Much against the claim that Gujarat is India’s “growth engine”, facts suggest this was not so in the last one decade

AARGBy Hemantkumar Shah*

The annual average growth rate (AAGR) of gross domestic product (GDP) in Gujarat was 4.34% during 1960-80, whereas India’s AAGR was 3.3%. Thus, the difference between Gujarat’s growth rate and India’s growth rate was 1.04%. The AAGR in Gujarat was 14.97% during 1980-1990, and it was the highest growth rate experienced by Gujarat. During 1990-2000 it was 12.77%, the second highest. During these two decades, the AAGR for India stood at 5.5%. Thus, Gujarat was far ahead of the whole of the country by 9.47% and 7.27%, respectively. During the period 2001-11, Gujarat’s AAGR plummeted to just 9.82%, when India’s AAGR was 7.5%. Thus, the difference between the two was just 2.32 %! During 2006-12, the AAGR of Gujarat was 9.32%, whereas it was 8.06% for the whole of India, the highest since 1950. Here, the difference is of just 1.26%.

Thus, the economic growth of Gujarat during the period when Narendra Modi was chief minister, Gujarat went back to 1960s and 1970s. This also suggests that India’s high growth rate does not depend on Gujarat’s growth rate. The highest AAGR was experienced by Gujarat during 1990-94 — 16.73%.

The highest annual growth rate in Gujarat was 40.18%, during 1988-89, when Amarsinh Chaudhari was chief minister. Second highest annual growth rate was experienced during 1992-93, under the chief ministership of Chimanbhai Patel, and it was 34.33%. And, it was 30.06% in 1983-84 when Madhavsinh Solanki was the chief Minister. During Modi’s period, the highest growth rate achieved during 2003-04 and it was just 14.77%. These facts suggest that Gujarat did not develop as fast as it is claimed during the Modi rule.

Economic Transformation

Since the advent of industrial revolution, transformation in any economy is seen terms of how an agrarian economy gives way to an industrial economy. According to this parameter, Modi’s period is not the period of transformation of the Gujarat economy. In 1999-2000 industry’s contribution to GDP was 39.21% and agriculture’s contribution was 14.52%. In 2008-09, agriculture’s contribution went down to 14.10% and industry’s contribution went up to 41.05%. This suggests that only 0.42% transformational change occurred during Modi’s rule.

The reality is, industrialization of Gujarat had almost completed well before Modi took over as chief minister in 2001. During almost two decades, from 1980 to 1998, the contribution of agriculture to the GDP went down from 34% to 19.42% and industry’s contribution went up from 28% to 41.91%. Agriculture’s contribution to the state GDP in 2011-12 was 18.3%. Hence, from the historical perspective, industrial growth of Gujarat during 1980-98 was more important than under Modi.

Vibrant Gujarat Summits

In 2003, 2005, 2007, 2009 and 2011 Vibrant Gujarat summits were held, with promises of huge industrial investment. Their success ratio, however, is highly pathetic. In 2011, the summit ended with the promises of around Rs 20.40 lakh crore of investment, but at the end of two year period the success ratio was just 1.46%, i.e. just Rs 2,981 crore.  The success ratio of these summits has gone down consistently (see the attached table).

Interestingly, the total investment in the whole of India during 2009-12 was Rs 19,83,189 crore. How can it be Rs 20.40 lakh crore for Gujarat in just one year? Due to criticism, the Modi government did not sign any MoU with any investor during the 2013 summit held at the Mahatma Mandir in Gandhinagar. During the 17 year period, 1991-2008, the total industrial investment made in Gujarat was Rs 5.05 lakh crore.  Therefore, it cannot be Rs 20.83 lakh crore in just one year of 2011.

It is very difficult to assess the real industrial investment made as a result of Vibrant Gujarat summits, because the state government gives highly differential figures of actual investment. In 2005, promises of investment of Rs 1,06,160 crore were made during the summit. Initially, the claim of investment of Rs 74,019 crore was made by the state government. To one of the RTI queries, the state government replied that only investment of Rs 24,998 crore was actually realized.

