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NaMo Gets a Thumbs-up – Gujarat Tops in Economic Freedom
The recently-released ‘Economic Freedom of the States of India 2013’ report, jointly authored by respected authors and economists Ashok Gulati, Bibek Debroy, Laveesh Bhandari and journalist Swaminathan Aiyar (Brother of CONgress MP Mani Shankar Aiyar & Editor of Economic Times
), has given a major boost to BJP’s prime ministerial aspirant Narendra Modi ahead of the 16th Lok Sabha elections.
Coming at a time when the Gujarat development model continues to be questioned, Modi’s state Gujarat has been ranked number 1 in a list of India’s 20 largest states in terms of “economic freedom”. The index on “economic freedom” takes into account governance, growth, citizens’ rights as well as labour and business regulations.
Emphasizing that Indian states which are economically free are also doing much better in terms of a higher per capita growth for its citizens, the report reveals that unemployment levels are lower in these states, sanitary conditions are better and the states also attract more investment.
The annually published Index is in fact a joint product of research groups such as the Friedrich-Naumann-Stiftung für die Freiheit, the US-based Cato Institute and the Delhi-based Academic Foundation. The Index is based on three major parameters:
1) Size of the government with focus on expenditures, taxes and enterprises
2) Legal structure and security of property rights
3) Regulation of labour and business
The index places the State that Modi has been running for more than 12 years now, at the very crest of its ranking of what it calls economic freedom and business-friendliness. As the authors of the report point out, Gujarat has achieved what it has despite the fact that “…economic freedom … has decreased in India as a whole”. Gujarat is “not only the freest state, but also has the fastest rate of improvement in the index (from 0.46 in 2005 to 0.65 in 2013)”.
But there is more to Modinomics than its detractors would give its ‘implementer’ credit for. Gujarat, apart from registering the fastest rate of improvement (from 0.46 to 0.65 on a scale of 0 to 1), has a corresponding growth in its GDP as well. (Now, all the Chidambarams of the world will have to scoot for cover, because this is one of the primary benchmarks, among others, which they normally worship in their mindless pursuit of growth without a human face.)
What’s more, Modi’s very own Gujarat model has worked near-miracles (given the entrepreneurship-choking Indian conditions) over the better part of the 2000s. Add to that the significant strides his State has made in agriculture (including water resource management) and social welfare programmes. As one India Today report perceptively puts it, Gujarat, like Haryana, has achieved this “without an inordinate increase in the size of the government”.
Size of Government Index
HaryanaGujaratMaharashtraHimachal PradeshWest Bengal
2005 - 0.56
2009 - 0.69
2011 - 0.74
2013 - 0.69 (Govt. Actually SHRANK !!!!
) (Minimum Government, Maximum Governance)
Besides, as the authors of the report point out, a “host of factors have contributed to Gujarat’s continuing improvement. A sharp decline inman-days lost (owing to) strikes and lockouts, is one of them. Also actual wages have gone up compared with minimum wage rates. More strikingly, fall in the number of pendency of cases is also cited by the three as a major factor in improving the business-friendliness of the State.
The report has, in a more general sense, come as a shot in the arm for Modi’s party. The BJP-ruled States of Chhattisgarh, Rajasthan and Madhya Pradesh too have done creditably on several yardsticks of the Index. In fact, Chhattisgarh comes only second to Gujarat – but a distant one all the same – in the overall economic freedom sweepstakes, having notched up 0.11 points as against frontrunner Gujarat’s 0.19 points. Even in GDP growth, the two States came first and second respectively – 12% for Gujarat and 10.6% for Chhattisgarh since 2005.
Among factors that catapulted Gujarat to the top rank was its sterling performance in regulating both labour and business. Regulating not just the workforce, but also business? Well, this in all probability might come as a rude shock to Manmohanomists. What’s more, Gujarat has scored a nearly unbelievable 0.87 out of 1 in this respect. Even Tamil Nadu, known for its relative absence of any form of serious industrial unrest, came a remote second at 0.51. And remember that Tamil Nadu has held on to the No. 1 position against this particular benchmark since 2005!
“Size of government” may be an ambivalent term among economists, but here too Gujarat has retained its slot, albeit at No. 2. The ‘size’ is based on parameters such as government revenue expenditure as a portion of the gross state domestic product (GSDP), the contribution of national services to the State’s GDP, state-level taxes on income, property and capital transactions to the GSDP, and so on.
While we talk about the states which are economically free, states like Bihar, Jharkhand, Assam and West Bengal have been the worst performers of 2013. Surprisingly, Uttar Pradesh, almost-worst performer in 2005, improved its credibility reaching the 13th position in 2013.
The above development is indeed bad news for the proponents of lip-serviced ‘inclusive’ growth theory especially when Bihar emerges as one of the worst performers, though they themselves have been living these past 60 years in leafy, exclusive enclaves with not much care for the Great Unwashed of mera mahan Bharat! After all, they have never ventured out for a ‘cuppa’ from the chaiwallah on the roadside, unless of course it’s election time!
