Archive for May, 2014

The Gujarat Model: Which One?

19 May 2014
The electorate in India and our “First Past the Post” system of choosing representatives have handed thumping victory to Narendra Modi and BJP. Talking heads have variously described it as Modi Wave or Modi Tsunami that has rode on the ‘Development-Mantra’ that Modi chanted incessantly in his whirlwind campaign. Lynchpin of that development is the much commented Gujarat Model. Just a couple of weeks ago, Yogendra Alagh, chose to join issue in his Express piece: ‘Posture-nomics’. His two observations: ‘Arvind Panagariya and Surjit S. Bhalla have both descended on Dalit and Adivasi Gujarat. We are told that poverty levels in the state, and among Dalits and Adivasis, in particular, are lower than in the rest of India. But given that Gujarat is a richer state, this is a no-brainer. After analysing data trends, they conclude that poverty has fallen faster in Gujarat. One would be surprised if this were not so. The richer a state is, the lower its poverty levels’ and ‘Gujarat’s agriculture was growing at around 6 per cent annually, benefiting from the Sardar Sarovar project, which became operational around the beginning of the last decade. But unless we build lower-level distributaries, this source of growth cannot be sustained. I have been saying this for a while now, and in 2012-13, the state’s agriculture sector actually only grew 4 per cent. As a noted agricultural economist, Ashok Gulati could have given us some much-needed advice but he preferred to posture instead, saying agriculture was growing at 10 per cent…. Getting back to agriculture, the 10 per cent growth rate figure was the result of a paid-for study commissioned by the government of Gujarat and conducted by the International Food Policy Research Institute, to which Gulati was affiliated; drew scathing retorts. Surjit Bhalla rightly latched on to the tautological statement of Alagh and also said that latter spoke without offering any evidence in his piece, ‘The slur and troll campaign’: ‘Alagh: An ex-economist and ex-Planning Commission official, Alagh does not even bother to present any evidence for his interpretations about poverty levels in Gujarat. His conclusion: “the richer a state, the lower its poverty levels”. Hence, Gujarat has lower poverty, whatever that means’. In “A Field of Disagreements, Ashok Gulati, takes umbrage at the suggestion of ‘paid-for study’: ‘Instead, he chose to throw mud by saying it was “a paid-for study” by the Gujarat government. It pains me to say that Professor Alagh, whom I have respected as a senior professional, is speaking a blatant, shameful lie. I am proud to have been associated with IFPRI for more than 10 years. Let me put on record that IFPRI never received a penny from the Gujarat government for this study and the study was not commissioned by it’. While Alagh credits Sardar Sarovar- Narmada waters for the ‘6%’ growth in agriculture in the decade of 2000s, Gulati gives credit for the 9.8% agri-GDP growth in the same period to Bt Cotton that is 50% served by irrigation in Gujarat compared to 5% in Maharashtra. For irrigation, he further credits ‘check dams’ and ‘other irrigation schemes’ but omits to mention Sardar Sarovar.
In this acrimonious debate, a generous dose of sobriety was injected by Jean Dreze writing in The Hindu: ‘The Gujarat Middle’. Having written about ‘Gujarat Model’ just a month prior, Dreze chose to look at Summary Indexes because he argues: ‘This time I looked at a bunch of summary indexes based on multiple development indicators. One advantage of summary indexes is that they make it harder to “cheat” by focussing selectively on particular indicators that happen to suit one’s purpose’. The debate about Gujarat Model is not simply about GDP growth, but about such growth benefitting general populace, especially disadvantaged sections. Secondly, it should rightfully be also about how Gujarat has fared under Modi-decade when compared to prior times. To this end he uses Human Development Index (HDI) computations for various Indian states that he made with Reetika Khera in EPW, Multidimensional Poverty Index (MPI) rankings computed by Sabina Alkire et al at Oxford University, Composite Development Index (CDI) developed by Raghuram Rajan Committee, and finally the rate of change in CDI over time or the Performance Index (PI). He chose these three summary indices because he says these three are the only one’s known to him where recent computations have been made. Gujarat captures unfailingly the 9th rank among the 20 major Indian states on each of these three indices, he says, This ‘mysterious’ affinity of Gujarat to 9thRank somewhere in the middle is what prompts him to call it ‘The Gujarat Middle’. The PI was calculated for the decade of 2000s when Modi ruled the roost in Gujarat and here Gujarat falls to 12th rank among the 20 major states. I decided to put together the available information on all these indices, but failed to obtain rankings data on PI. The other three (HDI, MPI, CDI), however, bear out what Dreze has written. Can an analysis get any more objective?
Human Development Index (HDI)
HDI was fashionedin the context of Millennium Development Goals (MDG) to provide frame of reference for both social and economic development. For each of its components a lower and upper bound is created based on the data of different countries. It combines Life Expectancy at Birth (20 years < x < 83.57 years), Educational attainments (Mean years of schooling <= 18 years), and Per Capita Gross National Income on the basis of Purchasing Power parity (PPP) (US$ 100 < x < US$ 87,478). The value of HDI lies between 0 to 1, higher the value, better the level of development. The file below compares India and the Indian States individually with other countries. Whereas Gujarat is placed below Cape Verde (Rank 118) and Uttarakhand; Kerala below Botswana (Rank 98), Punjab below Vietnam (113), and Maharashtra below Guatemala (Rank 116) and Himachal Pradesh fare better.
Dreze and Khera computed standard HDIfor major Indian states by combining it with its variant that looks specifically at children.
Multidimensional Poverty Index (MPI)
Man (read human) doesn’t live by bread alone is the adage that possibly motivated to enlarge the definition of poverty beyond mere per capita income or per capita consumer expenditure. MPI is a three dimensional index comprised of 10 variables. (1)Education: Years of schooling, School attendance. –weight for each 1/6 (2)Health: Child Mortality, Nutrition. –weight for each 1/6 (3)Living Standard: Electricity, Drinking Water, Sanitation, Flooring, Cooking fuel, and Assets. –weight for each 1/18. MPI is then calculated by taking the product of Incidence(the percentage of people who are disadvantaged (or the headcount ratio, H) and Intensity (the average share of dimensions in which disadvantaged people are deprived). Higher the index implies that higher is the Incidence as well as the intensity of deprivation. In the file below, Country Briefing: India, the Oxford Poverty and Human Development Initiative (OPHI) has given data related to MPI for Indian States (see page 5 & 6). The map on page six shows that Gujarat occupies 9th rank behind states like Kerala, Goa, Punjab, Tamil Nadu, Himachal Pradesh or Maharashtra.
Composite Development Index
This measure is comprised of Income (per capita monthly consumption expenditure or per capita Net State Domestic Product), Education, Health, Household Amenities Index, Poverty Ratio, Female Literacy Rate, % of SC/ST population, Urbanization Rate, Financial Inclusion and Connectivity Index. This is an Inverse Index in the sense that higher the value worse off is the state. Page 2 of the following file gives idea of how the index was constructed and data sources used for each of the variables. Page 4 and 5 give extracts of the dissenting note of the committee member, Dr. Shibal Gupta, who has argued that per capita Gross State Domestic Product (GSDP) is a better measure than either per capita NSDP or MPCE. This was the principal defect in the majority recommendation among some other shortcomings, according to him. He observes, ‘Similarly, Gujarat, one of the most economically 45 prosperous states of India, appear in the list as a ‘less developed’ state, with an underdevelopment index of 0.49’. Page 6 I have constructed from the information available in the report. It places Gujarat at 12th place among Indian States.
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