Tuesday, May 17, 2011

Gujarat Shining Story?

Gujarat is one of the large states in India known for sustained levels of development. ‘Gujarties’ the people of Gujarat so identified - rings a bell! in imagination as enterprising people with an edge to manage and invest money in businesses and enhance savings. These Gujarati attributes are not new, rather age old; and developed over centuries especially due to their easy contact with the travelling business men from all over the world at the Indian west-coast. No wonder then that Gujarat is one of the few states where income earning opportunities have always been better and praiseworthy. Notwithstanding, such a relative advantage in income growth, it is useful to review how Gujarat is faring in other measures of standard of living such as poverty, human development, hunger and so on. Further, it is also instructive to review as to how various socio-religious communities living in Gujarat are placed in a relative perspective and are they getting the benefit of higher growth experience in Gujarat.

Multiple data especially those from the National Accounts (NAS), The Reserve Bank of India, National Sample Survey Organization, the Human Development Survey of the National Council of Applied Economic Research and the Prime Minister’s High Level Committee (Sachar Committee) report are used in this analysis. The FDI information according to main centers of investments is drawn from ministries of Commerce and industry. This review explores, firstly the relative development of Gujarat, followed by the Socio-religious differentials in standard of living within the State.

Per Capita Net State Domestic Product (PCNSDP): Per capita SDP or income is used as an indicator and measure of economic prosperity. Gujarat is a well-off State, figuring among the top ten in terms of per capita State Domestic Product since long. A review of triennium averages in constant prices since the 1970s suggest that Gujarat has been occupying 6th or 7th positions most of the last four decade excepting mid-1996 when it was at the 4th position. For the year 2007-08 and in terms of current prices, Gujarat had an income of Rs. 45, 773, but Haryana with an annual per capita income of Rs. 59,008 tops the list followed by Punjab, Maharashtra and Kerala. Tamil Nadu, Karnataka and Andhra Pradesh are a notch below in the vicinity of Gujarat competing to climb up. Note that the relative ranking can also change with a lacklustre performance of other states as opposed to a better performance of a state under review. Overall the economic status of Gujarat has been stable and relatively on the higher side at least since last four decades. Thus the Gujarat growth story measured in terms of macro economic indicator is not new; rather it is an old one. It is now worthwhile to investigate the state performance in qualitative dimensions such as poverty, hunger, human development and social equity.

Hunger: Gujarat surprisingly emerges as a State with high levels of hunger , while simultaneously boasting high per capita income and consistent income stability. Disturbingly Gujarat's hunger levels are high alongside Orissa and Bihar, with only Jharkhand, Chhattisgarh and Madhya Pradesh having higher hunger levels. Punjab, Kerala and Haryana (in whose league Gujarat was placed in terms of per capita NSDP), are very progressive measured by levels of hunger having least hungry population. Even Uttar Pradesh has registered lower levels of hunger compared with Gujarat. This paradox, for example, is explained by the fact that state such as Uttar Pradesh has vast areas under multi-cropping cultivation cycle with the blessing of the perennial supply of water from the mighty river Gaga. This ensures that in spite of UP’s population being poor, they are at least minimally fed. Incomes are more evenly spread in Uttar Pradesh, Tamil Nadu and West Bengal. Uttar Pradesh in fact fares a notch above even Tamil Nadu and West Bengal in having lower hunger; but Gujarat is much above all these states in having relatively higher incidence of hunger. Further Rajasthan has also recorded lower levels of hunger compared to Gujarat and this appears to be due to pro-poor state policies. Therefore, this analysis gives credence to the fact that Gujarat is a state where the rich-poor disparities are far greater relatively speaking.

Income, Poverty and Human Development Linkages: Generally one finds a positive association between income and poverty (lower poverty), and human development (higher); and that the association with the latter being much stronger. Higher position in human development ranking relative to poverty is an evidence of pro-people welfare state. One finds such an association in Kerala, Tamil Nadu, Karnataka, Maharashtra, West Bengal and even Orissa, which has higher HDI ranking compared with respective ranking in per capita income and poverty about the second half of 2000s in the ranking undertaken for 19 major states. On the other hand Gujarat has recorded relatively lower level of human development ranking compared with its poverty ranking – while in latter 2000s it tops at 6th level in income, but is places one level lower in poverty (that is higher poverty relative to income) but ranked 9th in HDI, far too low which is unexpected. The higher income levels must yield better human development, generally speaking as people will be in a better position to make investments in education, health and wellbeing. Orissa which reveals high levels of poverty performs better on the HDI; in fact it shows resilience in improving HDI at its own level of development and poverty. Further, one notice that the relative ranking of Gujarat in incidence of poverty and human development has declined between the mid 1990s and latter part of 2000s.

When the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) was evaluated, Gujarat is found to be the bottom of the list of large Indian states. In fact Rajasthan is at the top, followed by Madhya Pradesh, Chhattisgarh and Tamil Nadu.

