By Sanjay Jha
(Sanjay Jha is the National Spokesperson of the Indian National Congress party. He is co-author of the bestseller ‘The Superstar Syndrome’. Mr Jha is a former banker, and also a leading Management Consultant in training.)
In this election, the Sangh Parivar sponsored BJP has made communal polarization its principal electoral strategy. Hate speeches have dominated political discourse, pushing into second place what ought to have been the fundamental point of political debate – the growth model best suited for India – between a right-wing party, the BJP, and the Congress party with its centrist outlook. (India Votes 2014: Full Coverage)
In a few weeks from now at least that debate will be surely settled – does India need the Congress model (growth with equity) or the BJP-Gujarat model (pure growth focus).
There is no philosophical taboo against the private sector or foreign investment in the Congress party manifesto, ideology or approach. In fact, the Congress has backed FDI in multi-brand retail, while the BJP has done a deceptive U-turn. (India Votes 2014 Candidates | Schedule)
The Companies Act, RTI, Lok Pal Bill and the draft Direct Tax Code and GST bills, which would have been cleared if the BJP had allowed Parliament to function, are indicative of the pro-liberalization reforms agenda of the Congress. We believe that free markets, based on the assumption of unfettered wealth creation, is not the sole solution to end poverty. Active poverty alleviation programmes are a must, too.
The Congress economic model has shown outstanding results despite severe global challenges and being, on occasion, locally hamstrung. India was ranked sixth among Emerging Markets in GDP size in 2004 (ex-China). Now, it is the largest after China.
From 1999 to 2004, India was the fifth largest economy in the world in PPP or purchasing power parity terms – a rank that remained unchanged throughout the NDA years.
Under the UPA, India jumped two ranks to become the third largest.
Poverty reduction has been substantial – a significant 140 million were lifted out of poverty in eight years. Most importantly, this economic model has given India a very high growth on a large base of a nearly $2 trillion economy, while reducing interest/revenues from 50% in 2004 to 30 per cent now, and reducing debt/GDP from a near bankruptcy level of 85% under the NDA, to 67 per cent now.
Such a model, which combines high growth and reduction of debt, is unmatched in the world since 2004. I dare either Professor Jagdish Bhagwati or BJP’s failed Finance Minister Yashwant Sinha to challenge these numbers.
The Gujarat model is more traditional, more old economy, and hence more capital intensive, with a poor track record on employment creation. This has not led to any higher growth over peer states like Maharashtra and Tamil Nadu, but instead, has built up debt, as is expected of any capital intensive growth model. (Also Read: Gujarat development model a ‘toffee model’: Rahul)
Gujarat’s debt servicing burden as well its per capita debt, and per capita debt/per capita GDP today, are the second highest after Punjab. Since for many these seem like statistical gobbledygook, they escape serious scrutiny. But the truth is that eventually, the ordinary person in Gujarat is paying a huge cost for some bad economics.
Gujarat has been a cipher in services, particularly in IT. There is no software/hardware/IT/ITes industry worth the name in Gujarat. Large companies like Infosys and HCL Tech have no presence in the state. (Also Read: God save the country from this sort of model: Sonia Gandhi)
Where will the aspirational youth of today, many of whom supposedly revere Narendra Modi if the BJP propaganda machine is to be believed, go in Gujarat to get employment in new-age industries? It is fair to presume that most want jobs in modern services rather than smokestack, ageing manufacturing or agriculture jobs.
Even in manufacturing, Gujarat has largely sat out India’s boom in high engineering and automobiles, among others. The auto projects there are minuscule compared to the ones in other states. In clean electronics manufacturing, Gujarat is not even on the map.
Then, the state has failed to attract foreign investment. At barely 1.5 per cent (just $400 million) of India’s total FDI, it is matched by even West Bengal. This, despite the hype around Vibrant Gujarat, where corporate big saddies religiously quasi-coronate Modi.
Where Gujarat has missed the plot completely under Modi is its failure to create a transformational large modern industry, and this must rankle. It would be fair to say Gujarat should have done far better than its distinctly less than middle-of-the-road performance.
A Raghuram Rajan report terms it as a “less developed state” on a comprehensive measure of development, given its coastline, large natural resources, low population density and large barren landmass.
In relative terms, Gujarat has vastly underperformed among its peers and its potential, in the last ten years. Modi had successfully pulled off a master ruse on India, thanks to some magnanimous “analysts”, until Rahul Gandhi gate-crashed his party and exposed its dark underbelly.
In summary, Gujarat eerily resembles the flawed Chinese model: high financial capital, low intellectual/knowledge industry, over-dependent capital-intensive structure , and highly polluting, the social cost of which is humongous. We know today how the Chinese model is collapsing.
Right now, Gujarat seems to be headed for an accelerated decline, with crony capitalism skewing the picture further. The BJP’s present economic thinking has been fashioned by rightist economists, corporate leaders versed in rent-seeking and investment bankers obsessed with short-term stock-market spikes, and hence, is ultra -capitalistic.
Indian Shining bombed in 2004. Gujarat is not even shining despite the cosmetic razzmatazz. India will reject the so-called magic-wand tricksters again in 2014.
(The views are personal and do not necessarily reflect the views of the Indian National Congress party)
Courtesy : http://www.ndtv.com/