[Reader-list] WHY WE SHOULD RESPECT GUJARAT'S GOVERNANCE AND ECONOMIC ACHIEVEMENTS

[Bipin Trivedi]

http://www.dnaindia.com/money/column_why-we-should-respect-gujarat-s-governa
nce-and-economic-achievements_1451797 

As the state of Gujarat nears completion of the first decade of the 21st
Century, its achievements in economic management and in governance merit
respect and 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% (13.8% in
per person terms). By 2010, its GSDP is approaching $100 billion, and its
per capita income 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%, 33%, and 46%, respectively of GSDP in
2007-08. The manufacturing sector, key to India's future, accounted for 41%
of employment, the largest share.

Gujarat, a mid-sized state, accounts for 5% of India's population but
contributes 21% to India's exports and 13% 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 skilfully, with the particular mix and
sequencing to suit particular context and conditions.

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Outcome or result orientation: Such an orientation has helped minimise
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 industrialisation; and to support future
development of inland transport to reduce congestion and reduce transport
and logistics costs.

Willingness to explicitly address business environment: The mix of factors
which impact business environment include supply of resources and inputs;
progressiveproductivity 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 urbanising, 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 urban amenities, and
sustain competitiveness, while improving the quality of everyday life of the
people.

Gujarat is among the handful of states where the state government has framed
clear policies in vital areas such as agriculture, ports, power, roads and
education. This has helped create greater certainty and consistency, two
important aspects of business environment. Gujarat's share in the
Delhi-Mumbai Industrial Corridor (DMIC) is 62% of the total area and 74% of
the population. Its share in the 1,500 km-long Delhi-Mumbai dedicated
freight corridor (DFC) is 38%. Its readiness to leverage these to enhance
its competitiveness in attracting new economic activities is illustrated by
the speedy and smooth allocation of Tata's Nano car project and the rapid
industrial development of the town of Sanand, near which the Nano plant is
located. Its ability to address issues surrounding land acquisition and
development fairly effectively is a particularly strong advantage as
compared to other states. 
To give another illustration, the Kutch region, traditionally arid, is being
transformed through what a magazine has recently termed as 'Green Revolution
Lite'. This is an improved, compacted, and eco-friendly version of the
earlier Green Revolution in Punjab and elsewhere. It is led by ordinary
farmers, but under state policies to address their business environment.

The two characteristics noted above have contributed to improving Gujarat's
power supply capabilities in an environmentally sustainable manner while
contributing to India's energy security.

Thus, Gujarat Urja Vikas Nigam Ltd, its state electricity utility, has
signed power purchase agreements with 26 solar power project developers for
365 mw of electricity. Its electricity regulator has fixed tariff for solar
power. The state has formulated a solar park scheme, which is expected to
contribute to increasing the share of renewable energy in India's energy
consumption.

Governance philosophy and vision: The third key characteristic has been the
governance philosophy, which has emphasised the vision of India emerging as
a major power by transformation into a knowledge-based economy and society,
while approaching the country's history from a more balanced and
empirical-based perspective. A good illustration is the Statue of Unity
Project after Sardar Patel, who politically unified India after
Independence. Characteristically, the project also includes a research and
academic centre for preserving the unity and integrity of India, on
agriculture to improve land productivity and yields, and on tribal life to
empower them to earn livelihoods from a wide variety of activities over
large geographical areas, rather than continuously depending on government
initiated and funded programmes. The Unity project aims to balance national,
academic, historical and spiritual values.

Gujarat has also demonstrated strong skills in social entrepreneurship,
defined in simple terms as meeting everyday needs of ordinary people in an
affordable manner by capitalist means. This philosophy, sometimes pursued in
partnership with the government organisations, is much more sustainable and
useful than large centrally planned ill-designed schemes, which make
reversibility difficult even when they are demonstrated to be ineffective.

Gujarat's people, its political leadership, particularly chief minister
Narendra Modi, its business sector, labour leaders and
social-entrepreneurship oriented not-for-profit sector all have contributed
to Gujarat's achievements and to laying a solid foundation for its future,
though it should not become complacent and regard future progress as
automatic.

India would clearly be in a better position to emerge as a major power if
more states and the Central government learnt and adapted the state's
approach to economic management and governance.

The writer is a professor of public policy at the National University of
Singapore and can be reached at: sppasher at nus.edu.sg