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Industrial investment, economic growth fail to improve Gujarat social sector indicators


By Rajiv Shah 
Has Gujarat’s high growth trajectory helped overcome its lag in the social sector? Inter-state comparisons, culled out from different studies, suggest that this not happened. 
Gujarat is being widely projected as the “model state” which others must follow. The state’s economy, it is argued, has been growing at the rate of around 10 per cent per annum. Expanding wings of industrialization is considered the key to this growth. The state rulers’ “model” stems from the view of neoliberal economists such as Bibek Debroy and Jagdish Bhagwati, who believe that economic growth would automatically take care of improvement in the social sector.
However, facts suggest that, despite high growth, the social sector in Gujarat has suffered. Its coastline, forming 20 per cent of India, has become more vulnerable to environmental destruction. Fishermen in areas where industrialization has taken shape have lost livelihood. The SEZ and port at Mundra, Kutch district, developed by the Adani group, spread over 10,000 hectares, has displaced 56 fishing villages and 126 settlements. Fishermen have lost their customary rights. The farming villages in the area have also been stripped of their livelihood.
High rate of growth has been achieved by offering huge subsidies to industry. The Adani group was given over 5 crore square metres of land along the coast at paltry rates ranging from Re 1 to Rs 32 per square metre, when the market rate was over Rs 1,500 a square metre. It got the land for industrial use and port development, but it sold/leased out a significant portion of it to other corporate groups, flouting norms. Another example is that of the Tata’s Nano plant near Sanand in Ahmedabad district, whose total subsidies have been estimated at Rs 30,000 crore.
The Gujarat government has granted Tata Motors 1,100 acres of land at the subsidised price of Rs 400.65 crore, to be paid in eight equal installments at eight per cent compound interest with moratorium of two years. There was no charge for transferring the land from agricultural to non-agricultural purpose. The registration fees were waived. The state government met the entire infrastructure cost of developing roads, electricity and gas supply. It provided a soft loan of Rs 9,750 crore at an interest of 0.1 percent per annum to set up the project and additionally allowed deferred repayment of the principal amount of the loan spread over 20 years.
The future of industrialization would mean destruction of fertile agricultural land. The Delhi-Mumbai Industrial Corridor (DMIC) almost along the same trajectory where the Narmada canals are projected to give waters. A process has begun to decommand agricultural land wherever industrialization is proposed in the DMIC’s area of influence. Reports say, around 4 lakh hectares (ha) out of 18 lakh ha to be brought under Narmada command will be decommanded. Already, the process of decommanding 40,000 hectares in Dholera special investment region (SIR), situation in Ahmedabad district, has begun.
As part of the DMIC’s zone of influence, Gujarat is setting up dozen-odd SIRs, where the notified authorities of the respective SIRs – and not the local self-governing bodies – would be responsible for all decisions, including land acquisition. Three SIRs are being processed are – Dahej in South Gujarat, Dholera in Ahmedabad district, and Mandal-Becharaji in North Gujarat. The farmers in Dholera SIR have been served notices, which say they would have to part with 50 per cent of their land under the Section 17(2) of the Gujarat SIR Act, 2009, which puts all the SIRs under the Gujarat Town Planning and Urban Development Act, 1976. The compensation to the farmers would be equal to market value of land decided by the government, which is two or three times lower than the prevailing rate.
The Gujarat government says there is “no land acquisition” under the SIR Act. But finding that they would have to part with 50 per cent of their land under the SIR Act, with government providing a different piece of land for cultivation than they owned, farmers are protesting. In Mandal-Bhechraji SIR they have won the battle – succeeding in forcing the government to downsize the SIR’s size from 44 villages to 36 villages. A similar battle is on in the other two SIRs.
Gujarat government has been holding biennial Vibrant Gujarat summits to attract investment. Despite huge claims that these summits have turned Gujarat into a preferred destination, there has been 225 per cent rise in the registration of “highly polluting” industries between 2007 and 2012. The state’s environment and forests department has categorized industries into three different categories — red, which are “high polluting”; orange, which are “moderately polluting”; and green, which are “non-polluting”.
