Can India's economy model itself on Gujarat?
- 5 May 2014
- From the section Business
The building is so new that the shiny green paint on the floor has yet to dry.
A tall concrete structure, it is the latest part of a power station being constructed in the north western Indian state of Gujarat - an extension to deal with growing demand.
Essar, one of India's biggest industrial businesses, set up this coal-fired plant in 2012, and the electricity generated here is sold to the Gujarat government, which supplies it to many parts of the state.
Further expansions are planned to produce yet more energy.
"The opportunity is huge," says the factory's head KB Makadia.
Over the past decade Gujarat has seen rapid economic growth. Driven by massive industrialisation, the state's economy expanded by an average of 10% a year between 2004 and 2012 - above the Indian average of about 8.25%.
In a country where power cuts are a common phenomenon, the Gujarat government boasts of bringing electricity to 18,000 villages by providing a round-the-clock power supply.
It has also invested in other infrastructure - hundreds of miles of new roads, and building ports too.
Together with the state's success in cutting down red tape, these have enhanced its reputation of being a business-friendly state.
Many other international and domestic firms have joined Essar here - among them Tata Motors, Maruti Suzuki and Ford.
Much of the credit for Gujarat's apparent economic success has been attributed to the man - who could be India's next prime minister - Narendra Modi.
He has been the state's chief minister since 2001, and has built a reputation for being an efficient technocrat with a no-nonsense style of working, focused on making doing business in his state easy.
Not surprisingly - it is an approach that has made Mr Modi a darling of corporate India.
"In the last 10 to 12 years, Gujarat has been operated in a focused way. And that focus has come from Narendra Modi and his team," says Mr Makadia.
Leading Indian industrialists like Ratan Tata, chairman of the Tata Group, and Mukesh Ambani of Reliance Industries amongst others have lavished praised on Mr Modi for his work in Gujarat.
Last year, Anand Mahindra, chairman of the Mahindra group said: "It's now time to see a Gujarat model being replicated in China."
But before taking that template outside the country, Mr Modi has made the Gujarat development model a central theme of his election campaign.
He is wooing Indian voters by telling them that he can replicate the model across the country if he comes to power - a welcome message in a country whose stellar growth has slowed to below 5% in the last couple of years.
Poor social development?
But not everyone is convinced.
Two hours away from the Essar power plant is the rural district of Tehsil Bhanvad, and one of its villages is home to Ariya.
Eleven months old, she is malnourished say healthcare experts - with a weight you would expect from a baby half her age.
Her father works as a driver and earns nearly $100 (£59) a month - insufficient to support a family of five people.
Ariya does get some food daily, as part of India's supplementary nutrition programme aimed at combating child hunger and malnutrition, but her parents say she needs more.
"I do feed her fruits, which I get from the government centre, but that is not enough," says Bhavu Ben, Ariya's mother.
One child in three is underweight in Gujarat, according to an official report in 2013 - marginally better than the national average,
But the report criticised the Gujarat government for poor implementation of the supplementary nutrition programme.
And the state's performance on other social indicators, like women's health and education, has also been weak.
A human development index report, released by a government-appointed panel last year, categorised Gujarat as a "less developed" state.
The same panel found other Indian states that were economically weaker compared with Gujarat doing much better on human development indices.
Narendra Modi's critics have used this to paint the Gujarat development model as pro-rich and anti-poor.
So is the Gujarat development model a huge success as projected by Mr Modi and his supporters, or is it a myth as argued by his rivals? And will this model work in reviving India's economy?
Like the political class, economists are divided.
Surjit Bhalla, chairman of New Delhi-based Oxus Investments, says he sees no reason why the Gujarat model can't work across India.
"The Gujarat model has succeeded in implementation, execution and attracting investment - which is needed to supplement growth," he says.
Economists in favour of the model, like Mr Bhalla, argue that the investment climate in India needs to be resurrected to generate revenues, which can be used to improve human development indices.
But then Prabhat Patnaik, professor of economics at the Jawaharlal Nehru University, believes that Gujarat's strategy to attract industries by providing them with public resources is one that leaves very little money for education, healthcare and the poor.
Many economists like Mr Patnaik also argue that Gujarat's fast economic growth rate does not stand out as particularly exceptional - with other Indian states including Maharashtra, Bihar and Kerala growing faster during the past decade.
"The Gujarat model will work in India in terms of worsening the human development indices, without bringing about any higher growth rate," he says.
If, as looks likely, Narendra Modi becomes India's next prime minister, it is a debate that will build even more momentum as India's long-term economic strategy plays out.