The powerhouse and its nemesis


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GIVEN the experience it has gone through from Godhra and beyond, a certain amount of Gujarat bashing is to be expected. It is quite obvious that Gujarat is facing problems and some severe ones at that, but an emphasis on half truths and shibboleths is at best irrelevant and at worst terribly misleading, since the real problems are obscured.

A leading newspaper headlined the slowdown of industry and negative growth in Gujarat as the cause of the mayhem. Also centralised and concentrated growth. Some academics, who should have known better, followed, even arguing that Godhra and the subsequent killings were proof of a society bereft of any human urges, all set to destroy both growth and modernising impulses.

Yet the Gujarat problematique cannot be discussed without recognising that it is a powerhouse of industrial growth, that its growth is highly decentralised and that it is a highly resilient and purposive society. Its problems lie in age-old social fissures, not just between religions, and a neglect of the larger vision of development as compared to industrial growth alongside a neglect of the human factor. But first the facts.

Gujarat is a small state, accounting for only 5% of India’s population, but it has been the strong-arm of the nation’s industrial and trade performance. In the six year period 1993/94 to 1999/2000, at constant 93/94 prices, its manufacturing output grew by 94% and its trade, hotels and restaurants and communication income by 84%. In other words, left to itself another industrial and service sector in Gujarat is created every five to six years.

This small state accounts for about a seventh of India’s industrial output and around a fifth of its industrial investment. Short of water its agriculture has not grown, but with the Narmada waters coming all that would be in the past. Not unexpectedly, the Planning Commission has projected it as one of the fastest growing states in the tenth plan.



Between 1993/94 and 1999/2000, Indian manufacturing output went up by 43%, and it is obvious that around a fifth of the growth of national output came from the small state of Gujarat. If in the next six years Gujarat does not grow, India’s growth, other things remaining the same, will go down from the top to less than the average of the developing world.

First the critics. Yes, SDP growth in Gujarat can be erratic, partly on account of the monsoon, since its agriculture is highly variable. When I came to Gujarat in 1968, its groundnut crop could vary between 16 to 44 lakh tonnes. This happens even now. Some stress the lower industrial growth figures. But that includes water, mining and electricity. It is manufacturing, which powers the dynamo and in the last four years, barring one, the sector grew by over 30%. Last year, when the bottom fell out of the manufacturing sector in India, in Gujarat it grew by over 5%. Life would be easy if Gujarat’s problems could be solved by higher SDP growth, for that will happen. Two droughts, an earthquake and civil strife have hurt, but in the past the state has shown a resilience to bounce back. The speed and the extent to which it will do so now, depends on its institutions.

Gujarat is perhaps one of the fastest growing industrial economies anywhere, and one which is very rapidly transforming itself from a rural economy. Unfortunately, the typical paradigm in which it is still looked at these days is that of a few sick cities and a large feudal framework of an agricultural and rural economy. The mindset is that of ‘70% of population in agriculture’ and sick urbanisation and industry. This is not true and most policy analysts have missed the fact that it is not. The facts are as follows:


Structural Change in Gujarat





Long term real manufacturing growth (% annual)



Manufacturing SDP growth 93/94-98/99 (% annual in ’93 prices)



% of work force engaged in agriculture (cultivators and agricultural labourers)








Gujarat’s non-agricultural growth is fairly widespread. Before the state was divided into smaller districts, apart from the forest area of the Dangs, every district had more than 20,000 industrial workers. Now, apart from the Dangs and the district of Narmada, every district has at least 10,000 industrial workers. Then there is a city like Surat where employment has grown between six to seven per cent every year for the last three decades, which makes it an unusual phenomenon of growth on a global plane. There are more than double the industrial workers in that city from the eastern state of Orissa as compared to that state as a whole. Surat incidentally is now a vastly improved city and was fortunately spared civil violence.



Damage has and can be severe and widespread. Ignorance of this has been costly in the past. A mechanical repetition of numbers misses this structural aspect. Any serious analysis will have to take the rapidly emerging change into account. Around half of Gujarat’s people are living in concentrated, but fairly spread out clusters of populations with substantial wealth and assets. There seems to be little awareness of this.

Gujarat’s problems emerge not from stagnation, but the level, pattern and structure of growth. If growth is high and widespread, damage from emergencies – natural like earthquakes, or manmade like civil disorder – will be high and widespread. The process of reconstruction and restoration of confidence will also be accordingly more difficult.



