Saturday, September 22, 2012

The Gujarat miracle: There is no denying the major economic advances the state has made under Narendra Modi by Arvind Panagariya in ECO TIMES

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The Gujarat miracle: There is no denying the major economic advances the state has made under Narendra Modi (do read reader comments in TOI insightful)

By Arvind Panagariya | Sep 22, 2012, 12.00AM IST - http://timesofindia.indiatimes.com/home/opinion/edit-page/The-Gujarat-miracle-There-is-no-denying-the-major-economic-advances-the-state-has-made-under-Narendra-Modi/articleshow/16495127.cms
 

I recently wrote about why the accomplishments of chief minister Nitish Kumar - that at last bring hope to Bihar - could not be underestimated. Today, i turn to Gujarat, which has been generally more prosperous in the post-Independence era and has performed impressively under chief minister Narendra Modi. Critics who insist on viewing everything related to Modi through the 2002 lens and, thus, fail to separate their economics from politics have fallen short of 20/20 vision.

Begin with growth. The relevant comparison here is with larger, richer states. Based on per-capita Net State Domestic Product (NSDP) in 2009-10, Gujarat ranks third, behind Maharashtra and Haryana but ahead of Tamil Nadu, Kerala, Punjab and Karnataka in that order.

Modi came to office in October 2001. In the following eight years spanning 2002-03 to 2009-10 (2002-10), NSDP grew at 10.5% annual rate in Gujarat and at 10.1% in the nearest competitor, Maharashtra. The rate during the preceding eight years, 1994-02, was 5.9%, behind only Haryana's 6.3%. Modi inherited a vibrant economy and has taken it to new heights. Gujarat had ranked sixth in terms of per-capita NSDP in 2002-03. Outperforming Tamil Nadu, Kerala and Punjab, it moved up to the third spot in 2005-06 and has remained there.

While the performance in agriculture has received the greatest attention, perhaps the most exceptional feature of Gujarat's success has been the performance of manufacturing. Compared with the national average of 15%, manufacturing in Gujarat accounted for 27.4% of the Gross State Domestic Product (GSDP) in 2009-10.

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