Economic Reforms and Development Strategy in Gujarat

The paper examines the development strategy followed by Gujarat state government during the nineties. It has followed the strategy focussed on industrialisation and urbanisation with an open door policy eversince its inception in 1960. Economic reform measures at the Centre with an explicit emphasis on trade and industry considerably benefited Gujarat making its economic performance outstanding. The state government only facilitated the growth of private enterprise since its strategy was already consistent with the changes in the policy reforms at the Centre. Since mid-nineties, however, when the reform process at the Centre slowed down, the state government in Gujarat started taking major initiative to liberalise and reform its policies further. In this process, the focus of the development strategy seems to have shifted away from the organised manufacturing to the unorganised sectors and giving protection to the SMEs. It is argued that Gujarats performance would again pick up as the national reform process gets back on the track.

Exports of Agri-Products from Gujarat: Problems and Prospects

Agri-products are defined to include products of agriculture & allied activities, fishing, forestry, and manufacturing industries, like food & food products, tobacco, textiles, paper, furniture, etc. Gujarat has a revealed comparative advantage in the exporting activity over the other states since, as per GITCO Study (November 2001), more than one-fifth of the exports of the country originate from Gujarat. Gujarat has the revealed comparative advantage in ground-nuts, oilmeals, castor oil, poultry & dairy product, spices, sesame & niger seeds, processed food & vegetables & fruits, cotton yarn & fabric, man-made textiles, handicrafts, and cotton raw including waste. Fresh fruits & vegetables, floriculture, and fish are not the areas of strength for Gujarat so far. Based on the large sample survey conducted by GITCO (November 2001), several features of the exports originating from Gujarat are also examined. Exports of agri-products originating from Gujarat represent excess supply rather than exclusive supply to the foreign markets. The prospects of the domestic demand and production of the agricultural sector in Gujarat are examined. The dismal picture of the declining real income in Gujarat agriculture during the late nineties is not supported by several other evidences. On the contrary, Gujarat has a very vibrant and responsive agricultural sector. It has an achievable potential to grow at 4.5% to 5% p.a. over the next 8 to 10 years. The paper concludes by identifying some areas for further research.

Measurement Issues in Comparing Fiscal Performance of States

Interstate comparison of fiscal performance requires use of appropriate concepts and proper measurement of state income, fiscal deficit and debt. GSDP at market prices and a comprehensive concept of debt consistent with the fiscal deficit of a state government are the right concepts to use for the purpose. The rating agencies and the Finance Commissions have not used the right concepts so far. Illustrative estimates for Gujarat show that it can lead to misleading target setting and wrong perceptions about the fiscal performance of the states. CSO, RBI and the rating agencies have to ensure that right concepts are used in interstate comparison.

Regional Sources of Growth Acceleration in India

Gujarat, West Bengal, Karnataka, Maharashtra, Kerala and Tamil Nadu were the major contributors to the growth acceleration in India after 1991-92. Although the Regional Disparity may increase temporarily, causality test provides support to the hypothesis about spread effects. The Regional growth targets assigned by the 11th Plan in India seem to rely on the spread effects of economic growth acceleration in the better off states to achieve its 9 percent growth target and reduce regional disparity in the long run. To strengthen spread effects, the domestic economy should be further integrated and interlinked with free flow of goods, services and factors of production.

Determinants of Export Performance of Indian Firms – A Strategic Perspective

Macroeconomic policy reforms initiated in India since 1991 have brought about a significant improvement in the export performance of Indian firms. This paper examines the export performance of firms with the help of balance sheet data of 557 firms for the years 1980-81 to 1995-96. Applying panel Tobit model, it explains the improved export performance through changes in various firm level variables as well as economic environmental factors derived from existing literature on experiences of different countries. The paper also draws certain strategic and policy implications likely to be relevant for emerging economies from its findings on India.

Consistent Measurement of Fiscal Deficit and Debt of States in India

There are differences in the definition of debt used by different bodies like the state governments, Reserve Bank of India, the Office of Comptroller and Auditor General of India and the Eleventh Finance Commission. Moreover, none of these definitions satisfy the criterion that fiscal deficit in a given year should equal the sum of increase in debt and monetisation. This paper attempts to estimate debt in a theoretically consistent and appropriate manner for 15 non special category states and 10 special category states for the period 1989-90 to 2003-04, which are then used to obtain effective interest rates for these states. We observe that non-special category states have a significantly greater probability of fiscal sustainability than the special category states. Moreover, when the trends in the proportion of debt of each state in the aggregate of all states is compared with trends in similar proportions of fiscal transfers from the centre and that in primary deficit on own account, we find that certain states have benefited by largesse from the centre despite a consistent bad performance while certain performing states have been penalized by reduced fiscal transfers.

Identification of Top Performing Economies

Using seven indicators of the economic performance of 187 countries, the paper identifies the top 50 performers during the decades of 1981-90 and 1991-2000. Five of these indicators are the trend rates of growth over a decade in imports, FDI, capital formation, per capita income and forex reserves. Average inflation rate and HDI are the remaining indicators. Comparison of top performers of the 1980s and the 1990s suggest that high performance in inflation and HDI are the precondition for consistency of high overall performance over time. The paper also examines the interrelationship among the indicators over time.