Interestingly, during the 2011 summit, even Sate Bank of India, Dena Bank and Bank of Baroda signed MoUs worth of Rs 18,000 crore for the implementation of various schemes of Government of India! Most of them are bankable schemes for which there is no need of any kind of MoU. And, of course, all of it is not an investment at all!

Foreign Direct Investment (FDI)

Gujarat got FDI worth Rs 4,730 crore in 2011-12. It went down to Rs 2,676 crore in 2012-13, representing a 43% decline. Gujarat ranks sixth in FDI after Maharashtra, Delhi, Tamil Nadu, Karnataka and Andhra Pradesh. Maharashtra’s contribution to total FDI of India was 39% in 2012-13, and it was just 2% in the case of Gujarat!

Human Development

According to the National Human Development Report of 2001 of the Planning Commission, Gujarat ranked 10th among all states of India in terms of human development. Its rank is 11th among Indian states, according to the India Human Development Report of 2011. Nowhere Gujarat stands first in any of the indicators of human development. Its rank is 26th in undernourished women and children.

Poverty Rate

In 1999 below poverty line (BPL) families were 26.19 lakh. The numbers have now gone up to 40 lakh, according to a Gujarat government advertisement on Mukhyamantri Amritam (MA) Yojana, aired on almost all FM radios in Gujarat during January 2014. As per the manifesto of BJP, announced for the assembly elections of December 2012, 50 lakh families were to be provided affordable good housing. It means that 2.5 crore people (43%) of Gujarat lives in poverty.  Good housing is one of the indicators for the measurement of poverty. According to the United Nations Development Programme (UNDP) criteria of Multidimensional Poverty Index (MPI-2010) ,too, Gujarat has 41.5% people living in poverty. Gujarat ranks 8th in terms of poverty among 20 Indian states, according to a research study by the Oxford Human Development Initiative in 2011.


According to Comptroller and Auditor Gujarat (CAG) reports, there has been corruption worth Rs 1.50 lakh crore in Gujarat in the recent past. The state government was involved in corruption in many cases, and therefore Lokayukta was not appointed for nine years. Undue favour was given to many industries, CAG has pointed out. Modi’s office was itself involved in lending government land to a private company, the Supreme Court has observed.


There are around 16 lakh educated unemployed youth in Gujarat, according to the state government’s publication Socio-Economic Review, 2012-13. Recently, 8.8 lakh applications were filed with the government for the post of talatis, i.e. village panchayat revenue official. It proves that there is widespread unemployment in Gujarat. Promises of generation of 1.02 crore employment were made during first five Vibrant Gujarat summits. But, in fact, till March 2012 only 2.99 lakh jobs were generated from the investment made till that time. Another 2.70 lakh jobs were to be generated from the rest of the investment to be made in the state. Thus, a total of only 5.69 lakh jobs were generated from industrial investment promised during these summits.

satyamevGovernment Finances

There has been 7.75 times rise in the value added tax (VAT) revenue, 2.5 times rise in electricity duty and 6.5 times rise in overall tax revenue of the state government in the last 12 years of Modi’s rule in Gujarat. Still, the debt burden of the state government has gone up from Rs 26,000 crore to Rs 1,69, 000 crore. In 2014-15 the estimated public debt of the state government is likely to reach Rs 1,85,000 crore. The net per capita debt burden in Gujarat in 2013-14 is Rs 26,000, which is the highest in India. This has happened on account of complete mismanagement of finances of the state government under Modi’s rule.


Gujarat is lagging behind in expenditure on education. In 2010 only 15.8% of total finances were allocated to education from the state government’s budget. Gujarat ranks 10th among 17 major state of India in this regard. In 2011, Gujarat’s rank was 12th — its expenditure on education was 16.1% of the total budget. In 2012-13 the situation worsened. The total expenditure on education was 13.4%. In 2013-14 the total allocation on education went up to 14.05%.

