BIHAR-GUJARAT: THE NEW FACES OF INDIA

Introducing India: fast facts…

Population(2011 estimate) 1,191,349,000 GDP (nominal) $1.367 trillion Per capita $1,124 Unemployment rate 10.7% Inflation 8.33 percent in November

of 2010 Growth Rate 8.90% Inflation Rate 9.70% Exchange Rate 44.7050 India Balance of Trade -9118.00 Millions HDI 119

Key Reforms

Opened economy to trade and investment

Dismantled controls Lowered tariffsDropped tax ratesBroke public sector monopolies

90-006.3%

80-905.9%

50-803.7%

Development Indicators

199051%

200026%

201016%Poverty

199052%

200065%

201075% Literacy

Population 81-902.1%

91-001.8%

01-101.5%

Drivers of Indian growth

Domestic Services ConsumptionTechnology

Key factors

+ Dynamic democracy + Vibrant private space+ Free, lively media and press

- Poor governance - High subsidies - High fiscal deficit- Creaky infrastructure - Inefficient government companies

GujaratState

Mosaic of business environments

Regression analysis of GDP growth of Gujarat

0 2 4 6 8 10 120

50000

100000

150000

200000

250000

300000

350000

400000

450000

f(x) = 85989.1620124624 exp( 0.134931495752621 x )R² = 0.987560814934243

GDP

GDPExponential (GDP)

Graph showing the comparison of the GDP growth of India and Gujarat state

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-100.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

Indian(Gdp Growth)Gujarat(GDP Growth)

Growth Drivers

Economic Incentives for Investment interest subsidy on purchase of

capital equipment under technology up gradation scheme Credit link subsidy Incentives for Technology Up gradation Friendly foreign trade policy

Social Education Medical Services Water Supply and Sanitation Rural Development,Housing Employment Welfare of weak sections Environment

Political scenario of GujaratThe Positive side of Gujarat politics:

The Gujarat model of governance characterised by: 3 C’s- consistency, competency and corruption

aversion 2 P’s- Performance orientation and public-private

partnership management Well-planned initiatives leading to growth and development.

The Gujarat government’s ideology –believe in Rashtraniti and not Rajniti has paid off.

Growth and development activities

The negative side of Gujarat politics:  Unsympathetic government and highly politicised

criminal justice system. The local courts judgements biased. Most of the cases forwarded to the Supreme

Court. The victims of Gujarat riots still not punished. The policies and ideology of Hindutva serve the

interests of powerful elements of Adivasi communities.

 

GUJARAT: COMPETITIVENESS Strategic location High level of industrialisation Highly productive & disciplined workforce Quality network of educational institutions Large, rapidly growing consumer market Major Auto MNCs having a presence across Gujarat.

114 Special Economic Zones approved by GOI - aimed at

promoting industries Development of state of art industrial clusters such as

the upcoming automotive park in Halol and the proposed auto component parks at Rajkot and Ahmedabad.

Contribution of all sectors in GSDP

1999-2000 2007-2008 2009-20100.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

PrimarySecondaryTertiary

Gujarat: Sectoral Production

59.3

9.3

7.5

7.4

9.52.44.6 Chemicals & Petroleum

Food Processing

Metallurgical Industries

Textile & Garments

Engineering

Mineral Based

Others(Source: ASI)

  GUJRAT WITH A DIFFERENCESome important events:The first state to • Implement BOT Law• Two fully functional LNG terminals. • Implement the interlinking of 20 rivers. • Uninterrupted 24hour 3phase electricity

Tata NanoVibrant Gujrat SummitSEZ

Challenges

Corruption at lower levelComplete bureaucracyThe Tribal region of South and North

Gujarat is lagging behind.Reduction in quantity of ground

water

What other states can adopt from Gujarat model?Himachal Pradesh: Like Gujarat, 'banjar' (barren) land can be

acquired for SEZs

Karnataka: Land acquisition model of the Gujarat

government Jyotigram-Model PPP model in infrastructure projects Putting down corruption and also improve the

tax collection using the modern technology (GPS)

Maharashtra: Ruling party, the Opposition and the media

should join hands for the development

Tamilnadu: Gujarat model of farm growth like sprinkler

and drip irrigation, provision of quality seeds in adequate numbers and the shift from raising cereals alone to high-value crops.

