Home > Uncategorized > The Myth of Modi’s as an Economic Manager

The Myth of Modi’s as an Economic Manager

The Myth of Modi’s as an Economic Manager:

 

Taking 4 fastest growing states, out the Planning Commission data on GSDP as on 15-03-2012, we have the following table:

 

  Growth1995-02 Growth 2005-12 Acceleration  
Bihar 4.94 11.42 2.31  
Maharashtra 4.97 10.75 2.16  
Tamil Nadu 5.54 10.27 1.85  
Gujarat 6.45 10.08 1.56  
         

 

 

I draw your attention to the following simple points taking into account that Shri Narendra Modi took over as Chief Minister of Gujarat in October, 2001 and the effect of his policies on the growth of Gujarat would show up as ACCELERATION in growth after he took over.  Fair enough?

 

  1.  Of the 4 large states listed here, Gujarat had the highest growth rate in the period 1995 to 2002.  In other words, when Shri Modi took over Gujarat in 2001, he inherited the fastest growing state among the 4 listed here.  The Gujarat growth rate then was 6.45% compared with 4.97% in Maharashtra and 5.54% in Tamil Nadu.  Among the larger States, Gujarat was the fastest growing state BEFORE Shri Modi’s time.  That nails many a lie.
  2. After Shri Modi took over, the growth rate in Gujarat accelerated from an average of 6.45% to 10.08% as shown in the above table.  Shri Modi did well.  But by how much?  In the 10 year period, Shri Modi was able to take the growth rate up by 1.56 times; that is to say from 6.45% to 10.08%;  – a good performance but not the best.
  3. In the same 10 year period that Shri Modi reigned over Gujarat, a variety of Govts in Maharashtra accelerated its growth rate from 5.54% to 10.27% – that is by a factor 2.16 times.  Also note, Maharashtra was growing more slowly than Gujarat in the period 1995-2002 but had overtaken Gujarat in the period 2005-2012.  Maharashtra thus did far better than Gujarat.  Why isn’t Maharashtra mentioned by those who tout Gujarat’s performance?
  4. Coming to Tamil Nadu, it was way behind Gujarat in growth rate in 1995-2002 clocking 5.54 against Gujarat’s 6.45.  However, after 10 years of Modi rule in Gujarat, Tamil Nadu was ahead of Gujarat clocking a growth rate of 10.27% having succeeded in accelerating it by a factor of 1.85 times compared to Gujarat at 1.56 times only.
  5. In terms of acceleration, Bihar did the best, successfully stepping up its growth rate from 4.94% to 11.42% that is to say by a factor over 2.31.  Bihar figures may suffer from a low base but the effort required to accelerate is far more challenging than in growing a already well developed state like Gujarat.

 

Now, since the media is expected to extol Shri Modi’s miracle in Gujarat, may I ask why the claims of Bihar, Maharashtra and Tamil Nadu, who have done far better than Gujarat, should be ignored?

 

Where is the acceleration in Gujarat’s growth rate to show it has done better under Modi when compared to similar acceleration in the growth rate of other states?  Rather than give Shri Modi the credit for Gujarat, should the credit not go to general economic reforms that accelerated the growth rates for all states?

You decide.

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Categories: Uncategorized
  1. May 3, 2012 at 8:44 am

    As much as I enjoy reading many of your pieces. This mildly disappoints .

    Numbers can be articulated in different ways.. Have seen this happen so much at work as well… (not to say Modi is not doing it). The point you making ia akin to scneraio. sales person 1 sells 10 apples a day , sales person 2 sells 100 apples a day sells person grows his sales to 20 apples…sales person 2 sells 160 apples a day. First sales person grew a 100 percent given his lower base.. so would you condemn the second sales person since he had an higher base level. Would his effort be lower than the first i doubt that…the numbers you have provided only states that much……

  2. S
    May 3, 2012 at 8:46 am

    Thanks for the detailed analysis

  3. May 3, 2012 at 8:59 am

    The “growth story” out there is similar to the apparent “growth story” of India in the same period. However, in his recent book, Ruchir Sharma has argued that there was an apparent world wide economic boom during this same period, and instead of being based on structural reforms in the country, India was more likely riding the boom wave worldwide.

    The interesting statistic therefore would be “2009-present”, when there are no external factors. How did these states do during this period? Since any growth in this time is mostly going to be due to prely domestic reasons, I think that would be a better barometer of success.

  4. Bimal Upadhyay
    May 3, 2012 at 9:14 am

    Read how Business Standard had to retract the story! I know your views on modi

    http://uninterestingboring.wordpress.com/2012/05/03/how-business-standard-and-bbc-had-to-retract-a-story-on-gujarat/

  5. May 3, 2012 at 9:22 am

    There can be a number of statistics can be portrayed to support one’s viewpoint, so I will leave that to others..

