Man vs Wild

In an interview, a former President of the Ku Klux Klan (KKK) was asked why KKK burns the holy cross at their meetings, an act which could be construed as something that denigrates Christ. The President whose name I do not remember is claimed to have said that burning the cross actually glorifies Christ and he gave a long reason which had something to do with Scotland, crusades and that dark medieval era.

Although there may not be many other similarities but I find this very attitude present in a group of seemingly unconnected characters of Indian origin spread across the globe. Like KKK, the characters in this group, let’s call them “The Godhra Hyenas”, also like to keep the flames of Godhra and post-Godhra riots burning, not in search of justice but to seek retribution against Narendra Modi who coincidentally is also the biggest threat to the prime ministerial ambitions of this group’s blue eyed boy and son of Sonia Gandhi. This group forgave the actual rioters long ago because targeting the actual culprits is not likely to get them publicity, which for them is the source of their daily bread, directly or indirectly.

It would have been so much easier for them if the Gujarat administration was as inefficient and corrupt as the Sonia Gandhi led NAC led PMO led UPA. Unfortunately though, that was not meant to be. Narendra Modi is not just a personally honest man with impeccable integrity but he also has a vision. This is what makes it really difficult for this group to throw muck at him. After the courts put speed breakers in their path in the riots case, they started looking for alternate ways to damage his reputation of being an able leader of a vibrant Indian state. Every year on the heyppy budday of Godhra riots, the Godhra hyenas get charged up whipping up wild claims one of which is; The Modi model is just a myth.  I think the only way to put an end to these never ending claims and counter-claims is to look at some data.  So here it goes….

•  Gujarat not the only power surplus state: This is a new one. According to a mint columnist, Gujarat’s power surplus situation is nothing special as several other states also have surplus power.  While it is factually correct that various other states also have surplus power, it is important to list and compare them with Gujarat on the basis of their respective energy demands. Population could be considered a surrogate measure to gauge demand (more population more demand, right?). Gujarat’s population (surrogate for demand) is more than twice the sum of population of all other states that have surplus power. I have countered this claim in a short post previously but I believe that a picture speaks a thousand words.  So take a look at the chart below and see for yourself the difference in energy demands that are being experienced by these states. As I said in my short post, the claimant, Salil Tripathi tried to pull a fast one here.

• Deficit and Growth: Another accusation on the Gujarat government is its lack of fiscal discipline. I pulled up some publicly available data to see if it was indeed true. Here’s what I discovered. Narendra Modi inherited a Gross Fiscal Deficit (GFD) of approximately 7% when he took over as the Chief Minister of Gujarat in 2001. The GFD in 2011 was estimated to be approximately 3.5% (Source: Socio-Economic Review of Gujarat and RBI Annual Publications), down from 7 % in 2001, not bad huh!

Since Maharashtra was dragged in to put Gujarat down; I pulled in some interesting data from RBI’s website summarizing the total outstanding liabilities of the two states for the period between 1991 and 2011.

As you can see in the chart above, Gujarat and Maharashtra started out pretty close on their liabilities. Then around 1997, Maharashtra’s liabilities began to rise at a faster rate compared to Gujarat, indicating that the rate at which Maharashtra built up its liabilities was much higher than that of Gujarat.

In terms of growth also, Gujarat has performed better than Maharashtra despite the disproportionate advantage that Maharashtra possesses in the form of Mumbai, India’s turbo engine. Between 1991 and 2001, the net state domestic products (NSDP at current prices) of Gujarat and Maharashtra grew at approximately 12% and 13%, respectively (Source: Ministry of Finance). However, between 2001 and 2010, Gujarat changed gears and grew at an average annual growth rate of 15%, a 3 percentage point increase. Maharashtra, meanwhile grew at 14% during the same period, a 1 percentage point increase.

Detractors may argue that Maharashtra is a larger economy and hence the base effect unfairly masks its true growth rates. The answer to those detractors is this. Gujarat of 2001 was much bigger than Maharashtra of 1991. Yet, the growth rate of Gujarat of 2001 (15%) trumps the growth rate of Maharashtra of 1991 (13%). Secondly, Gujarat of 2001 was enormously larger than Gujarat of 1991, so according to the high base effect theory, the base effect should unfairly mask the true growth rate of Gujarat of 2001. This means, the 15% average annual growth rate experienced between 2001 and 2010 (Modi regime) is much more significant that the 13% growth rate experienced in the previous decade (before Modi). You can look at the data in any way you like but it’s hard to miss the spectacular growth achieved by Gujarat under Narendra Modi. I am afraid Modi’s detractors must look at other avenues to target and malign him since targeting him for his performance clearly isn’t working.

Let’s leave Maharashtra out for a moment and see what happened to Gujarat’s net state domestic product between 1996 and 2010. The chart below shows something very interesting. Gujarat’s economy was growing at an inconsistent manner before Modi showed up; it grew between 1996 and 1997, staggered between 1997 and 1998, and then grew again between 1998 and 1999. Between 1999 and 2001 though, the growth curve dipped indicating a drop in the growth rate.

Modi took over in 2001 (during the dot com recession) and interestingly, the growth curve since then has shown a consistent trend (straight line) except for a slight dip in 2009. The key take away from the chart below is that during the five year period before Modi took over (red oval), Gujarat’s economic growth was not only slower than it is today, but it was also inconsistent with crests and troughs. Since 2001 though, Gujarat’s curve has only been rising and more importantly at a consistent rate (blue oval) which is a very healthy sign that investors must be looking at very closely.

 Grants from Center: A common accusation against the UPA governm

ent has been about its step motherly treatment towards Gujarat.  I don’t know if Grants from Center is an indicator of bias, but on a comparative basis, Maharashtra seems to have received much more in grants.  It’s not just the Rupee amount but the rate of growth of grants too. Take a look at the chart below and see how Maharashtra and Gujarat got grants from the center. From 2000 to 2005, the grants were neck to neck but something happened around 2005. What happened? Well, the Congress government drove Maharashtra, the industrial powerhouse of India to near bankruptcy in 2003. See this report for more details on how Sushil Kumar Shinde, the then CM of Maharashtra sought central assistance to avoid a financial disaster. 

Before I end, I would like to counter another claim made by Salil Tripathi.  He claimed that Gujarat now runs a revenue deficit. That may be factually true but it is a case of intellectual dishonesty. Let’s look at Gujarat’s revenue deficit to understand why I make this allegation against him.  When Modi took over in 2001, the revenue deficit as a percentage of Gross State Domestic Product (GSDP) was 6%. In the following years, the Modi administration turned it around and actually turned a surplus in 2007 as you can see in the chart below. It is correct that the surplus has disappeared but that is just one data point (2010).  Moreover, it is down to 2% of the GSDP (down from 6% in 2001). There is also a good reason why Gujarat turned a deficit and the state Finance Minister; Vajubhai Vala did explain the reason to the state assembly in 2011:

“The budgets for the financial year 2008-09 and 2009-2010 were surplus budgets. Despite that, the central government reduced central sales tax from four per cent to three and further to two per cent. This led to a loss of Rs 1,277 crore. He said the central government was to reimburse the amount to the state, but Centre just reimbursed Rs 157 crore to the state, and later, a second installment of Rs 677 crore followed.

He said that due to implementation of the Sixth Pay Commission, there was a burden of Rs 5131 crore on the state exchequer”

I hope these charts help counter some of the propaganda unleashed by the Godhra Hyenas but I am afraid we haven’t heard the last of this yet because principles aren’t driving this vicious campaign against Narendra Modi, an integrity deficit and a pursuit of personal revenue surplus is, directly or indirectly, consciously or subconsciously.