Poverty amid prosperity

While Gujarat’s GDP growth in the last two decades has been notable, it is not reflected in employment, wages, health or education

November 30, 2012 12:24 am | Updated 12:31 am IST

121130 - Lead - Poverty amidst prosperity

121130 - Lead - Poverty amidst prosperity

There is a widespread belief that Gujarat is a shining star on the Indian growth horizon and that all other States would do a great service to Indian masses by emulating the model of development that Gujarat embarked upon under the stewardship of Narendra Modi. A recent study, Poverty Amidst Prosperity: Essays on the Trajectory of Development in Gujarat (Aakar Publication, forthcoming), by 10 independent researchers (including this author) suggests that when it comes to Gujarat, we have not one but several things to worry about. Carefully reviewing the cardinal principles of the development experience in Gujarat through the analysis of data and information provided by official sources, the study tells us how goals like social equality, sustainable livelihoods, access to education and health, justice and peace have been abandoned in the race for growth in the high-speed lane.

GDP growth in Gujarat has been notable in comparison to the all-India level in the last two decades. Other States that have grown at similar rates in the last decade are Maharashtra, Haryana and Tamil Nadu. Unlike these States, the high growth rate in Gujarat is more balanced; it is the result of enhanced performance of almost all sectors, particularly the agricultural sector. However, only a careful look at the performance figures, in terms of employment, wages, consumption, poverty, inequality, and outcomes in health and education, reveals that this broad based growth has resulted in worrisome outcomes.

Biggest casualty

The biggest casualty of the ‘successful’ growth in Gujarat (and least discussed) is employment. The aggregate employment in Gujarat has remained stagnant (NSSO data shows growth in employment for the period 1993-94 to 2004-05 was 2.69 percentage per annum, whereas for 2004-05 to 2009-10 it came down to almost zero). The stagnant employment growth in the last five years in Gujarat is better than the decline in employment experienced at the national level but lags far behind Maharashtra, for instance. During the last 17 years (1993 to 2010), growth rates of employment for rural Gujarat and rural India have been on a par, while urban Gujarat performed slightly better compared to all-India. In the last five years, employment in rural Gujarat has declined in spite of exceptionally high growth in the rural sector. The loss in rural employment has occurred along with reduced participation of small farmers in the fast growing, high value crops and reduced access to cultivated land because of changes in the norms for sale and purchase of land. Marginal growth in employment in recent years has occurred mainly in the services sector, especially in the urban areas. Mostly, this job creation is casual in nature.

Gujarat’s contribution to India’s manufacturing employment has also remained almost stagnant over the three decades, in spite of doubling its share in Gross Value Added. In addition to poor gains in employment, the manufacturing sector in the State is also characterised by slow growth in wages (1.5 per cent in the decade of 2000 when the all-India wages grew by 3.7 per cent), increasing use of contract workers ( from 19 to 34 per cent between 2001-08), and overall reduced position of workers in the manufacturing sector (with the lowest share of wages in Gross Value added in the decade of 2000 in comparison to Haryana, Maharashtra and Tamil Nadu). Paradoxically, this worsening condition of workers in the manufacturing sector is accompanied by increasing profitability and growing investment in the sector. While there is a growth in the manufacturing sector, Gujarat’s Scheduled Tribes’ dependence on agriculture has increased, particularly during 2005-10 period. The share of STs in regular employment remains stagnant — it was 7 per cent in 09-10, same as in 1993-1994 and, for Muslims it is 14 per cent today, while it was 15 per cent in 1993-94.

In the last five years, the rural and urban per capita monthly consumption expenditure in Gujarat grew at much lower rates, compared to the national average and growth in other comparable States. In 2009-10, the average monthly per capita expenditure in Gujarat was Rs. 1,388, much lower than Haryana (Rs. 1,598) and Maharashtra (Rs. 1,549) but higher than the national average. The relatively superior position that Gujarat had in consumption levels in 1993 was lost by 2010.

Rural poverty

The decline in rural poverty, at the rate of 2.5 per cent per annum in the last five years in Gujarat is better than the national average but slower than Maharashtra and Tamil Nadu. By the end of 2009-10, the number of poor in rural Gujarat was still higher than Haryana and Tamil Nadu, and the relative ranking of the State vis-à-vis other States has not improved much compared to its position in the early 1990s. The changes in urban poverty levels in Gujarat are also lower compared to the national average and other States between 1993-2005 and 2005-10. The situation in inequality levels is also not superior. Reduction in rural inequality in the last five years has been much slower in Gujarat as compared to Tamil Nadu, Maharashtra and Haryana. In urban areas, inequality increased in Gujarat at slower rates than the national average but increased nonetheless.

Gujarat today is a rich State with poor education and health outcomes. An evaluation of key education indicators over time reveals that the improvement of Gujarat in literacy rates is sluggish as compared to the rest of India. Gujarat’s ranking in terms of literacy rate deteriorated from the fifth to the seventh for both 6 years and above, and 6-14 years age group among 15 major States between 2000 and 2008. In terms of proportion of the people who are currently attending any educational institution, Gujarat’s rank has deteriorated from the 21st to the 26th (6th to 10th among major 15 States) for the age group of 6-14 years during this period and the gender gap in literacy levels of 20 per cent and those currently attending school (13.3 per cent) in the age group of 11 to 14 is also higher in Gujarat in comparison with other States. Furthermore, in Gujarat the disparity in literacy rate (and among those currently attending school) of the general category and the overall literacy rate is higher than the national average; it is also higher than other States of comparison, namely, Haryana and Maharashtra, though marginally less than Tamil Nadu.

In health, Gujarat ranks 10th in the rate of decline in infant mortality. The rural-urban IMR gap remains unbridged with no change in the ratio between 2000 and 2010. The gains in reducing the gender gap in IMR are poor and the disparity ratio between the SCs, the STs and others has actually increased between 2000 and 2010. Incidence of under-nutrition in the State for the year 1998-99 was lower than the national average across all social groups. Disturbingly, in 2005-2006, under-nutrition in Gujarat worsened in comparison with the national average. The level of under-nutrition for the SCs in Gujarat is close to the national average and, for the STs, it is higher than the national average. Immunisation of children in Gujarat was above the national average in 1999 and, also in 2006. However, between 1999 and 2006, the social gap in ante-natal care increased. The State ranked 9th in 1990-95, it ranks 11th in 2005-2010. All this when the overall growth rate continues to soar!

It is significant to note that the State expenditure in social sectors, both as a percentage of GSDP and as a percentage of total expenditure, has declined more than the average decline in other comparable States and stands below the national average pointing to a clear shift in the priorities.

Exclusionary growth

How do we explain these socially exclusionary outcomes of growth?

Gujarat provides a window to understand the limits of market-led growth and an insight into a policy regime that does not attempt to mitigate the most brutal consequences of this specific mode of production. The paradoxes of this development model are writ large. They are a precursor for things to come in other parts of India unless there is a change in policy direction at the Centre or, alternatively, the States begin to negotiate the growth agenda in a substantially different manner.

(The writer teaches at Jawaharlal Nehru University, New Delhi.)

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