    The proof of the pudding is in the eating, and not statistically portraying if it is tasty or not. SO here’s a open challenge..Why dont you spend a week travelling rural villages of each of these states and THEN form your opinion? (If you are as good looking as your fake picture suggests, I wouldn’t mind giving you company)..what say? Hai G main D?

  6. May 3, 2012 at 9:24 am

    Aha, shifting the goalpost eh? When you couldn’t argue with the growth per se you tried to talk about growth of growth? This is really a ROTFL LMAO article nothing more.

    Alright, by that same token, UPA got the power when the Indian economy was doing rather well. In the last 7-8 years of UPA rule the GDP growth of India has come down to ~6/6.5 %. Here the growth of growth performance of UPA is actually negative, any words on this?

    Moreover, guess who was in power in Guj in 1995-02? Answer: BJP. So from your very facts it is clear that a BJP ruled state was doing well compared to the other 3 states you moaned about and then under Modi it got even better, And I guess now you would want to go back even further in time to pre 1995 days to find out some minor anomaly.

    Point is, after a so called POGROM of Muslims in 2002 and some other natural calamities, Gujarat has been able to show consistently high growth. Note that there isn’t much difference between M, T and G in your table. Bihar’s case is a bit diff owing to a very low denominator with which it started.

    Given that BJP under Modi has been able to clock so much growth after all these negative events how does the UPA/UPA2 at the centre explain the bad state of Indian economy? They can’t simply blame bad monsoon, high crude prices etc. All of these are true for Guj too and yet to is doing so well……what is justifiable for the gander must be justifiable for the goose too but the Gujarat Goose seems to be flying in a zone of its own.

  7. bimal
    May 3, 2012 at 9:25 am

    @sonaliranade when u r at high growth rate growth becomes constant and maintaining tht itself is huge task. u can keep ranting with ur bullcrap statistics

  8. May 3, 2012 at 9:28 am

    Acceleration? This is so childish. Agmenon73 very well explained the base level effect. For credentials check, I manage HF portfolios in NYC.

  9. bimal
    May 3, 2012 at 9:35 am

    >when previous growth rate is high (consider its a relevent to mass of the body becoz u have already added the value to state) – m

    >and current growth rate is also high, (consider it to be Force which you are applying to make the state grow) – F

    so according to acceleration formula a = F/m where F is the net force applied to a mass, m.

    so obviously you will have a less acceleration 😀 did u get the point? no?

  10. May 3, 2012 at 9:39 am

    @Agmenon – The point you are missing and the one I think Sonali is trying to make here is that Modi is not the miracle maker he is touted to be. He is just another CM who has benefited from growth conditions present in the country.

    Gujarat has always been a state performing well on growth and industrial parameters. Now-a-days, anything good there gets attributed to Mr. Modi.

    The point you should also note is that Maharashtra growth has come from a larger base than Gujarat. While Tamilnadu comes from a smaller base, I doubt if that is significantly smaller as shown in your example.

  11. Debu Bhatnagar
    May 3, 2012 at 9:55 am

    Your views are usually well thought through but here I think you are a bit off track. There are 2 factors to be considered. On top of the highest growth shown by any state between 1995-02, Gujarat’s performance between 2005-12 is impressive. Further, the base of GDP per capita that Gujarat has already achieved by 2005 is far higher than say Bihar. This makes it easier for Bihar to grow faster.

  12. May 3, 2012 at 10:42 am

    In case of Maharashtra and Tamil Nadu, growth is completely non-inclusive; just look at the disconnect between the state of Cities and Villages. How many industries are set up in rural Maharashtra compared to rural Gujarat? You may be trying to say a right thing but what you have presented here is hardly convincing.

  13. CSV
    May 3, 2012 at 10:44 am

    With all due respect, you have redefined acceleration :). Acceleration is rate of growth not ratio of growth then and now. Never-mind. But I have to agree with other comments, “Numbers can be articulated in different ways”.In the article, first of all, the base levels have not been taken into consideration while calculating “acceleration”. Second Guj was reeling from a devastating earthquake when Modi took over. TN also had to confront the Tsunami but the scales are not comparable. Thank god MH didnt have to see any such calamity except the man made bombs (which btw does not explain the farmer suicides). Another important factor you have missed is Mumbai being the financial capital of the country. Also the fact that Gujrat had to overcome the media which was screaming that Gujrat is unsafe for investment. There are many more loopholes ….. but overall the article is very very narrow.

