In Charts: Has Gujarat’s Economy Really Thrived?
As Gujarat chief minister, Narendra Modi presided over a state which witnessed rapid economic growth and robust investments and created an enabling environment to set up businesses. This so-called ‘Gujarat model of development’ later became the cornerstone of Modi’s campaign ahead of the 2014 general elections and earned him a decisive mandate at the Centre.
Modi’s Bharatiya Janata Party once again faces a crucial battle on his home turf. But what was expected to be cakewalk state election has turned into a closer than expected race for for the ruling party, as most pre-election surveys showed the Congress making an inroad into the BJP bastion.
Where does the Gujarat model of development stand today and how does it fare on key economic indicators versus comparable states - Maharashtra, Karnataka and Tamil Nadu? Here’s the story in seven charts.
In terms of economic growth, Gujarat has outpaced the other three states comfortably. Its nominal gross state domestic product grew at 9.1 percent in financial year 2016. According to rating agency Crisil, it is the fastest growing state in the last five years.
Gujarat outperformed on three key macroeconomic parameters, as per Crisil:
- Its growth rate was above the national average
- Inflation and debt levels were below the national average
- Its fiscal deficit was less than the target set by the Fiscal Responsibility and Budget Management Act between fiscal 2013 and 2017
To put it in context, Gujarat's growth rate was twice that of Punjab, which saw the slowest economic expansion during the period.
While Gujarat has managed to contain its debt levels over the last three years, its indebtedness, as a percentage of GDP, is well above the other three states.
The rise in Gujarat's gross fiscal deficit, the gap between its revenue and expenses, has also remained relatively low compared to the other three states.
Gujarat also witnessed the fastest growth in labour-intensive sectors, even outperforming the national average. According to Crisil, a state which sustains high growth in labour-intensive sectors, “is likely to be more successful in creating jobs”. Gujarat is the top performer in construction as well as manufacturing sector growth.
Among the four states, Gujarat has the lowest rate of active labour force participation in rural areas. However, it is well above the national average.
In urban areas, Gujarat’s labour force particpation is better than that of Maharashtra but worse than Tamil Nadu and Karnataka.
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Quality Of Expenditure
Gujarat allocates a much higher amount of its aggregate spending towards capital expenditure compared to the other three states. However, in absolute terms, Gujarat's aggregate expenditure is the lowest.
The Gujarat government spent Rs 1.37 lakh crore in 2015-16. Aggregate expenditure was highest for Maharashtra at Rs 2.4 lakh crore.
Among the four states, Gujarat is third in terms of implementing ease of doing business reforms, as suggested by the Department of Industrial Policy and Promotion. Andhra Pradesh and Telangana top the list.
According to the DIPP's 2017 scorecard, Gujarat has implemented 67.7 percent of the reforms suggested. This is only slightly lower than the 69 percent for Andhra Pradesh. Karnataka ranks the lowest among the four states.