Lessons to be learnt from Narendra Modi's Gujarat

Oct 26 2013, 11:48 IST
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SummaryNarendra Modi's model performed much better than most on offer.

for another reason. Two of India’s leading economists—Jagdish Bhagwati and Amartya Sen—have been positing their distinct and separate models of economic development. While both desire and want development, their prescriptions have an important difference. Simply put, Mr. Bhagwati would let economic growth do most of the work while Amartya Sen would want active government intervention in the form of doles, preferably doles by right, to make right the misfortunes of the poor.

The debate about performance is particularly obtuse in India. There is a considerable amount of molestation of statistics going around (e.g., Digvijay Singh’s comment referred to above) and when that is not enough, many in India take recourse to debating, in Madhav Dhar’s words, the existence of gravity. Surely, an interesting subject for rich and other wannabe-rich Scandinavians to debate but clearly not as important as determining what is the best strategy for reducing absolute poverty in India.

This, and subsequent articles, will attempt to transparently (just as my 2012 article referred to above) discuss economic performance in India. Which model has delivered growth? Reduction in inequality? Education? Health? Poverty reduction? This first article looks at the most talked about, and possibly the most important, indicator variable for inclusive growth, i.e., reduction in absolute poverty in India over the period 1999/00 to 2011/12. (The beginning point is chosen for two reasons —it is a decade away and it also presents a reliable and convenient “initial conditions” set for Gujarat chief minister and PM-contender Modi).

The standard source used for the analysis of poverty decline are the NSS surveys for these two years. Data for 2009/10 are also reported for ease of comparison with my earlier article, and conclusion, about Modi’s Gujarat. The results are presented for different population groups. In addition, the data are aggregated into two population groups—the disadvantaged, consisting of Muslims, SC and ST’s, and the non-disadvantaged (consisting of OBCs and upper-caste Hindus).

As is well known, the NSSO conducted a new large sample survey in 2011/12 to counter the biased influence of the 2009/10 drought year. Note, the marked decline in national poverty rates (a decline of 7.7 percentage points over 2009/10 at the national level) and in Gujarat (a decline of 6.3% for the same period).

The latest 2011/12 NSSO data radically changes the conclusions and interpretation of the nature of inclusive growth in Gujarat. The sharpest decline in poverty between 2009/10 and 2011/12 is observed for

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