Since growth is decentralised, the restoration of security and confidence will need to be widespread. The kind of growth Gujarat has been going through is endogenous, highly decentralised and widespread. This is not an activity which can be ‘planned’ or ordered by a leadership group. This means that restructuring cannot be centrally designed or ordered. It will require a major process of confidence building so that a large number of economic and social actors once again start functioning autonomously. The web has to spin itself and that is far more difficult.

First it must be recognised that peace, security and development are interconnected and doable. Loss of life is terrible and cannot ever be compensated. The destitution which has been created will have to be dealt with and that process has to begin immediately. Yet a vast majority has a stake in the establishment of economic normalcy and that must be emphasised and taken advantage of.

The notion that Gujarat has gone through an irreversible downslide is incorrect. After a few days the cycle of investment, production and employment will again begin. The only serious question is restoring it to its earlier levels. I wrote about this process a few days ago in an English newspaper. The vernacular press in Gujarat is popular and has the usual disdain of the ‘foreign’ language media and yet that article was translated and published. The urge for the wheel to turn again is compelling.

There are two aspects of this which need to be taken into account. Rehabilitation has to be part of a process of confidence building. Equally important, the links of the rehabilitation process with the growth process of the economy need to be carefully worked out in terms of organisational and resource use linkages and technology. Growth and rehabilitation have to reinforce each other and this needs a policy. The initial efforts are programmatic, correctly so and this will need to continue, but only a growth and reform strategy together with a rehabilitation policy will turn adversity into advantage.



The more the institutions of civil society are involved in the rehabilitation process the better it will be. Needless to say both the structure and the effort have to be initiated by the state but transparency will build confidence. This is even more essential given the widespread nature of the process required. The burning of cars made in the largest FDI in the state on a distant highway is not on. It is true that Gujarat does not have much foreign direct investment in the manufacturing sector. But its trade and technology links are global. Since security forces cannot be present indefinitely, communities have to ensure a peaceful environment.

Already the Mumbai mohalla models are being widely talked about. Peace and economics are indivisible. As Brahmbhatt of the Hotelier’s Association said, Rs 200 crore of property, largely of the minority community, was burnt; also 7000 workers, largely from the majority community, lost their jobs. In a state where the net growth of employment in the last couple of years has been at best negligible on account of the recession, this should not be scoffed at. In fact, community involvement even in the process of damage assessment may be an advantage, more so since almost all riot commissions have shown the limitations of official records, for understandable reasons, in this process.



The problem is not that Gujarat is stagnating and therefore turning on itself. The problem is more complex. Past methods of reasoning do not get one far. As a ‘planning’ type, who never left his research job in Gujarat but off and on went to Yojana Ayog, I find the irrelevance of our mindsets to what is happening around us distressing. The urge to relate economic stagnation to violence comes from that. When we grew up, the popular framework was that poverty, hunger and insecurity emerge from lack of food and income. Today, after both the earthquake and Godhra, we find granaries bursting at the seams and sufficient income, yet we are intensely insecure.

As Chairman of the Advisory Committee of the Gujarat Disaster Management Authority, I have argued that the state has developed at a rapid pace, outstripping a corresponding development in civil society organizations. It is this that has led to greater vulnerability. If Gujarat’s manufacturing sector doubles every seven years, as it has in the past, and development takes place on a highly decentralized scale as it has with every district having more than 10,000 workers in the manufacturing sector, when disasters like an earthquake or civil violence happen, the damage is far greater. Earthquakes are natural, but damage depends on land use, the nature of development and social and governance institutions to help cope.

It is not evident that anyone fully realizes the processes underway. It is only the philistine who claims to know it all. The larger question of human insecurity is a major issue. Data and information systems to address these problems need to be worked on. It needs to be recognized that while there are natural causes for some crises, social and governance institutions to cope with them are important, since in many cases it is the nature of development itself that creates the crisis. Many of the answers in fact lie outside Gujarat. Every high powered or expert group that has examined Indian higher civil services since the Administrative Reforms Commission has recommended that public interest must be explicated before a civil servant is non-routinely transferred. Yet no state, nor indeed the Centre, is willing to take the first step.



As vulnerability is not coincident with poverty, malnutrition or other indices of human deprivation, research and speculation by thinking individuals should aim at providing a better understanding of such crises. Also public responses to improve the coping facilities of social groups should be assisted by targeted research and development visions, and not just by relief. A number of approaches have been highlighted in the literature to address these problems (e.g. entitlement, empowerment, and enfranchisement). These have to be given content and meaning in the days and weeks to come.

