only 23 per cent boys and 20 per cent girls study beyond the twelfth standard. Technically qualified workers constitute only about 5-7 per cent of the total workforce.

When modern industries (high tech, robotic) are rising in the State, even skilled workers may not get work unless they are super-skilled.  With low education and low skills, most workers will be left out of the fourth industrial revolution technologies that are increasing in Gujarat. One major reason for this state of affairs could be the increasing privatisation of education, including high-tech and professional education. Looking at the downside of this development model, the Fitch subsidiary India Ratings, noted that Gujarat has more capital-intensive industries (refineries, petrochemicals and chemicals), which are technology-driven and not necessarily labour-intensive. In contrast, for example, a State like Tamil Nadu has textile clusters, among others, which are highly labour-intensive. 

With low education and low skills, most workers will be left out of the fourth industrial revolution technologies that are increasing in Gujarat

The economic and political strength of a small group of large industrial/business houses in Gujarat is reflected in major economic, social and political decisions in the State.   The overall neglect of masses and particularly the bottom 30-40 per cent population is reflected in the neglect of their quality and volume of education and health levels, low and poor quality of employment, and high unemployment of the educated.

A neglected area in education is early childhood care and education (ECCE) for children between 0 to 6 years. This ECCE is critical for the overall development of children’s nutrition and health, education and early childhood development.  The National Education Policy recommends holistic development of a child’s social, emotional, cognitive and physical needs in order to build a solid formulation of lifelong learning and well-being. Thus, the Integrated Child Development Scheme (ICDS) is designed for this purpose, as a pre-school education programme. Though this programme runs very well in States like Kerala, Tamil Nadu, Karnataka etc., it has many limitations in Gujarat: low wages, low budgets, poor qualification and training to workers and irregularity are some of the serious concerns. 

Only 14 per cent of the sample of children in Bhavnagar and 5.4 per cent of the children in the Narmada district could access on-line education, mostly through smart phones. Another 30 per cent used televised State education programmes or later when the lockdowns eased attended street-teaching initiatives

As has been seen across the country and described by various studies, Covid-19 was a catastrophe for Indian education. The Centre for Development Alternatives, Ahmedabad conducted a survey of 872 students and their households in November 2020 in Gujarat to study the impact of Covid on the education of children living in slum colonies in an urban centre, Bhavnagar, and a tribal district, Narmada. The survey revealed the following: only 14 per cent of the sample of children in Bhavnagar and 5.4 per cent of the children in the Narmada district could access on-line education, mostly through smart phones. Another 30 per cent used televised State education programmes or later when the lockdowns eased attended street-teaching initiatives. When asked why they did not study, the answers were: no smartphone, no TV at home, worked as child labour, helped parents in domestic work or “did nothing”.

Predatory capitalism has brought prosperity to the State at a certain high level and to a limited to section of the population. This is at the cost of the unorganised sector, the unemployed and others in the bottom rungs of society. Now that the elections are over, it is important to address some real issues of long term and sustainable development in Gujarat.

(Dr.Indira Hirway is Director and Professor of Economics, Centre For Development Alternatives, Ahmedabad. Views are personal)