Levels of Foreign Direct Investments
Recent reports place Gujarat as a favorite destination of the ‘foreign direct investments (FDI). There is a considerable hype about such investments and reports that large amounts of foreign, often NRI linked, investments in Gujarat abound. A review of the past performance of the FDIs does not support such a finding. The region / state specific FDI data provided by the ‘department of industrial policy and development’ suggests that the size of cumulative inflows from January 2000 to March 2010 has been highest in Maharashtra with 1.75 lakh crores, followed by New Delhi at 1.02 lakh crore. Even the state of Karnataka has received 31 thousand crores which is higher than the FDI in Gujarat only with 28 thousand crores. The FDI line up continues with Tamil Nadu, (Rs. 25 thousand crores), Andhra Pradesh (Rs. 21 thousand crores) and Kolkata having received a meager 6 thousand crores.

Thus Gujarat is a game for playing the “the politics of development” and no one is caring to assess if such tall claims have any truth behind them. Hype and hoopla built around foreign direct investment (FDI) in Gujarat is a lie. Gujarat can be considered a hunting ground "for NRI and corporate politics", and that "the FDI hype" is designed to facilitate tax subsidies, cheap licensing, under-priced land and low royalty payments to the investors. Often the politics works in such a way that Gujarat is used as a platform for corporate negotiations and investments in other states. Investments announced in Gujarat appear largely promises, as the real amount invested is found to be a fraction of the amount promised due to practical reasons.
Nonetheless, Gujarat does have some positive features; over 90 percent paved roads to villages, 98 percent electrified villages with 80 percent electrified homes and 18 hours of electricity everyday, 86 percent piped water supply and better phone connections, banks, post offices, bus connection compared to other states. Agricultural extension work, too, is better than in other states. But amid all this, poverty, hunger and lack of sense of security thrive.

The large scale representative sample data available from the NSSO and the NCAER’s human development surveys and information from the Sachar Committee report are used to assess poverty and human development amongst the socio-religious groups within Gujarat with a focus on Muslims. Poverty amongst the urban Muslims is eight times (800%) more than high-caste Hindus, about 50% more than the Hindu-OBCs and the SCs/STs. Note that over 60% of all Gujarati Muslims live in urban areas and they are most deprived social group in Gujarat. On the other hand rural poverty amongst the Muslims is two times (200%) more than high caste Hindus. Gujarat unlike a few other large states has not provided any specified quota in employment and higher education for the Muslims. While Muslims have bank accounts proportionate to the size of population, the bank loan amount outstanding which is an indicator of financial inclusion is only 2.6 percent. Muslims are also found to be soft targets for petty thefts and harassment of girls compared to other communities.

Education: Educationally Muslims are the most deprived community in Gujarat. Despite 75% net enrolment, about similar levels compared with the SCs/STs and other groups; the Muslims are deprived at the level of matriculation and higher levels. A mere 26% reach matriculation whereas this proportion for 'others except SCs/ STs is 41%. The SCs/STs fare about the same on this count. Amongst the Muslims a large dropout takes place at about 5th standard. A disturbing trend was noticed in case of education at the level of graduation. Muslims, who had about the same level of education in the past, are found to have left behind compared with even the SCs/STs who have caught up with higher education. Startling is the fact that the in recent years it is high caste Hindus who have benefitted most from the public provisioning of higher education and the SCs/STs are catching up and the Muslims are left behind. The disparity in access to higher education is increasing over time. This clearly is an evidence of discrimination in provisioning of higher education access, infrastructure and related services.
To overcome the Muslim deficit in different levels of education, the central government has launched a nationwide scholarship scheme with effect from April 1, 2008. All states have responded favorably, with the only exception of Gujarat which has not implemented even the pre-matric scholarships for minorities. There are 55,000 scholarships allocated to Gujarat of which 53,000 are to be given to the deserving Muslims, but Gujarat not even cared to implement this program.

Employment: The work participation rate is a common measure of employment; in Gujarat, this is 10% lower for Muslims at 61% compared to the Hindus who have a ratio of 71%. Gujarat has higher unemployment rates for Muslims compared to say West Bengal. Importantly, the Muslims traditionally are artisan and skilled workers, have relative advantage in handling mechanical and tool work; therefore they are employed as industrial labour in considerable proportion in manufacturing and organized industry. In most States, Muslims form a higher percentage of the workforce in manufacturing and the organised sector compared to Hindus and it is only in Gujarat, the reverse is true.