In 2007, in all, there were in all 8,013 registered industries in Gujarat, out of which 5,163 industries were in the highly polluting sector and were therefore categorized as “red”. The number of registered industries jumped in the next five years to 27,892, and so did the industries that were categorized as red. In 2012, there were 16,770 registered industries categorized as red, a jump of exactly 225 per cent. In fact, there was very little fall in the percentage of highly polluting or red sector industries in the total number of industries registered over the five years.
The Central Pollution Control Board (CPCB) has identified Gujarat’s chemical industrial hotspot, Vapi, as the “most polluting” industrial region of India, while Ankaleshwar, another chemical hub, remains high in the list of areas creating pollution. Based on Comprehensive Environmental Pollution Index (CEPI) score, the Ministry of Environment and Forests (MoEF), Government of India, has re-impose ban on industrial activity on the industrial cluster of Vapi, even as continuing with the ban imposed by it in 2010 on the industrial clusters of Ankaleshwar, also in South Gujarat, and Vatva, which is off Ahmedabad, where CEPI levels remained high. Vapi’s CEPI was highest in India with 85.31, followed by Ghaziabad (UP), 84.13 and Singrauli (UP and MP) 83.24.
Despite Gujarat’s high growth rate, the Gujarat government has failed to bring down poverty in the state fast enough. The Planning Commission of India’s report (July 2013), “Poverty Estimates 2011-12”, suggests Gujarat has been an average performer in poverty reduction. The rate of poverty reduction in Gujarat between 2004-05 and 2011-12 was 15.2 per cent, which is worse than eight out of 20 states, including Andhra Pradesh (20.7 per cent), Bihar (20.7 per cent), Madhya Pradesh (17 per cent), Maharashtra (20.8 per cent), Orissa (24.6 per cent), Rajasthan (19.7 per cent), Tamil Nadu (17.6 per cent), and Uttarakhand (21.4 per cent). The national average for the rate of poverty reduction during this period was higher than that of Gujarat – 15.3 per cent.

A committee headed by the Reserve Bank of India governor Raghuram Rajan in its report, “Report of the Committee for Evolving a Composite Development Index of States” found that several states have a much lower backwardness index than Gujarat. Gujarat’s backwardness index is 0.49 on a scale of 1, states with lower backwardness index are Haryana (0.40), Himachal Pradesh (O.40), Goa (0.05), Karnataka (0.45), Kerala (0.09), Maharashtra (0.35), Punjab (0.35), Tamil Nadu (0.43) and Uttarakhand (0.38).
The purchasing power of Gujarat’s industrial and agricultural labour is one of the lowest in India. As against the all-India average per day earning of regular employees in urban areas of Rs 449.65, the the correspondent payment in Gujarat was Rs 319.71. In Bihar, the average regular wage per day was Rs 412.24, in Chhattisgarh Rs 322.84, Assam Rs 606.96, Madhya Pradesh Rs 436.12, Odisha 431.66, Rajasthan Rs 416.54, and Uttar Pradesh Rs 482.87. Regular wages and salaries in “comparable states” was — Maharashtra Rs 485.72, Andhra Pradesh Rs 395.35, Karnataka Rs 486.92, Haryana Rs 776.85, Punjab Rs 361.75, and Tamil Nadu Rs 389.81.
As for casual labour, the earnings in Gujarat averaged at Rs 112.84, as against all-India’s Rs 138.62. Here Gujarat is worse than all states except two — Chhattisgarh (Rs 83.85) and Madhya Pradesh (Rs 105.22). The earning of casual workers was found to be the highest in Kerala – Rs 314.88, which is almost three times that of Gujarat. The situation is equally bad in the urban areas, where average casual wage per day in Gujarat was found to be Rs 144.52, which is, again, worse than all but four states — Chhattisgarh Rs 106.16, Madhya Pradesh Rs 125.89, Uttar Pradesh Rs 143.20 and West Bengal Rs 128.24.