Given the nature of the effort involved, this might well be the moment to look at more deep-rooted problems. Inspite of the negative media reports, largely about the walled cities, it is in fact the walled cities that, to an extent, held in Gujarat. At the time of writing there are reports of business recovery in the walled city of Ahmedabad, and businesses belonging to the different communities.

The destruction was far greater in the urbanising areas that have mushroomed around the city. These have been the despair of town planners in Gujarat and the rehabilitation effort here should be integrated with planning of infrastructure amenities. The Union budget has provided special schemes to involve local bodies and community agencies in urban reform schemes. Gujarat should take the finance minister seriously. Unlike earthquake rehabilitation that involves complex procedures on international funding, the state’s rich tradition of outstanding architects and urban planning could be used to advantage.



Gujarat has a varied agro-ecological regime. In terms of soil, climate, water and rainfall, it is a world within a world. This must to be taken account of in its development strategy. The strategy for Kutch has to be different from that in the Dangs, in the Central plains or in the eastern tribal belt. As Achyut Yagnik of SETU has pointed out, rural violence has been more intense in the eastern tribal belt and North Gujarat compared to Saurashtra and South Gujarat. This might well be the occasion to address the issues of a more balanced development of the state and of social and educational strategies in areas where it is being left behind; what Sanat Mehta calls the poorvi patti, the 22 taluks of tribal Gujarat, that are still backward.

There are islands of development. The Sadguru Foundation has over 100 lift irrigation cooperatives run by the adivasis. Last year I visited some of these talukas to see if the money from my MP Local Fund for drinking water had been well spent. I found a welcome increase in female literacy of some groups like the Rathwas, but they were exceptions.

Much of our social science literature on the region is dominated by western scholars like Michael Cernea and others who worked with the Morse Commission, who have basically argued that the adivasi is not a Hindu. They were, I insisted, dead wrong and when I was not properly understood, even wrote a piece in our leading sociological journal to make my point.



The last few days have shown how wrong such approaches, which implicitly rely on North American social anthropology, can be when applied to Indian conditions. However, industrial and trade development not linked to the endowments of the population can become a fertile ground for considerable chaos with attendant social costs. The Morse Commission, a Bible for many activists, made many snide comments on India’s freedom movement, but it did not tell us that the British had hanged an adivasi freedom fighter and Gandhiji had started the Bhil Seva Mandal for the all-round development of the adivasis. It is high time we again got into the act seriously.

The poor performance of Gujarat on many human development and social indicators is well known. The lag in education is appalling. This is a major reason for the state missing the IT bus. But the problem is more deep-rooted. When I came to Gujarat in 1969, the Gujarat College and institutions of the Ahmedabad Education Society were nationally recognised. MSU, Baroda even though in decline, remained a force. Presently no state level institution finds a place in the top 400 in India. The politicisation of education in a pedantic sense is complete, both in terms of educational administration and teacher politics.

Universities in Gujarat follow the old Bombay University model. One more college means one more seat in the Senate. Every political party plays the game, destroying education in the process. Teacher leaders are sanskritized and play the same politics, setting up their own institutions. Asked to search for a vice chancellor once, I could see the complete politicisation of appointments. Two eminent Gujarati speaking persons were superseded and number three, who to my ignorance had rich political antecedents, was immediately selected, destroying the university in the process. An entire generation of young Gujaratis is being sacrificed at the altar of mediocrity and demagogy.



On the wider cultural plane, with the politicisation of education and culture, the land of Narmad is missing the poetic vision of a Uma Shanker Joshi, the grandeur of the theatre of C.C. (Chanchi) Mehta and the acidic logic of S.V. Desai. Gone are the Nhiru Bhai Desais who made one reach for the morning paper. Bakul Tripathi still wounds with his gentle humour, but is perhaps the last of the Mohicans. There is no land between the hedonic and revivalism. It is either CG Road fun, McDonald’s batata burgers, or packaged dharma. Cry my beloved soul, for there is no one to comfort you, only the noise of mirchee for your wounds.

The challenge we face is how to bring Gujarat back to the cutting edge in the country’s growth. This can be so only if we understand that growth, to be enduring, has to be based on civilizational strengths, which are there in ample measure in every part of this great country. They are also present in full measure in Gujarat. If institutions which should mobilise these strengths fail, future growth will remain a mirage.