Uttar Pradesh PPP in constructing state highways

The Tale of New Bihari Babu

Bihar-Governance model

‘Development with justice' an aim of the state.

The growth fuelled by reinstating basic governance model in place

Government-induced growth- boom in agriculture and services sectors

Development due to discipline ad sturdy administrative qualities.

The Growth Story!

How did it Happen?

Law and order• Only 317 kidnappings as against 1393 in the last four years• Speedy trials-fast track courts• SPECIAL COPS• 38,824 convictions between 2006 and September 2009• New laws and policies adopted

Economic• Development spending rose• Better connectivity and infrastructure.• Investment Increased in public and private sector• Model Tax System• Formulated new bio-technology policy• Employment increased -SHG’s(85ooo), SGSY(18000), NREGS(81 Lakh)

Social • 50 % reservation seats for women in local bodies• Centre for Quality Learning• Expenditure on public health Increased

The fiscal deficit of Bihar dropped by 18 percent(3700 crores) in 2006-07 and further by 44 percent(1703 crores) in 2007-08

2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 - 09

Primary 0.134 -0.106 0.298 -0.087 0.124

Secondary 0.205 0.28 0.351 0.179 0.109

Tertiary 0.0990000000000002

0.0310000000000001

0.146 0.147 0.112-15.00%

-5.00%

5.00%

15.00%

25.00%

35.00%

Chart TitleG

row

th R

ate

Sectoral Annual GSDP Growth

Contd....

Construction sector is growing by a whopping 35.8% per year.

Telecom in the state grew by 17.68% per year.

Trade, hotels and restaurants grew by 17.71%.

Automobile sales in the state grew 45%The number of tourists increased from

about 1 lakh to almost 4 lakhs.

Achievements

World Bank ranked Bihar 14th for being the “easiest place to start business” in India

Covered the journey from Bimaru state to second most developing state in the country

GDP contribution -14th in Indian GDP Tourism industry quadrupled in last four years. Real estate sector boomed up. Bihar -a better

place to live in. Security plus road and telecom expansion have

incubated a boom in small business and domestic construction.

Large private houses coming up.

Challenges

Little growth rate in manufacturing sector Power sector is a major hurdle. Need more time for social indicators to become

visible. feudal land laws need a major transformation. Central rules acting as a stumbling block for

various investment proposals. Unpredictability of the state’s politics

States that can adopt Bihar Model Orissa• Drafted an anti-graft law• Can Adopt property tax model• Can adopt special cops services and heavy

police patrolling Madhya Pradesh• Properties of corrupt officials confiscated and

schools opened.• Adopted property tax model• Can adopt special cops services and heavy

police patrolling

Contd....

Karnataka• RTI applications via telephone.• Adopted property tax model BIMARU states can adopt Bihar law and order

model . States with high crime rate like Tamil Nadu,

Haryana, Jharkhand can adopt Bihar’s Governance model.

Bihar and Gujarat

Similarity• Development and corruption-free model

Difference• The Bihar model has a better chance of being

replicated at the national level –its a rainbow coalition of all classes

• Bihar started with a low base growth rate whereas Gujarat's base has always been strong

Comparison between Gujarat and Bihar Growth modelsGujarat• Entrepreneurial strength• Progressive policies• Political will of the government• Good industrial relations• Well-developed infrastructure

Bihar• Improvement in law and order• Breaking the strong link between crime and

politics• Growth is largely centered in construction

Narendra Modi and Nitish Kumar run their states as CEO’s and Not as CM’s

ReferencesReferenceshttp://swaminomics.orghttp://economictimes.indiatimes.comhttp://www.accommodationtimes.com http://www.thenarendramodi.infohttp://projectsinfo.inhttp://www.indianexpress.comhttp://www.naredco.inhttp://www.forumfed.org http://bihartimes.inhttp://business.in.comhttp://www.thehindubusinessline.comhttp://economictimes.indiatimes.comhttp://www.indexmundi.comhttp://www.thehindu.com