By Prof. Mukul G. Asher
Gujarat’s governance and economic achievements are exemplary.
Why not the governments of other Indian states and the Central government respect Gujarat’s governance and economic achievements and emulate Gujarat’s approach to economic development and transparency in governance?
As the state of Gujarat nears completion of the first decade of the 21st century, its achievements in economic management and in governance merit a closer study.
Between, 1999-2000 and 2007-2008, Gujarat’s gross state domestic product (GSDP) in nominal terms grew at a compound annual rate of 15.8 percent (13.8 percent in per person terms). By 2010, its GSDP is approaching $100 billion, and its per capita income is now around $1,600, over a fifth higher than the national average.
Gujarat’s economy is well-balanced, with primary, secondary, and tertiary sectors contributing 21 percent, 33 percent, and 46 percent, respectively of GSDP in 2007-08. The manufacturing sector, which is key to India’s future, accounted for 41 percent of employment, the largest share.
Gujarat, a mid-sized state, accounts for 5 percent of India’s population, but contributes 21 percent to India’s exports and 13 percent to the industrial production. Its literacy rate is higher than the national average. While the sex ratio needs to improve (there were only 920 females per 1,000 men in 2001), consistent with international norms, females in Gujarat live nearly four years longer than men.
Gujarat’s achievements have been a result of combining the following set of characteristics consistently and skillfully, with the particular mix and sequencing to suit particular context and conditions.
Outcome or result-orientation: Such an orientation has helped minimize political or outmoded ideological considerations (such as the public sector being better than the private sector) in economic decision-making and in project management. This has been the case in social sectors such as health and education, infrastructure provision, or in actively seeking new growth opportunities to help diversify sources of competitiveness and livelihoods for a growing number of workers.
It has facilitated combining knowledge, resources, energies and management skills of public, private and not-for-profit sectors for addressing specific public policy challenges.
It is only in the last decade that plans to use the state’s 1,600-km-long coastline to generate broader regional growth have made progress. Gujarat’s private and joint sector ports will positively contribute to India’s rapidly growing international trade; to industrialization; and to support future development of inland transportation to reduce congestion and cut transport and logistics costs.
Willingness to explicitly address business environment: The mix of factors, which impact business environment, include supply of resources and inputs; progressive productivity-oriented industrial relations environment, regulatory framework; physical and social infrastructure; and where appropriate, fiscal incentives involving taxes, subsidies and budgetary expenditure.
The emphasis on addressing supply side constraints in infrastructure; in real estate amenities, matching human resources and skills with projected demands; and improving urban amenities, including innovations in public transport (such as Ahmedabad’s Bus Rapid Transit System (BRTS)), sets Gujarat apart from most other states in the country.
India is rapidly urbanizing, and Gujarat is expected to experience majority urban population in the not-too-distant future. Its urban management experiments should, therefore, be of relevance elsewhere in the country. BRTS in Ahmedabad, for example, is raising resources from the market for expanding its reach. With tight fiscal constraints in urban areas, such a capability will be increasingly needed to provide...