Child labour in Gujarat is one of the highest in India, While the percentage of child workers in the age group 5-14 has gone down from 3.6 per cent in 2004-5 to 2.2 per cent in 2011-12 in urban areas and from 5.6 per cent in 2004-05 to 4.3 per cent in 2011-12 in the rural areas, the proportion is higher than 20 major states except Jharkhand (rural areas), West Bengal and Uttar Pradesh (urban areas). There has been absolute rise in child workers in Gujarat — in 2004-05 there were 3,99,820 child workers in Gujarat, which increased to 4,19,003 in 2011-12.
Gujarat’s primary health centres (PHCs) and community health centres (CHCs) are quite well equipped, but there are no doctors to handle them. “Rural Health Statistics in India”, by the Ministry of Health and Family Welfare, says that in 2012, as against the required strength of doctors in PHCs of 1,156, the state government sanctioned 1,123 posts, but just about 778 doctors posts were filled up and there was a shortfall of 380. Gujarat’s shortfall in doctors of 31 per cent was higher than all major Indian states, except Uttar Pradesh and Madhya Pradesh. In CHCs, the required strength of specialists was 1,272, but the state sanctioned 346 posts, out of which only 76 were filled up.
This has had its impact on the state government’s effort to reduce infant mortality rate (IMR) and maternal mortality ratio (MMR). A study published in international health journal Lancet, “Neonatal, 159 month, and under-5 mortality rate (U5MR) in 597 Indian districts, 2001 to 2012”, said that Gujarat’s six districts figure among 42 of India’s top laggard districts. Gujarat’s “laggard districts” are Valsad, which could reduce the U5MR from 59 per 1000 to 56.8, or by a 0.3 per annum; Panchmahals, from 83 to 84.9, or by 0.8 per annum; Sabarkantha from 79 to 70.0, or by 0.9 per annum; Dahod from 105 to 83.6, or by 1.9 per annum; Amreli, from 59 to 46.2, or by 2.0 per annum; and Vadodara, whose U5MR went up from 73 to 73.6, increasing by 0.1 per annum. Between 2001 and 2011, India’s U5MR fell by 3.08 per annum, as against Gujarat’s which fell by 2.6 per annum.
Malnutrition levels of Gujarat’s children remain high. The “India Chronic Poverty Report”, published by the Indian Institute of Public Administration, has calculated that Gujarat’s 43.13 per cent children are of normal weight, as against the India’s 54.16 per cent. Poor nutrition levels stem from failure to take care of mothers’ health. Office of the Registrar General of India data show that Gujarat’s rate of fall in MMR between 2004-06 and 2010-12 was 23.75 per cent, as against the all-India’s 29.92 per cent. As many as 12 states – Rajasthan, Uttar Pradesh, Uttarakhand, Maharashtra, Karnataka, Assam, Madhya Pradesh, Chhattigarh, Kerala, Bihar, Jharkhand and Andhra Pradesh – performed better.
Coming to sanitary conditions, Census 2011 figures show that Gujarat’s its 65.76 per cent of 6,765,403 rural households, or 2.28 crore of the rural population, use open fields to defecate. While the all-India average is almost equal to that of Gujarat, 67.3 per cent, Andhra Pradesh’s 65.12 households use open fields to defecate, Jammu & Kashmir’s 58.29 per cent, Maharashtra’s 55.79 per cent, West Bengal’s 51.3 per cent, Uttarakhand 45.04 per cent, Haryana 42.28 per cent, Assam 38.46 per cent, Himachal Pradesh 32.55 per cent, Punjab 28.10 per cent, Goa 27.7 per cent, and Kerala’s 5.5 per cent.
As for urban Gujarat, the situation is better – with 8.74 per cent of the 5,416,315 households, or about 22.48 lakh population, having no access to either private or public toilets in the state. This is the breeding ground for manual scavenging, the despicable caste based occupation called by Mahatma Gandhi “the same of India”. The census figures ay, there 2,566 manual scavengers in Gujarat, 1,408 in rural and 1,158 in urban areas.
Drinking water eludes large sections of Gujarat population, despite government claims that Narmada pipeline has been spread across most Gujarat villages. The NSS report, “Key Indicators of Drinking Water, Sanitation, Hygiene and Housing Condition in India”, (December 2013) says, Gujarat’s 42.4 per cent households in rural areas and 25.9 per cent households in urban areas do not have drinking water facilities within their premises. As many as six states in rural areas and seven states in urban have higher proportion of drinking water facilities within household premises.
