Dr Bharat Jhunjhunwala
There is a palpable sense of elation at the prospect of Narendra Modi becoming the Prime Minister. He has won the hearts of the people of this country by standing up to Nawaz Sharif for his calling Manmohan Singh a ‘dehati aurat.’ Businessmen are falling over one another to sing praises of Modi. Modi had land identified and offered land to Tatas within three days of their pulling out of Singur in West Bengal. He personally presides over meetings to fast track industrial projects. Economic growth in the cities of Gujarat seems to be on track. Modi’s efforts have led to the industrialization of major towns like Surat and Porbandar. Electricity is available 24 hours across the State. Gujarat is selling surplus electricity to other states. There is practically no labour unrest here. There is no disturbance on account of caste or communal issues either-despite the past controversy. Corruption also seems to be in control. I had an occasion to visit Amdavad few months ago. The taxi driver told that now he can get his license by paying only the official fee of Rs 100 or so. The rich and the poor stand in the same queue to get their licenses. Previously one had to pay a bribe of Rs 2,000 for the same. A businessman from Surat told me that there was no unemployment in the cities. A journalist told me that farmers and diamond cutting businessmen in Southern Gujarat were finding it difficult to find workers because they were getting employment in cities nearer their homes. An RSS worker who had worked with Modi told me that Modi was a man of action. He took quick and clear decisions and saw that they were implemented. In Modi we have a person who has raised the self-esteem of the country and provided clean administration. There is no case for complacency though. A similar sense of euphoria had gripped the country in 1999 when Atal Behari Vajpayee had become the Prime Minister. Yet it was shown the door by the electorate in 2004 because there was little in the BJP model for the aam aadmi. The same fate may befall Modi unless he is able to make a fundamental change in the development model.
The pro-rich growth model espoused by Modi is made clear by comparing the growth rate with other ‘forward’ states of the country? Figures published by the Ministry of Finance indicate that the average per capita growth rate after accounting for inflation between 2005 and 2011 was as follows: Maharashtra 12.5%, Tamil Nadu 12.2%, Bihar 12%, Haryana 9.3% and Karnataka and Gujarat 7.7%. These other states are enmeshed in problems such as those of corruption, unavailability of electricity and infrastructure yet they have higher growth rates than Gujarat. Why?
Gujarati scholar Darshini Mahadevia helped solve the riddle. She said that development under Modi was centered largely in the big cities like Amdavad, Gandhidham, Porbandar and Surat. The condition of people living in smaller towns and villages had not improved much. For example, Gujarat was selling surplus electricity to other states when about 11 lac houses did not have connections. There would be no surplus if these houses had been electrified. The productivity of these households would be higher if electricity was provided. Other states were growing faster than Gujarat, it appears, because the incomes of the aam aadmi was increasing. The slower rate of growth in these other states due to corruption and lack of infrastructure was more than made up by the growth of income of the ordinary households. This is seen most clearly in Bihar which has clocked higher rate of growth than Gujarat. Bihar’s growth is not coming from factories like that of Nano. It is coming from the provision of road and electricity to the ordinary household.
Growth of Gujarat is low because it is restricted wholly to the major cities. The high rate of growth in the cities is being pulled down by the very low rate of growth in the villages and small towns. Maybe this is negative even.
No wonder the Committee under the Chair of Raguram Rajan to determine criteria of backwardness has placed Gujarat at 12th position in development though the industrialists would unquestionably place it at the 1st position. Reason is that four of the ten the criteria used by Rajan are focused on the conditions of the aam aadmi: infant mortality rate, female literacy, household amenities like water supply and per capita consumption. The last parameter is very important. By taking consumption instead of income the parameter has shifted the definition of development form rich to poor. Per capita consumption will rise only if the poor man also consumes more because the rich save more and consume less. Gujarat would rank much higher if per capita income were to be used instead of per capita consumption. It has high per capita income and low per capita consumption.
The apparent contradiction between the enthusiasm of the businessmen for Modi and low rates of growth thus gets resolved. The enthusiasm is real. Big industries are growing fast in big cities. But the aam aadmi in the hinterland is being left behind and therefore the growth rate is lagging behind.
BJP must ponder over its defeat in the 2004 and 2009 elections. There is no doubt in my mind that the NDA made decisive contributions to the country’s standing in its five years of rule. It made India a nuclear power. It started the development of highways across the length and breadth of the country. It laid the foundations of the IT sector. It accumulated foreign exchange reserves so that we may not have to face a 1991-like crisis again. These achievements, howsoever real, did not translate into votes because there was little for the aam aadmi under the Vajpayee Government. The same situation repeated in 2009. The UPA rode on the programs of MNREGA and loan waiver. Matters of corruption got sidelined as far as the voter was concerned. The voter is mostly focused on Roti Kapada aur Makan. Corruption is a non-issue for him. No wonder the UPA is bracing itself to contest the coming elections on the platforms of Direct Benefit Transfer and Right to Food.
Both UPA, NDA and AAP must understand that they will truly succeed only if they are able to attain high levels of economic growth along with relief to the aam aadmi. UPA and AAP must understand that relief to the aam aadmi will be sustainable only if the nation is prosperous. BJP must understand that they will be able to lead the country only if they are able to connect with the aam aadmi. Unfortunately none of the parties are able to walk on the tightrope.
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