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Gujarat growth story

Thursday, 22 November 2012 - 1:27pm IST | Place: Ahmedabad | Agency: dna

Gujarat, in last two decades, has galloped past other larger states of India, as far as agriculture and manufacturing are concerned.

Gujarat, in last two decades, has galloped past other larger states of India, as far as agriculture and manufacturing are concerned. Thus claims a study by Sebastian Morris, a professor with Indian Institute of Management, Ahmedabad (IIMA).

The paper, “Economic Growth in Gujarat in Relation to the Nation and Other States in Recent Times” , is a statistical analysis that maps comparative economic growth of the larger states in the country from 1992 to 2010.

Findings point out that Gujarat has outperformed Tamil Nadu, Andhra Pradesh, Karnataka and Maharashtra in growing crops and setting up industries, but is a laggard when growth in service sector is concerned.

A unique feature of Gujarat’s Growth Story is how the state has maintained high per capita income with an equally robust manufacturing rate, states the paper. It arrived at the deduction by studying agriculture, manufacturing and services in two different phases , 1992-94 to 2003-04 and the period thereafter, after policy reforms in 1991.

“What is remarkable is how Gujarat has been able to maintain and enhance its comparative advantage, despite high per capita income,” states the paper.

“All other highly-industrialised (and high-income) states, as expected, have steadily lost comparative advantage with per capita growth. Steep rise in labour costs for agriculture is reason for this.”     

Vast migrations to Gujarat and increasing use of capital intensive machinery have allowed the state to maintain its advantage, mentions the paper. Efficient water management and supply of quality power to industrial consumers are credited equally for the positive growth story.

Meanwhile, a stiff tug of (growth) war continues between Gujarat and Maharashtra.

“While Gujarat has maintained its advantage in manufacturing and agriculture, Maharashtra has held its own in manufacturing and services. Land and infrastructure may be Gujarat’s forte but Maharashtra’s larger and cosmopolitan cities are attracting more foreign direct investment and tradable service industries, ample local availability of skills and attracting skill intensive
industries,” observes the study.

Morris’s paper establishes increased coherence between growth at national and regional levels as its important inference.

Focus however continues to remain on how income distribution, performance of public services, local infrastructure and social services can shape growth of state and state government.

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