  14. neha
    May 3, 2012 at 10:57 am

    you r damn boring…for us Mr. Modi G is god….today our city has 24*7 electricity, water, transportation. Just becoz of Mr Modi G… after 2007 or 2008 I started feeling that yes now we are living in a country which is gonna next superpower. Modi G is dynamic personality…he is god

  15. Pm rao
    May 3, 2012 at 12:06 pm

    One thing is clear. In your hatred towards Modi, you are loosing basic common sense

  16. nikhil
  17. नीलिमा त्रिपाठी
    May 3, 2012 at 2:01 pm

    yes “Acceleration” is low Because Gujrat’s condition was not that bad that of Bihar and other states
    and Gujrat needed improvement only necessary areas and modi has done that nicely. Other states like Bihar need more attention and awareness as they are still living in old eras …..so “Acceleration” dose not prove that Gujrat is lower in progress…

  18. Aneet
    May 3, 2012 at 3:34 pm

    What is the harm in celebrating all of these states ?

    Why must we a nation of 28 states puch holes in a good story of a few well to do states, if media has taken a fancy to Shri Modi, so has it to many not so deserving personalities…. why should Modi be treated any differently ?

    And more importantly, numbers can be articulated to propogate a certain point of view…. any number for that matter but the fact is people of Guj democratically voted….

  19. May 3, 2012 at 4:52 pm

    In a marathon, the one who is way ahead may be running slower at a certain point than the one way behind. The one that is way ahead may not be the fastest in the race but he sure has to be learnt from for continuing to sustain the run and not stopping. These qualities of the one way ahead will soon be needed by the one way behind. Compare when they are the same distance in the race. You are admitting yourself that they indeed are at different distances.

  20. SKS_Mumbai
    May 3, 2012 at 5:25 pm

    Presuming that the planning commission data you are referring to happens to be http://planningcommission.nic.in/data/datatable/0904/tab_103.pdf , here is the question:

    1. I can understand that 2005-12 average was readily available and hence easy to use.

    But if you can be as precise as telling us the month in which Mr Modi took charge (October, 2002, right?), then fair to expect that you would have also noted that Planning Commission data for 2012 is incomplete! Specifically in case of Gujarat, the state whose Chief Minister is the subject of your Myth busting analysis.

    (Now the fact that Gujarat’s data was not available at the time this report came out, can also be cited by you, to prove that Modi is a laggard, but that would be about your freedom of expression, not about analysis.)

    If financial results for Company X is available for the period 2002-2006 and in case of Company Y for the period 2002-2005, then even a half decent analyst would do the comparison on 2002-2005 results, instead of applying 2002-05 number to Y’s 2006 performance! Elementary.

    But doing the right thing in Gujarat’s case would bust the Myth of myth busters. Nevertheless this is what the data shows: whether you look for 2002-11 (incidentally, 2002-11 captures Modi’s period more precisely, remember October? ) or for 2003-11, in both cases Gujarat tops the so called big states: the states which rank above Gujarat happen to be Uttarakhand, Chandigarh and Sikkim.

    2. Now your other claim about Gujarat being relatively better than other big states till Modi happened!

    The 1995-02 period wasn’t as great (comparatively speaking) as we are being asked to believe. But for an unusual 18.02% growth in 1995, Gujarat wasn’t all that hot and happening! And when you see numbers like 18.02% followed & preceded by 6% – 8% kind of numbers, then what you need to do is to look for an explanation behind that aberration, rather than jacking up the average for convenient conclusions.

    Myth Busted? You decide.

  21. Naveen
    May 3, 2012 at 9:34 pm

    Yes decided. You know your math but lack in common sense. Look at the figures again with an unbiased mind you will find the answer.

    • SKS_Mumbai
      May 31, 2012 at 7:25 am

      Yeah Genius. Math is math, your bias or lack of bias does not change the Math.

  22. corrected numbers
    May 3, 2012 at 10:23 pm

    Modi tenure started in October 2001, why should we restrict the growth rates from 2004-05?
    Gujarat beats all large states in average growth rate since the time Modi took office, no really, see here: http://twitpic.com/9gttuc/full

  23. May 4, 2012 at 1:14 am

    These numbers are bound to attract some very good attention. People say Modi has done a lot on the grass-root level i.e empowering people, infrastructure and facilities. But this doesn’t reflect in the numbers which it should. In Maharashtra, it does reflect at the grass-root level that common man has been empowered and is now earning more than he did previously.

    Modi is nothing but a hyped politician. Inheriting projects and a fast growing state doesn’t make you a good CM. Especially with the riots tag on him, he doesn’t qualify for the PMs post.

    • SKS_Mumbai
      May 31, 2012 at 7:33 am

      Prayas
      keep trying one day or another, numbers will mean something else and then you and sonali ranade can claim Divinity. But till then you all will remain a joke.