Primary education: There were 43,000 vacancies of teachers in higher secondary schools in 2011. Almost 85% schools do not have enough number of teachers in primary schools of tribal district of Dangs. The teachers in primary schools are being appointed with fixed salaries on a contract of five years. At present, their salary is fixed at Rs 5,300. Previously, it was just Rs 2,500, and in between it went up to Rs 4,500. They are known as vidya sahayaks. Their salary is less than that of a plumber or a mason! Moreover, these teachers are being forced to bring children to hear Modi or some minister during public meetings.

There is high dropout rate in primary education in Gujarat. After 5th standard 29.5% students leave schools and more than 45% do not reach 10th standard.  In May 2012, the state government told the High Court of Gujarat that it does not have enough money to provide free education to socio-economically backward classes of the state. The Modi government did not implement the rules framed under the Right to Education (RTE) Act for two years.

Privatization of primary education is the rule of the day. In 1999-2000, 81.34 lakh children were studying in the government schools in Gujarat. The number has gone down to 60.32 lakh in 2011-12. Only 20,000 children took admission in Ahmedabad Municipal Corporation (AMC)-run schools in 2012-13, whereas on an average 28,000 students were admitted each year in these schools for during the four years. Obviously, they were forced to go to private schools due to poor quality of education they receive in government schools.

During 2009-12, under the Sarva Shiksha Abhiyan (SSA), the Gujarat government did not spend Rs 1,340 crore which was disbursed by the Central government for implementing the scheme. In Ahmedabad, 70% and in Rajkot 35% funds under the scheme were not spent. The figure for Vadodara is 28% and for Surat 21%.

In March 2014, 9.75 lakh students appeared for 10th SSC board examination. The number for March2013 was 10.30 lakh. Why was there a gap of 55,000 students when the enrolment is almost 100%, as claimed by the state government, and when there is an increase in population?

So far as education development index (EDI) for primary education is concerned, Gujarat ranked 12th in 2005-06. The rank went down to 11th in 2006-07. In upper primary education the rank of Gujarat was 11th. Only 18.53 lower primary schools were having computers. At least 10% primary schools in the state do not provide mid-day meal to children.

Higher education: There is shortfall of around 5,000 teachers in colleges and universities. Universities are being run without regular appointments of vice-chancellors for months. There is no vice-chancellor in Kutch University for the last two years. There is no regular registrar in seven universities. There are many universities in the state where there are only one or two lecturers in several departments. The higher education commissioner does not permit universities to appoint lecturers in universities.

All 30 universities opened up in Gujarat in last the 12 years are in the private sector, or on the self-finance basis. Many universities exist on only paper, or with just 100 to 200 students. This is especially the case of the Children’s University and the Indian Institute of Teachers’ Education in Gandhinagar. More than 15,000 lecturers have not paid the arrears of their legal wages since 2006!

In Vibrant Gujarat, there are 30 government polytechnics where there is a shortfall of around 1,000 lecturers. In more than 15 engineering colleges, there is a shortfall of 400 lecturers!

Lecturers are paid only Rs 16,500 per month in granted colleges and statutory universities. They are appointed on a five year contract on fixed salary. In government colleges, they are appointed on 11 months’ contract. They do not enjoy any job security.


Gujarat has 43% undernourished children in under-five category. As many as 47% women are undernourished. And still, the state is suffering from a wide gap of anganwadis. There is requirement of around 72,000 anganwadis in Gujarat, but the state has only 54,000 of them. Infant mortality rate (IMR) and maternal mortality rate (MMR) are quite high in Gujarat compared to other Indian states. The state does not have enough primary health centres (PHCs) and community health centres (CHCs). In 2005-06, there existed just one PHC for 51,300 persons. In 2011-12, the situation worsened, with 56,100 persons per PHC. The number of sub-centers remained the same — 7,274 during 2005-12.