Growth Acceleration and Potential in Gujarat

The paper begins by considering the growth experience of Gujarat in 17 sectors compared to the nation during the pre-reform period of 1980-92 and reform period of 1991-2004 identifying areas of strength and weaknesses. It then identifies episodes of high economic growth over 4 and 10 consecutive years in each sector in the state over the last two decades and derives plausibly optimistic growth potential of the state in future. In order to examine the feasibility of such optimistic growth targets, a preliminary attempt is made to estimate traditional sources of economic growth in Gujarat in the neoclassical growth accounting framework for the primary and non-primary sectors in the two sub-periods. Sources of growth acceleration are derived and implications of targeting substantial growth acceleration implied by earlier estimate of optimistic growth potential in the state are examined. In the process, the paper provides first estimates of capital stock, growth of land input, factor shares and total factor productivity growth for Gujarat broadly comparable and consistent with the national level estimates. A simultaneous equations model to identify the prime-movers or drivers of economic growth in Gujarat is also fitted before concluding the paper with suggested strategy and policy changes based on the findings of the study to achieve faster growth in the state.

Trends in Regional Disparity in Human and Social Development in India

In the present paper, we have examined trends in regional disparity in human and social development by considering numerous indicators other than State Income. We found no support to the general impression prevailing in the recent literature that disparity is increasing over the last two decades when we subjected the trend to statistical significance test. We considered numerous output as well as the input indicators for the purpose. In very few indicators, the disparity showed an increase, whereas in a large number of indicators it either remained the same or actually declined over the last two decades. The state governments’ efforts in the social sectors were perhaps a major reason for the outcome. Except education, in all other social sub-sectors, the interstate disparity in the government effort markedly declined during the 1990s compared to the 1980s. In education, it remained the same. Our findings in this paper point to a very clear policy prescription. The social and human development is considered by all the state governments as very important and a priority sector in their development strategy. The way they are making efforts in these directions is reducing disparity across states although each state has been acting on its own. This is perhaps because of the felt need of people and the polity in states. Explicit objective of reducing regional disparity in social and human development in the central planning may not, therefore, be specially required. Augmenting the revenue resources of states allowing the states to access public borrowings directly would enable most of them to concentrate on their priority areas – based on the local felt need. It is likely to address the issue of regional imbalance and disparity in a much better and efficient way without imposing excess burden since it would allow exploiting complementarities in growth and equity.

Improving the Performance of Accredited Social Health Activists in India

The Accredited Social Health Activist (ASHA) represents the pivotal part in the whole design and strategy of the National Rural Health Mission (NRHM), which, in turn, is a critical initiative of the central government to fulfil its promise on inclusive growth. The performance of ASHAs is, therefore, crucial for the success of NRHM and hence of the inclusive growth strategy of the government in India. In the primary healthcare sector, NRHM is the principal programme of the government to achieve the health related millennium development goals such as infant mortality rate (IMR), maternal mortality rate (MMR); as well as control of specific diseases, and improvement of nutrition status of children and mothers. NRHM was introduced in the year 2005 in the 18 high focus states in India and has been expanding in its coverage ever since. Several mid-term appraisals of NRHM have been carried out, the last one having been done by the present team (2009). The present paper is devoted to identifying and suggesting ways in the short to medium term to improve performance of ASHAs under NRHM in India. The purpose of this investigation is not to question the strategy based on ASHAs in the rural setting but to explore and evaluate alternatives. We believe that under the given circumstances it is not only prudent but also most practical and meaningful to concentrate on improving the performance of ASHAs. The present paper, therefore, examines the whole question in terms of current and potential provisions of the recruitment, training and deployment of ASHAs in India. Our paper presents data collected through written questionnaires with ASHAs in Bihar, Chhattisgarh, Rajasthan, and UP. Where appropriate, we have also provided key qualitative insights from the state of Assam, where we conducted a focus group discussion with 25 ASHAs and 4 ASHA facilitators. All mid-term appraisals of NRHM in India have expressed concerns about role and performance of ASHAs. There is considerable literature and international experience in this regard. A brief review of the literature and international experiences is presented in the second section. The third section discusses current profile of ASHAs in the five selected states and their selection procedure. Further sections then consider the following five questions: a. Is the recruitment process for ASHAs appropriate to ensure proper selection? b. Are the roles and responsibilities assigned to ASHAs easily understood and appropriate? Are new responsibilities for ASHAs envisaged? c. Is the training that ASHAs receive adequate, appropriate for knowledge retention, and of high quality? d. Are ASHAs' current incentives and compensation structure consistent and adequate for them to perform as per expectations of NRHM? e. Are supervisory structures currently in place in the rural areas sufficiently detailed and do they effective monitor/track ASHA performance? The last section summarizes recommendations for the consideration of the International Advisory Panel. A quick sample survey of ASHAs, potential/actual beneficiaries (young mothers) and government officials was carried out during March-May, 2010 in selected states to get an idea about the ground reality for ASHA's role, training, incentives, supervision, effectiveness, etc. details about the sample survey are given in the appendix