- See more at: NaMo Gets a Thumbs-up - Gujarat Tops in Economic Freedom » Page 2 of 2 » The Indian Republic
The recently-released ‘Economic Freedom of the States of India 2013’ report, jointly authored by respected authors and economists Ashok Gulati, Bibek Debroy, Laveesh Bhandari and journalist Swaminathan Aiyar (Brother of CONgress MP Mani Shankar Aiyar & Editor of Economic Times
), has given a major boost to BJP’s prime ministerial aspirant Narendra Modi ahead of the 16th Lok Sabha elections.Coming at a time when the Gujarat development model continues to be questioned, Modi’s state Gujarat has been ranked number 1 in a list of India’s 20 largest states in terms of “economic freedom”. The index on “economic freedom” takes into account governance, growth, citizens’ rights as well as labour and business regulations.
Emphasizing that Indian states which are economically free are also doing much better in terms of a higher per capita growth for its citizens, the report reveals that unemployment levels are lower in these states, sanitary conditions are better and the states also attract more investment.
The annually published Index is in fact a joint product of research groups such as the Friedrich-Naumann-Stiftung für die Freiheit, the US-based Cato Institute and the Delhi-based Academic Foundation. The Index is based on three major parameters:
1) Size of the government with focus on expenditures, taxes and enterprises
2) Legal structure and security of property rights
3) Regulation of labour and business
The index places the State that Modi has been running for more than 12 years now, at the very crest of its ranking of what it calls economic freedom and business-friendliness. As the authors of the report point out, Gujarat has achieved what it has despite the fact that “…economic freedom … has decreased in India as a whole”. Gujarat is “not only the freest state, but also has the fastest rate of improvement in the index (from 0.46 in 2005 to 0.65 in 2013)”.
But there is more to Modinomics than its detractors would give its ‘implementer’ credit for. Gujarat, apart from registering the fastest rate of improvement (from 0.46 to 0.65 on a scale of 0 to 1), has a corresponding growth in its GDP as well. (Now, all the Chidambarams of the world will have to scoot for cover, because this is one of the primary benchmarks, among others, which they normally worship in their mindless pursuit of growth without a human face.)
What’s more, Modi’s very own Gujarat model has worked near-miracles (given the entrepreneurship-choking Indian conditions) over the better part of the 2000s. Add to that the significant strides his State has made in agriculture (including water resource management) and social welfare programmes. As one India Today report perceptively puts it, Gujarat, like Haryana, has achieved this “without an inordinate increase in the size of the government”.
Size of Government Index
HaryanaGujaratMaharashtraHimachal PradeshWest Bengal
2005 - 0.56
2009 - 0.69
2011 - 0.74
2013 - 0.69 (Govt. Actually SHRANK !!!!
) (Minimum Government, Maximum Governance)Besides, as the authors of the report point out, a “host of factors have contributed to Gujarat’s continuing improvement. A sharp decline inman-days lost (owing to) strikes and lockouts, is one of them. Also actual wages have gone up compared with minimum wage rates. More strikingly, fall in the number of pendency of cases is also cited by the three as a major factor in improving the business-friendliness of the State.
The report has, in a more general sense, come as a shot in the arm for Modi’s party. The BJP-ruled States of Chhattisgarh, Rajasthan and Madhya Pradesh too have done creditably on several yardsticks of the Index. In fact, Chhattisgarh comes only second to Gujarat – but a distant one all the same – in the overall economic freedom sweepstakes, having notched up 0.11 points as against frontrunner Gujarat’s 0.19 points. Even in GDP growth, the two States came first and second respectively – 12% for Gujarat and 10.6% for Chhattisgarh since 2005.
Among factors that catapulted Gujarat to the top rank was its sterling performance in regulating both labour and business. Regulating not just the workforce, but also business? Well, this in all probability might come as a rude shock to Manmohanomists. What’s more, Gujarat has scored a nearly unbelievable 0.87 out of 1 in this respect. Even Tamil Nadu, known for its relative absence of any form of serious industrial unrest, came a remote second at 0.51. And remember that Tamil Nadu has held on to the No. 1 position against this particular benchmark since 2005!
“Size of government” may be an ambivalent term among economists, but here too Gujarat has retained its slot, albeit at No. 2. The ‘size’ is based on parameters such as government revenue expenditure as a portion of the gross state domestic product (GSDP), the contribution of national services to the State’s GDP, state-level taxes on income, property and capital transactions to the GSDP, and so on.
While we talk about the states which are economically free, states like Bihar, Jharkhand, Assam and West Bengal have been the worst performers of 2013. Surprisingly, Uttar Pradesh, almost-worst performer in 2005, improved its credibility reaching the 13th position in 2013.
The above development is indeed bad news for the proponents of lip-serviced ‘inclusive’ growth theory especially when Bihar emerges as one of the worst performers, though they themselves have been living these past 60 years in leafy, exclusive enclaves with not much care for the Great Unwashed of mera mahan Bharat! After all, they have never ventured out for a ‘cuppa’ from the chaiwallah on the roadside, unless of course it’s election time!
- See more at: NaMo Gets a Thumbs-up - Gujarat Tops in Economic Freedom » Page 2 of 2 » The Indian Republic
