Gujarat Model

Gujarat Model
Inclusive Growth Model :
What is that?
Efficient Public transport is growth but efficient public
transport running on smooth roads is Inclusive growth
Is there a unique contribution of Mr. Narendra Modi to
it ?
Whom does it benefit?

Six Key transformational initiatives

that changed Gujarat
Power Sector Reforms
- Technology Investment: 24X7 Three phase power to almost all homes in Gujarat
- Governance : Stable financial health of Power companies, hence assured power.

Agriculture and Water

- Public participation
- Water Grid : Only state in India whose water level rose

Infrastructure build up
- Urban Development : Efficient delivery of public services, model implementation of BRTS
- Road Network : Amongst the best in the country

Industry and Investments

- Industrial Clusters : Special industrial clusters promoting investment in job opportunities
- Pro-Industry Policies : Gujarat becoming the Auto hub of India with brands like Nano, Maruti etc.

Healthcare
-First state with first of its kind CHILD TRACKING SYSTEM for child and maternal health monitoring.
Child Care : 32% improvement in malnourishment. Maternal mortality rate reduced from 172 to 125 from
2001 to 2012.

Womens Empowerment
- Education and Empowerment : Female Literacy rose from 58% to 71% from 2001-2011, of Girl child

Distinguishing Features

1. Business Friendliness
As a state that is
overflowing with the
spirit of
entrepreneurship,
Gujarat is probably the
countrys most investorfriendly state.

Under Modi, the state has had

its most prolonged period of
political stability, and Modi,
with his personal interest in
reducing red tape and
administrative lethargy, has
been able to take Gujarat one
notch higher in terms of
investor-friendliness.

2. Balanced between being businessfriendly and agriculture-friendly.

Agri-GDP growth
registered at state-level
was 9.8 percent per
annum up from a meagre
2 percent during 1990s

What it has done is

applied trickle down
economics to
agriculture and it has
worked

3. Economic Freedom

Lack of
Economic
Freedom

Poor Governance
which would imply a
jungle of rules and
obfuscating
bureaucrats that
promote corruption,
delay and
harassment.

This hits everybody from farmers and consumers to industrialists

and transporters.
The state has always been an epitome of Economic freedom,
ultimately leading to Good Governance.

FOURTH-Low Social
Indicators

Gujarat ranks 11th among 23 states in HDI.

This is where the Gujarat model of trickle down is not good enough to lift the
really poor socially and economically out of their misery quickly.

The Gujarat model does not believe in doles and direct subsidies.
The state runs some of the most efficient power companies, but there are
limited subsidies for the rural sector, lower than in other states. Farmers get
limited power at just over 60 paise per unit, but they get 24x7 power at
higher, commercial rates.

Reason for Low HDI of Gujarat

Only big state with a huge tribal population, which is nearly 15 percent of the
total wheras Tamil Nadu and Kerala have barely 1 percent tribal population.

It is this tribal gap that explains a large part of Gujarats laggard status in
terms of human indicators.

The remedy clearly is to spice up trickle-down economics with some trickle-up

direct investment in tribal areas.

5. Modi himself
Industrial promotion has been a trademark of successive Gujarat
administrations regardless of personality or party. While earlier it was done by
officials, Modi himself lead the investment effort loudly, and visibly, from the
front.

So while there was no Modi model of development, there was a Modi way of
executing it.

There is clearly a Modi model of governance, which has been an important

ingredient for success especially in the agricultural area.

Conclusions about Gujarat Model :

Not a pure capitalist model. It is pro-business, but retains elements of a strong

state and public sector performance.

Gujarat model is the ideal form of mixed economy where both the state and
business play their allotted roles, with the balance tilted in favour of growth
and private business.

It works. It would work better with a few tweaks to improve the states HDI.

KERALA MODEL OF
DEVELOPMENT

The Centre for Development Studies at Thiruvananthapuram with

the help of United Nations, conducted a case study of selected
issues with reference to Kerala in the 1970s. The results and
recommendations of this study came to be known as the 'Kerala
model' of equitable growth which emphasized land reforms,
poverty reduction, educational access and child welfare.
Professor K. N. Raj, a renowned economist played a key role in its
development.
More precisely, the Kerala model has been defined as:
A set of high material quality-of-life indicators coinciding with
low per-capita incomes, both distributed across nearly the entire
population of Kerala.
A set of wealth and resource redistribution programmes that
have largely brought about the high material
quality-of-life indicators.
High levels of political participation and activism among
ordinary people along with substantial numbers of dedicated
leaders at all levels. Kerala's mass activism and committed cadre
were able to function
within a largely democratic structure, which their activism has

LITERACY
RATE OF
KERALA IN
2014:93.91%

LIFE
EXPENTAN
CY RATE
OF KERALA
: 73.2% 77.6%

28.6% of the total

population are
undernourished
22.7% of children in
Kerala are

underweight

Kerala's unemployment rate is 7.4 %, which is much higher than the

national average of 2.3%
Though Kerala recorded a growth of 8.24 %for 2012-13, there is only a
marginal increase of 0.2%

Kerala's unusual socioeconomic and demographic

situation was summarized by author and
environmentalist Bill McKibben.

Kerala, a state in India, is a bizarre anomaly among developing

nations, a place that offers real hope for the future of the Third
World. Though not much larger than Maryland..
Kerala has a population as big as California's and a per capita
annual income of less than $300. But its infant mortality rate is
very low, its literacy rate among the highest on Earth, and its
birthrate below America's and falling faster. Kerala's residents
live nearly as long as Americans or Europeans. Though mostly a
land of paddy-covered plains, statistically Kerala stands out as
the Mount Everest of social development; there's truly no place
like it.

Gujarat model
Vs Kerala
model
A COMPARISON

"Kerala Model" in is a metaphor for a primarily

redistribution and state driven development while
"Gujarat Model" is the metaphor for a primarily
growth and private-entrepreneurship driven
development.
In popular discourse, Kerala is the ultimate in
human development indicators, and this is said
to be the result of state spending on social sectors
like education and health.
Gujarat, on the other hand, fares poorly on social
indicators, but high on growth, let by its
entrepreneurial spirit. It is seen to be spending less
Look
education: In 2011, 87.2% of Gujarati
on
socialat
sectors.
males were literate as against 70.7% of females; a
gap of 17.2%. The corresponding all-India figures are
82.1% and 65.4%; a gap of 16.7%.

Kerala's social indicators are still high and

there isn't much gender bias in both health and
education. On the other hand, in Gujarat, the
female and male infant mortality rates
stood at 51 and 44, respectively, in 2010-11.

There are more reasons to worry: 44.6% of

children below the age of five suffer from
malnutrition in Gujarat whereas nearly 70% of
the children suffer from anemia. States like UP
and Bihar have fared better in malnutrition.

"Gujarat inherited low levels of social indicators

(at independence) and it is the change in these
indicators where Gujarat shows impressive
progress. The literacy rate has risen from 22
percent in 1951 to 69 percent in 2001 and 79
percent in 2011. The infant mortality rate per
thousand has fallen from 144 in 1971 to 60 in
2001 and 41 in 2011."

"Kerala have had a long history of

commercialization and globalization via trade
and that the resulting prosperity is a key
explanation of the high social indicators they
inherited at independence."
The belief that Kerala, God's own country, lacks
in entrepreneurial spirit. In fact, the earliest Arab
traders had closer links to Kerala than Gujarat.
Kerala, even now, has more of its citizens - one in
three households - living abroad whereas Gujarat
has less than one in 10 urban households (one in
50 rural households) living and earning abroad.