Manufacturing and organised sector including public employment: There was a time when Muslims dominated the state's textile industry in power loams, textile mills and handlooms; and in diamond cutting and polishing industry not to speak of chemical, pharmaceutical and processing industries. But now Muslims barely make it to the workforce in the manufacturing and organized sector in Gujarat. While at an all-India level, Muslims share in this sector is 21%, in Gujarat it is merely 13, much lesser than Maharashtra at 25 and West Bengal at 21. Note that Muslims generally have better employment amongst the state level public sector enterprises across India. It is only in Gujarat that Muslims not have access to organized and public sector (including PUSs) employment when compared to other communities and other states of India. This finding was counter-checked by a second set of data in a multivariate analysis. The fact that Muslims do not draw income from the formal organized (including public employment) sectors is negative, large and highly significant; this is the only community which records this negative and significant coefficients. Generally, there is a reference to the Sachar report pointing to the fact that Muslims are indeed present in substantial proportion (compared with other states such as West Bengal, UP etc) in government employment in Gujarat. Yes this is so and it may be noted that such employment has taken placed during the last 5 decades or so, these are not recent appointments. Gujarat government must come forward to publish figures as to how many Muslims have been appointed in government employment during the last 5-10 years in employment categories such as group A to group D and in the state PSUs.
Petty Trade and Self-Employment: Gujarat also shows a wider gap between Muslims and Hindus in petty trade and self-employment. Fifty-four per cent of Muslims as opposed to 39 per cent of Hindus are self-employed in the State. The gap is much lower in West Bengal, where 53 per cent of Muslims are self-employed as against 45 per cent of Hindus. Compared to other States and compared to Hindus, larger share of Muslims in Gujarat are self-employed or undertake petty trade. This disparity is compounded by the fact that compared to other sectors; self-employment and petty trade has shown only a marginal income growth during the last two decades in comparison to other sectors of the economy. Further, at least in Gujarat the FDIs and public investments are channelled into the organized sector where Muslims do not get employed - thus metaphorically speaking, Muslims in Gujarat face a situation - ‘between the hard rock and the sea’.

Safety and Security: The human development survey of the NCAER canvassed a few questions which relate to the safety and security of citizens. All respondents were asked to assess the condition of village and neighborhood conflict. Further, any experience and occurrence of ‘theft/burglary’ and ‘harassment of adolescent girls’ was also recorded for the reference year.
It is instructive to note Gujarat is one of those high village/neighborhood conflict states, next only to Uttar Pradesh (82 percent) and Uttrakhand; but on par with West Bengal at 63%. However, since this is a societal level factor, the inter-community differentials were found to be low – which means irrespective of the community one belongs to, they had similar exposure to neighborhood/village conflict which is rather very high in Gujarat.

But one notices considerably large inter-community variation in the household experience in theft/burglary and particularly the Muslim households in rural Gujarat with a very high share of (35%) households reporting such occurrence, while their share of households was only 5%. All other communities have reported lower levels. In urban areas also this share was 13% compared with only 11% households. While information on who are the performers of such crimes is not available, what is important to highlight is the fact that Muslims are easy targets and are vulnerable for such crimes in the rural areas of Gujarat. In case of the occurrence of harassment and threat of girls, 17% urban Muslims households reported such an occurrence which is considerably higher relative to their share in the households. The only other community having higher share of harassment of girls is the SCs in rural areas - with 34% households reporting 39% of such events.

Conclusions: Gujarat indeed is one of the richer states always in league with the top ten state of India in terms of per capita national state domestic product. But if alternative measures are evaluated which reflect hunger, social development and human development, relatively speaking Gujarat is underperformer. Further, within the state, when socio-religious group differentials are assessed one finds deep-rooted poverty and income inequality amongst Gujarat’s lower castes and Muslims relative to other groups. The latter, in particular, fare poorly on parameters of poverty, hunger, education and vulnerability on security issues; nowhere benefiting from the feel good growth story painted by the current governance of the state.
There indeed exists a deep-rooted poverty and income inequality in Gujarat. Putting the Muslim situation in this larger framework, the empirical evidence suggests that relative to other states and relative to other communities, Muslims in Gujarat are facing high levels of discrimination and deprivation.


Reserve Bank of India (RBI) online database ( ).

Government of India (2009), “Report of the Expert Group to Review the Methodology for Estimation of Poverty", Planning Commission, New Delhi.

Abusaleh Shariff (2009),”Hunger and Malnutrition in India: Concepts and Indexing”, IFPRI/NCAER, Mimio.

United Nations Development Programme (2010), “HUMAN Development Report”, UNDP, Palgrave Macmillan.

Sonal Desai, Amaresh Dubey, B.L. Joshi, Mitali Sen, Abusaleh Shariff and Reeve Vannaman, (2010) India Human Development Report: at the Beginning of the Millennium, New Delhi: Oxford University Press, New Delhi.

Abusaleh Shariff and Maithreyi Krishnaraj eds, (2007), State, Markets and Human Development, New Delhi: Orient Longman Press, PP i-xxiv,784.

Government of India (2006). Social, Economic and Educational Status of the Muslim Community of India, a report of the Prime Minister’s High Level Committee, New Delhi: Cabinet Secretariat, Government of India, November 2006; i-xx, PP 404.


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