The myth of Gujarat’s exceptional GDP growth under Modi.

It’s pure propaganda that Gujarat’s growth is exceptional under Modi. Not only Gujarat was one of most industrialized state of India in the past, but also Gujarat’s growth almost always surpassed that of India. Nevertheless, the recent GDP growth numbers of Gujarat are in line with other industrialized states of India like Maharashtra and Tamil Nadu.

Gujarat had an extremely poor growth during 1997-2001 and even a 5 percent fall in 2001 (negative growth). Thereon, the growth numbers look better, but that’s only a temporary recovery, that’s why after 2005, Gujarat’s GDP growth is in line with other industrialized states of India like Maharashtra and Tamil Nadu. Modi was made CM in 2001. However, if you compare Gujarat GDP growth pre-1999 to post 2005, Gujarat GDP growth looks to have slowed down a bit compared to the rest of India.

gp2001
gp2002

References: Page 6, State Domestic Product 2009-10, Gujarat State, The Directorate of Economics & Statistics, Government of Gujarat.

Page 142, Real Growth Rates of States GSDP % at Constant Prices, Data for use of Deputy Chairman, Planning Commission, 03 May 2013.

Prior to Modi’s CMship, Gujarat’s GDP
Taking the “progressive” states in India to be Maharashtra, Tamil Nadu , Andhra Pradesh, Gujarat, Delhi and Haryana. Reference: Page 144, GSDP at Constant Prices, Data for use of Deputy Chairman, Planning Commission, 03 May 2013.

The GDP shares of these 6 states relative to each other is almost constant from 2004-05 to 2011-12. If Gujarat is doing well, so have been the other “progressive” states.

GDP-6-States-2005-12

In absolute GDP addition (2005-2012), Gujarat is way behind, Maharashtra.

GDPAddition-6-States-2005-12

In below graph, State GDP as percentage of India GDP, Gujarat, a performing state, had an extremely bad 1997-2001 years, thereafter due to lower base; Gujarat’s growth rate, in immediate aftermath looks good. However, in last 5 years or so, Gujarat’s share of India’s GDP pie, has grown in line with other fast moving states at expense of known laggards (like UP & WB).

SGPIG054

References:
1. RBI State Net Domestic Product 1984-2013
2. Page 142 and 144 GSDP at Constant Prices, Data for use of Deputy Chairman, Planning Commission, 03 May 2013.

One of the well heard argument is that “Gujarat is top progressing state in India, because we live in Gujarat and we know it”. Even if by some magic you can feel whole of India by living in Gujarat, the all India growth data begs to differ. The Gujarat GDP growth rank have highs and lows, before year 2002 and after.

RankGujaratGDPGrowth

Page 142, Real Growth Rates of States GSDP % at Constant Prices, Data for use of Deputy Chairman, Planning Commission.

A better measure of growth is CAGR (Compounded Annualized Growth Rate) on this. Lets calculate, CAGR at constant price of 1994-1999 (five years, pre Modi period), 1999-2004(half of that under Modi) and 2004-2012(last 8 year under Modi). Well, Gujarat has almost have same CAGR in 1994-1999 and 2004-2012, but India (Maharashtra and Tamil Nadu also) has picked up growth substantially during these two periods.

CAGR

CONCLUSION:

1. Gujarat’s GDP growth rate higher than India, predates Modi’s term.
2. Initial GDP growth rate of Modi’s term, constitutes a recovery, from a low base of extremely bad 4 years of growth.
3. Under Modi, Gujarat’s GDP growth is inline with other progressives States.

Reference update: Planning Commission removed 2013 report mentioned in this post with an updated 2014 report.

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2 Responses to The myth of Gujarat’s exceptional GDP growth under Modi.

  1. good analysis. Thanks for getting stuff together.

  2. Pingback: Modi facts | connecting the dots

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