Gujarat Model: A case of De-development

Gujarat Model

One of the crucial factors which has led to BJP getting an absolute majority in this election has been the constant propaganda related to good governance of Narendra Modi in Gujarat. It has often been stated that under Modi’s governance, Gujarat has seen a remarkable infrastructure development, boost in the agricultural sector and boost in the manufacturing sector. What is so dangerous about this propaganda is that it is extremely deceptive.

By hiding crucial aspects of this growth and more importantly by correlating this growth with development of ordinary working people in Gujarat (increase in quality of human life) it has led many to believe that this same model of governance when pushed up to the national level will solve everything!

There certainly an enormous expansion in the infrastructure like rails, roads, Non Major Ports (NMPs) as well as in the industrial sector with an enormous private investment in chemical and petro-chemical sectors, automobile industries and so forth. It should be noted that the supposed prosperity of the state as well as various reforms which are often attributed to Modi in fact originated during the nineties.

At the beginning of 2000, Gujarat was the second most industrialized and fifth richest (in terms of per capita income) state among all the major states in India. One important example of the pre-Modi reforms is the well known BOOT (Build-Own-Operate-Transfer) policy which was adapted by the Gujarat government in mid -nineties for the construction and development of non-major ports (NMP). Under this policy private investors were encouraged for construction of NMPs (which unlike the Major ports come under the jurisdiction of state government) by giving them complete control of the operations and tariffs for a period of three decades. As a result of this policy, Gujarat has become a state leader in the Maritime sector. It is expected that within next 10 years, Gujarat’s ports will manage a third of traffic handling capacity related to the entire National Coastal area.

This example and many others such as Infrastructure development act (1999) show that ever since liberalization of Indian economy in 1991, Gujarat has always been one of the leaders in embracing neo-liberal reforms through its frequent use of PPP (Public Private Partnership). The well known problem with the blatant use of PPP in India and specifically in Gujarat has always been that the corporation decide everything. In Gujarat for example in last two decades, there is a growth in the number of road networks improving the accessibility of SEZs, but hardly any new state highways have been constructed in Gujarat over last 2 decades and perhaps even worse, a significant proportion of rural areas (around 8000 habitations out of roughly 34000) still remains disconnected from the cities, as no construction of roads take place in such areas. The point being that it is the profitability of a project which is the prime factor in deciding the direction of infrastructure development.

What Modi has done essentially is taking such neo-liberal policies even further. For example, Infrastructure Development (amendment) act in 2006 has meant further concessions like financial assistance from state, possibility of extension of the period for which the investors controls the operation and various tariffs related to the project etc., are almost entirely decided by the corporation, who can make windfall profits out of these PPP projects.

A well known example of beneficiary of Modi’s governance is Adani Group, which has acquired close to 7000 hectors of land at a rate of less then 10 rupees a square meter for a period of 30 years (since 2005). He has leased back some of this land to State Owned Indian oil Co. at as much as 700 rupees per square meter! By any account this is robbing the ordinary people of Gujarat on a massive scale.

An argument often given by the neo-liberal apologists is that at the end of the day, such infra-structure development projects bring in employment and in turn reduce poverty. A closer look at the ongoing projects in Gujarat tell us a different story. Majority of the Infrastructure related projects in Gujarat are Capital intensive and hence don’t increase the employment significantly. The 80 odd Infra-structure related projects which are ongoing and which account for just under 40 percent investment only create less then quarter of the jobs in Gujarat. Ofcourse such subtleties are carefully hidden away by Modi and his supporters when they quote statistics on investment being brought into Gujarat under Modi’s leadership.

A related issue is job growth in the manufacturing sector. The textile sector which was the prime generator of manufacturing jobs in Gujarat has dwindled and has been taken over by capital intensive sectors like petro-chemical industries. Since 2004-2005 Manufacturing sector has seen a negative growth rate. The unorganised workers are chief “beneficiaries” of this negative growth. The gems and jewel sector which is the highest contributor (30 percent) to employment in un-organised sector saw as much as forty five percent job loss due to global financial crisis of 2009.

Working class in Gujarat (which includes migrants) is perhaps the most oppressed in the entire country. This is clearly seen in the fact that highest number of strikes are recorded in Gujarat in recent years. It is also important to note that most of the Industrial development in Gujarat is restricted to a few regions. Another important indicator of employment stagnation is the absence of any structural shift in job sectors. There is certainly no appreciable shift from primary to non-primary sectors in Gujarat. Such a shift would at least indicate more people getting better jobs in the private sector.

It is often stated that Agriculture sector has thrived remarkably under Modi’s Government. However the reality for poor (especially landless farmers and various tribal groups) lies far from this truth. Farming non-food crops like cotton crops is definitely a profitable enterprise in Gujarat these days. However such a growth has gone hand in hand with liberalization schemes which among other things amended the Agricultural Land ceiling Act (ACLA) which restricted the maximum land that a person could own. In recent years the big land holdings and corporatization of agriculture in Gujarat have grown whereas the marginal holdings have become smaller. This is a clear signal as to what happens to poor farmers in the state.

The emergence of state like Gujarat which embraced the neo-liberal ideology and the emergence of Modi, who is but a sort of glorified manager of the entire private sector, is also not accidental but completely expected. Thus the rise of this evil is not tied to the evil himself, but to the free market ideology. Thus any movement against the current govt should not just be tied to Modi himself, but against capitalism.

Alok Laddha