Why Gujarat biz model has failed to impress economists

Punching holes in the Gujarat model of development, noted economist Jayati Ghosh today said the high rate of economic expansion was fuelled by big concessions to corporates but the poor did not benefit from it as wages remained second lowest in the country.

"I hate to draw analogies but let's face it the Gujarat model that everybody loves at the moment so much is based on very high GDP growth, not necessarily wage growth.In fact, wages in Gujarat are the second lowest in India.

But very high GDP growth which is driven by lots of concessions to large corporates," Ghosh said at the launch of UNCTAD's Trade and Development 2014 report.

The economist, a Professor of Economics at the Centre for Economic Studies and Planning, School of Social Sciences, at the Jawaharlal Nehru University, said that the Gujarat model cannot be replicated on a national level.

She added: "Some of these concessions are in terms of land and mineral resources but some are fiscal subsidies. The government of Gujarat is sitting on a massive debt, a very large debt which is very rapidly going to become unsustainable.

"Maybe Gujarat will get bailed out by the Indian government. But can the Indian government do that same strategy? I don't think so. They can't do it for very long, and who is going to bail them out when they do it." Asked whether the Gujarat model was anti-poor, Ghosh said: "What we do know is that the Gujarat model has not benefited the poor of Gujarat. We also know that it is a model that is dependent on a large debt which is not sustainable".