Gujarat achieved good — not exceptional — GDP growth under Narendra Modi

This is the first post in a series looking at the economic development performance of BJP and Congress. This post focuses on Gujarat’s GDP growth rates. Similar analysis of India’s GDP growth rates under Congress can be found in another post.

Supporters of Narendra Modi cite his economic record as the primary argument supporting his candidature for Prime Minister. This argument is based on the GDP growth that Gujarat achieved under Modi’s leadership. In order to get a full and true picture of Gujarat’s GDP growth, it is important to compare the growth Gujarat achieved under Modi to that achieved by other, comparable states during the same time period, and the growth achieved by Gujarat under Modi’s predecessors.

The chart below shows the compounded annual growth rates of real GDP (i.e. at inflation-adjusted, constant prices) in the ten largest Indian states since Narendra Modi became the Chief Minister of Gujarat.

ten-states-real-gdp-cagrs

This shows that Gujarat grew at the fastest rate among all major states in this period. However, its growth rate is not significantly faster than that of Maharashtra.  The states shown above started at different levels of GDP in the year 2001-2002, so below is another view of the same growth, which shows the initial base value of GDP in red, the change since in green, and the change as a percentage of the base value. The states are shown in order of their base GDP in 2001, smallest to largest.

ten-states-real-gdp-change

It is again clear that Gujarat’s growth is not significantly larger than that of Maharashtra or Tamil Nadu. In fact, the absolute magnitude of growth was larger in Maharashtra, Tamil Nadu, Andhra Pradesh, and Uttar Pradesh.

Now, let us compare the real GDP growth rates (again CAGRs) of Gujarat since liberalization, under different Chief Ministers. In order to do this, I ignored a few short-tenure CMs, and only included people who were in office for more than a year. Here is the chart showing the GDP CAGRs achieved by each CM.

gujarat-real-gdp-cagrs

The red ones are from BJP, green is from RJP (a breakaway faction of BJP), and the blue is Congress. The period of political chaos involved three CMs and a bout of President’s Rule all within a year. As you can see, Gujarat achieved higher growth under Chimanbhai Patel than it did under Narendra Modi. This indicates that the economy of Gujarat has the potential to achieve high rates of growth. Modi deserves credit for not screwing it up, like Keshubhai Patel seems to have done. He also deserves credit for staying the course with pro-growth policies to sustain a long period of solid growth. But Modi doesn’t deserve a reputation for exceptional economic leadership that his supporters claim for him.

 

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