India needs Gujarat growth model to create more jobs

Written by Charan Singh | New Delhi | Updated: Jun 23 2014, 14:53pm hrs
The dismal performance of the Indian economy, recording a low growth of 4.7% in 2013-14, should be considered as an opportunity to revive the economy. The economy is growing at sub-5% for the second consecutive year, far from the dream figure and potential of more than 8% of economic growth. The manufacturing sector recorded a negative growth of 0.7% in 2013-14 as compared with a positive growth of 1.1% in the previous year. Mining and quarrying recorded a negative growth and sectors like trade, hotels, transport and communication also recorded a substantially lower growth when compared with the previous year.

To immediately revive growth in the economy, a distinct short-term strategy should be devised, which should provide seamless continuum into the long-term. In this context, lessons from the developmental model of Gujarat can be of significance for national policymaking. The developmental model of Gujarat has five major pillarswater power, energy, human resources, knowledge power, and security. Water power implies local water conservation, and creating a water grid by interlinking small rivers and streams. On energy, in addition to traditional sources, renewal sources of energy were explored. On human resources, efforts were made to improve literacy levels, especially for the girl child and improved cleanliness and better sanitation under health initiatives. Under knowledge power, efforts were made to spread internet technology to all villages of Gujarat, extend technical education through larger number of ITIs, polytechnics and engineering colleges. To secure business interests, measures were undertaken to check any unwarranted infiltration across the borders.

The growth model of Gujarat is not only business-friendly but also agriculture-friendly. On the business front, it has emerged as the petro capital of India in addition of being a hub of textile industry, diamonds, cloth printing and electronics. Its business-friendly gestures, like inviting Tata for the Nano project, have been beneficial in encouraging and sustaining micro, small and medium enterprises. Consequently, Gujarats gross domestic product recorded an average increase of 10.2% from 2002-03 to 2012-13 as compared with 7.8% for the country during the period. Interestingly, the difference in growth performance in agriculture was more stark11.1% compared to 3.3% over the similar period. The robust growth in agriculture sector has been due to the Sardar Sarovar Project, thousands of check-dams, better canal irrigation, and good management of ground water economy. The mantra of per drop-more crop has been successful with substantial area brought under micro irrigation. The production of cotton, wheat, fruit crops and milk has played a vital role in sustaining agricultural growth.

The harnessing of renewal sources of energy like solar power in different ways has been useful in meeting the energy need of a growing state. The concept of solar parks, solar city and Gandhinagar photovoltaic rooftop programme yielded promising results in terms of regular and continuous supply of power. It also brings forth an excellent demonstration of pubic-private partnership where government, developers, regulators and home-owners work together. Solar power generation and water conservation on the Narmada Canal is a successful experiment that can be replicated in other parts of India.

India is amongst the oldest civilisations and despite foreign rule of more than a thousand years has been successful in preserving its language culture, traditions and rich heritage. As the Prime Minister mentioned for Varanasi, tourism, including religious tourism, holds great potential for India, a land of temples and sages of Hinduism, Buddhism, Jainism and Sikhism; of Ayurveda; and of yoga. To make India an attraction of global tourism, while the government would need to incur expenditure in developing airports, good network of roads and waterways, private sector and religious institutions can help in developing pilgrimage centres to meet global standards. Also, India is a country of lakes and rivers and projects like the Sabarmati Riverfront hold good potential for tourism and employment generation. This would be another perfect illustration of public-private partnership and can generate immediate employment opportunities and economic development.

The distinguishing pattern in Gujarat is the governance model that provides for more flexibility in the labour market for SEZs. The idea of rurbanisation of 50 villages where the objective is to make villages modern so as to check large-scale migration to urban areas has also been experimented. E-governance, the ambitious IT project called eGujCop connecting police stations and Home Department, and Home Department Intelligent Information System (HDIITS) ensure transparency and monitoring of cases on a real-time basis.

The scaling up of the Gujarat model to all-India would imply generation of employment and growth immediately and in the near future. It is for this reason that unemployment in Gujarat is low and growth amongst the highest in India. That is what India needs today.

The author is RBI Chair Professor of Economics, IIM Bangalore.

Views are personal