  24. SKS_Mumbai
    May 4, 2012 at 5:40 am

    Very Nice

  25. Surya Verma
    May 4, 2012 at 9:22 am

    Agree with agmenon73. Without nominal figures, % is misleading.

    You should read “damn lies and statistics”…. Then perhaps you already did 😛

  26. Aditya Agnihotri
    May 4, 2012 at 11:53 am

    Absolute crap.

    Not even a 10th pass student who had studied maths will wrote this article.

    A brief without absolute figures and without context is a waste.

    What a waste!!! Sonali-How much you got paid for writing this piece of shit?

  27. Aditya Agnihotri
    May 4, 2012 at 11:55 am

    Absolute crap.

    Not even a 10th pass student who had studied maths will write this article.

    A brief without absolute figures and without context is a waste.

    What a waste!!! Sonali-How much you got paid for writing this piece of sh**!!

  28. Punit
    May 4, 2012 at 12:20 pm

    These are just figures,just go to guj villages for the real exp.i guess the name of that programme regarding electricity supply was nirmal gram,im not sure,but now even villages of gujrat are getting 24hrs electricity.every second biznessman wants to invest in gujrat.these are not ‘figures’,in fact the rate of 10% is not that low (compare with national average or other countries).the artical was intentionally pointed against the left magnet modi.its hightime media persons start giving attention to other issues,like whats happening in india’s north east.those guys are fed up with the step motherly behavior.stop being local.

  29. May 5, 2012 at 1:56 am

    very good

  30. May 5, 2012 at 11:38 am

    “Numbers are like people. Torture them enough and they’ll tell you anything.”

  31. dinipc
    May 5, 2012 at 4:53 pm

    Disappointing! The data from 2002 to 2005 is missing – why? Because it does not allow adding up to your conclusions?

  32. @DogaHinduHai
    May 5, 2012 at 4:54 pm

    I agree with Nilesh!! Just by calculating rate of Change Vidarbha farmer won’t stop suiciding & won’t stop Drip Irrigation in Gujarat!! Thanks & May God bless you!!!

  33. Teejay
    May 5, 2012 at 8:07 pm

    The better growth of Bihar viz others can Possibly be explained by the low base it started from.m it is not fair to compare it with the rest. Also how we’re the other indicators of prosperity in the state such as education, per capita GDP etc. statistics can be very misleading sometimes

  34. Ranjan
    May 6, 2012 at 8:10 am

    Quote: “Among the larger States, Gujarat was the fastest growing state BEFORE Shri Modi’s time. That nails many a lie. 2.After Shri Modi took over, the growth rate in Gujarat accelerated from an average of 6.45% to 10.08% as shown in the above table.”

    Well, perhaps the difference is that Modi took over not from a Congress Govt. but another BJP Chief Minister? Indeed, BJP has ruled Gujarat for the last 15 years. Even if you want to pull down Modi, you would still have to give some credit to the party.

  35. devendra
    May 7, 2012 at 2:10 pm

    he is posterboy,it is rain unpresdent rainfall has played major role in agri development of Gujarat,Gujarat is always ahead compare to any other states beofre and after independence,Gujarati are born enterpuner and have skills to establish as well as run business/industry.his all contrvelsial activity and statements keeps him in light.

  36. May 10, 2012 at 9:18 am

    i think the job of the head of the state is to streamline the operations. we can’t compare 3/4 states on just numbers. there are couple of things which really surprises me about gujrat : 1) there are no power cuts 2) if you want to set up a industry, the state govt facilitates you rather than delaying the project which happens in other states.

  37. May 13, 2012 at 4:41 am

    its easier to sit in a room and write blog without understanding the fundamentals and realities of the ground. visit the places

  38. June 23, 2012 at 11:35 am

    Sections of the country are obsessed with Narendrabhai and Gujarat progress. Can these same people tell us what a MESS of the Indian economy the UPA has made and critically review performance of Congress ruled states?

  39. July 3, 2012 at 4:39 am

    The Eco Times carried on a blog on July 1 2012 where they have tried to call the bluff on Modi’s performance wrt economic growth. Noted economist Bibek Debroy has issued the first rejoinder on July 2 – http://blogs.economictimes.indiatimes.com/policypuzzles/entry/reporting-hype-over-the-gujarat-hype

  40. Hardik Gandhi
    September 3, 2012 at 12:04 pm

    Sonali Ranade, Microsoft’s increase in profit by 1% can be more than RIL’s 10%. So don’t get biased by the percentage. It is the networth that matters. A shopkeeper might increase his profit by 100% in the next year, but it may not even be nearing to 0.5% of Walmart. So it doesn’t mean that Walmart is doing business in loss or that shopkeeper has overtaken Walmart in networth.

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