Coming to food security, a senior Jawaharlal Nehru University economist, Prof Himanshu, has calculated, on the basis of raw data obtained from the National Sample Survey Organisation, that Gujarat has the “highest leakage” of foodgrains from public distribution system (PDS). He says, “The worst aspect of PDS performance in Gujarat is that it is now the state with the highest leakage in PDS in 2011-12: The figure rising from 45 per cent in 2009-10 to 69 per cent in 2011-12.” The percentage of population purchasing from PDS declined from 26 per cent in 2009-10 to 22 per cent in 2011-12, and the average consumption from PDS per person has declined from 0.8 kg per person to 0.6 kg per person.
Education has similarly suffered a setback, despite government’s much publicized child enrolment drive called Kanya Kelavni. Pratham’s Annual Status of Education Report (ASER), 2013, says that as many as three per cent of the Gujarat’s rural children in the age-group 6-14 are “out of school”, which is worse than 11 other major Indian states. Worse, there is an increasing number of “out of school” girls as they move to higher classes. Only two out of the 20 big states have higher percentage of “out of school” girls in the age group 11-14 than Gujarat (6.6 per cent) — Uttar Pradesh (9.4 per cent) and Rajasthan (12.1 per cent). As for the age-group 15-16, Gujarat has highest percentage of “out of school” girls compared to any other state – 29.9 per cent, against the national average of 17.2 per cent.
As for quality of education, the ASER survey shows that Gujarat’s 67.8 per cent of the children of standards VI to VIII could read standard II class textbooks, with nine states’ children scoring better performance than Gujarat’s. In simple arithmetic, Gujarat’s performance is one of the worst — 26.8 per cent children studying in classes V-VIII are incapable of doing simple division sums, which is worse than all other states, except two – Assam (19 per cent) and Madhya Pradesh (25.2 per cent).
In financial inclusion, a Crisil report has revealed Gujarat has failed to improve its performance over the last four years in providing the three critical parameters of banking services, viz. branch penetration, deposit penetration, and credit penetration. Prepared in collaboration with Standard & Poor, Gujarat has slipped its financial ranking from the 17th position in 2009 to 18th in 2011 and further to 19th in 2012, when Gujarat scored 40.6 on a scale of 100 — which is 2.2 points below the national average of 42.8.
The view that women enjoy equal status is Gujarat is debunked by sex ratio in Gujarat. It is 921 females for each 1000 males, and the girl child continues to remain neglected. In Gujarat there are 886 girls in the age-group 0-6 against 1000 boys as against the all-India’s 914 girls against 1000 boys. The situation is particularly bad in the urban areas, where there are 852 girls as against 1000 boys. While in the rural areas things are better – with 906 girls against 1000 boys, an analysis of Gujarat’s villages has suggested that 20 per cent the state’s 18,618 villages have a child sex ratio of less than 800.
Studies show that women are neglected in Gujarat in the organized employment market. The Annual Survey of Industries (ASI) report says the state’s ranking in providing jobs to women remains one of the poorest in India, 14th in a list of 22 states, equal to some of those states which have had poor score in gender equality. Out of a total of 6.34 lakh “directly employed” workers working in the state’s 16,931 industrial units, 6.01 lakh workers are males, and just about 33,456 are females, making up 5.27 per cent of the total workforce. The national average is 18.78 per cent.
That Gujarat government has failed to place much emphasis on the social sector is clear from the Reserve Bank of India (RBI) report, “State Finances: A Study of Budgets of 2013-14” (January 2014). The Gujarat government’s social sector expenditure has stagnated — in 2010-11 it was 39.9 per cent of the aggregate budgetary disbursement, which came down to 38.2 per cent in 2011-12, increased to 39.0 per cent in 2012-13, and is projected to be 39.1 per cent in 2013-14. Worse, Gujarat’s social sector expenditure as percent of budgetary disbursement in 2013-14 is less than 11 major.

Download five-page short report (pdf version) by clicking HERE, Download detailed report (pdf version) by clicking “Gujarat Development: Myth and Reality”, by Rajiv Shah

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