Gujarat is among eight states where one per cent children suffered from severe anemia in 2010-11. There is a shortfall of at least 2,000 doctors in the government-run hospitals. The doctors are also being appointed on a fixed salary of Rs 10,000 with a contract of five years.

Government Employees

The sixth pay commission report of the Government of India has still not fully implemented in Gujarat. Arrears were given in installments. Arrears have still not been given to the teaching staff of colleges and universities.

More than 4.5 lakh employees work on contractual basis in Gujarat. The state government went to the Supreme Court against the judgment of the High Court ordering the state government for regular appointment to employees.


Thirty-six IAS and IPS officers are in jail for fake encounters and other criminal offences. There is no transparency in government functioning, as thousands of applications are pending with the State Information Commission where proactive disclosure should have been the norm, as per the Right to Information (RTI) Act. There is lack of accountability at every step. The state assembly meets for fewer and fewer days with every passing year. The report of the second state finance commission, which recommends how to mop up resources for local self-governing bodies, was tabled in the house after five years of its submission. Even then, the state government did not find it necessary to hold consultation with stakeholders. Even the draft of the Common University Act was not put in the public domain for discussion among the teachers, students and vice-chancellors!

Law and Order

Around 6,000 children have gone missing over the last five years. Even the murderers of children are not arrested in many cases and the accused are getting favour from their political mentors in Gandhinagar. More than 11,000 crimes of atrocities have been registered against women in the last five years, let alone unregistered crimes. More than 5,500 farmers have committed suicide and police staff has been instructed not to register cases of suicides. Ahmedabad and Surat have one of the highest crime rates in the country.


The electricity duty for domestic use in 2014 is 15%, and it is 11.25% for hostels of students, whereas it is just 10% for industries. More than 4.5 lakh farmers’ applications for electricity connection are pending with the state government, yet the state boasts that it sells electricity to other states.  Almost Rs 1,020 crore was spent on purchasing power from private companies, whereas, according to the state’s 11th plan, this amount should have been spent on the generation of electricity.

During 1990-2000, the production of electricity by the state owned company went up by 34.82%. But during 2000-11 it went up only by 19.74%. Even the private sector’s performance during the two phases worsened. During 1990-2000, the private generation of electricity went up by 483.82% and by 141.93% during 2000-11. Thus, Modi has failed in boosting electricity generation in the state.

According to the CAG report of 2013, Gujarat Energy Transmission Corporation Limited (GETCO), the state owned company, has not achieved targets for the construction of extra high tension substations and transmission lines. During 2007-13, there was delay of six to 50 months in commissioning substations. This is certainly not an example of good governance.

Gujarat Urja Vikas Nigam Limited (GUVNL), government owned, has signed a power purchase agreement (PPA) with the Adani Power Limited (APL). The PPA states that if the provisions of the agreement are not observed by APL, the GUVNL can impose fine on APL. During 2009-12, the APL supplied less power than the stipulated quantity. A fine of Rs 240 crore should have been collected from APL. But it received only Rs 160 crore. Less was fine was collected from APL! Can and should we smell any scam in this deal?

Vibrating Roads

There is a general impression that the roads in Gujarat are far better than most other states of India. This is once again a myth. National highways, state highways and district roads were better in Gujarat compared to the rest of India even 50 years ago, and they are good even today. But the roads in 18,500 villages, including 13,700 village panchayats, 159 municipalities and eight municipal corporations are full of potholes. Even a PIL was filed in the High Court of Gujarat in 2013 to direct the state government to construct good roads. While hearing the petition, the judge said that 90% roads were in a poor state. Every year crores of rupees are spent in resurfacing roads in big cities, which is beneficial to the contractors and their political mentors.

*Senior academic, teaches economics at HK College of Commerce

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