The Gujarat Model

What is the Gujarat Model? The media, the political class, intellectuals and ministers want to know what exactly is the Gujarat Model. Most of them have been reviling it non-stop even while wanting to know about it. It is quite amusing, especially in the surcharged atmosphere of election 2014. So intense is the rivalry with Narendra Modi that the critics have made it synonymous with him. Narendra Modi has never called it the Narendra Modi Model: he has called it the “Gujarat Model”.

Now, those who want to understand India (or even what is now called India, Pakistan & Bangladesh) ought to know that it is no less a continent, federation of nations (nationalities, sub-nationalities, religions, languages and cultures). In matters of economic growth or development or politics it is never surprising to come across different, even opposite, models and modalities functioning in different parts of the country. So it is not at all surprising that the Lucknow model differs from the Patna model and the Chennai model differs from the Hyderabad model. What may make a success in Kanyakumari may be an utter failure in Kashmir. Guwahati or Bhubneshwar may not match Ahmedabad. It is no sudden development. Any assessment of the difference will demand a valuation of the economic environment of the relevant region, its inhabitants and history of governance through monarchy, British rule and democracy. States like Gujarat have enough to be proud of. They are inheritors of a strong culture of economic development through internal and external trade, entrepreneurship, innovation, capacity to take risk, wealth creation, invention, discovery, social harmony, fraternity, co-operation, charity, philanthrophy and moral values. This is Gujarat Model. This is no Narendra Modi or Congress or any other model. Now compare this model with the Lucknow or Patna model and the difference will become as clear as the sunlight. A comparison with the models in the southern parts of India will throw up different conclusions as also will those with the eastern parts.


Two states in India are the maximum gainers of the exodus of industries, capital and industrialists from West Bengal in the mid sixties and seventies due to the violence of communist activists, who prided in taking credit for strikes in factories, ports, railways etc. These were Maharashtra & Gujarat. Maharashtra was already the financial capital of the country and home to the strongest stock exchange, the Bombay Stock Exchange or the BSE. Its bureaucracy, as also leadership, understood the value of money, finance and economic development far better than several backward states. The anti capitalism mind-set of the communists failed to realize the necessity for fast industrialization for their own benefit. It was against such a background that the harassed industrialists were not simply welcomed by Maharashtra and Gujarat but actively wooed. They were extended all kinds of benefits, facilities and concessions to attract them to set up industries in these two states. The latest example of such a myopic vision of the west Bengal government was its closure of the Tata Nano Car plant in Singur, and the progressive vision of the Gujarat government to facilitate its commissioning in Gujarat. Even the Maruti Suzuki plant has been proposed for Gujarat after violence at its Manesar and Gurgaon projects in Haryana, near Delhi. That contrasts the Gujarat model with other models. Since Narendra Modi followed the promotional culture of Gujarat, rather than impeding it as in other states, his contribution brought credit to him. This image of Narendra Modi of being pro-industry, the opposition grudges. The Congress and the Janata Dal (United) leader Nitish Kumar grudges. It is this culture of development that the rent seekers are against.

Gujarat was the first state in India to have set up an organization called the Indextb, an institute for entrepreneurship development (EDI), SEWA (Self Employed Women’s Association) and several other innovative institutions, which earned a good reputation nationally and globally. Other developed states also took such initiatives, contributed their own towards institution and industrial culture building. However, Gujarat never lost its lead. It was the state government of Gujarat which drew up a plan for DIC (District Industry Centre) scheme and sent it to the government of India in 1977 for consideration and adoption. The scheme was an instant hit. The Government of India decided to open as many DICs as possible and provided funds for it. I happened to be in the chain for implementation and had sanctioned more than 400 DICs in the country. Each DIC was sanctioned 7 managers including one General Manager. The mission was to encourage opening of small scale units, entrepreneurship development, making available raw material, facilitating marketing of their products, providing soft loans through banks, training and encouraging the youth to take to industry as an alternative to agriculture, which was already over burdened. Consider the need for promoting the pro industry attitude in the environment of anti-industry in the name of communism or socialism. It was an arduous task. A similar attempt was made under the Community Development programme in the 1960s by opening Block Development Offices where modern agriculture, medicine, education etc were being promoted in a country fastened to the ancient practices in agriculture  in  order to usher in modern farming practices like use of improved seeds, chemical fertilizers, farming machinery, Jersey cows, animal husbandry, veterinary services etc. Similarly use of modern medical facilities was promoted through vaccination, cholera and other disease control programmes among illiterate masses getting fooled by quacks and rogues practicing magic remedies or jhaad-phoonk (using the broom to drive away the evil spirit causing the medical condition).


Gujarat developed its small scale industry sector very fast. It created a pool of entrepreneurs and managers. Once I needed to know the number of Gujaratis working in a government of India organization having around 5500 technical staff of various categories operating some 156 stations throughout India (including Gujarat). The figure was the lowest single digit! One more illustration needs to be given here. Hindustan Lever enjoyed a monopoly on detergents market, when a small unit in Gujarat started giving it a tough competition in price. In no time the Hindustan Lever was forced to bring a new product sold in the range of the small industry product. The small unit has since grown very big and Hindustan Lever long stopped selling that product. Finally, you will find only in Gujarat small units running without electric power. In a nut shell, Gujarat has many special attributes which others may not have and some that others may have but not Gujarat. Leadership plays its role as a facilitator of honest business practices. Like it or not, Narendra Modi has done that most satisfactorily. His opponents, in contrast have indulged in loot of the national wealth through scams of historic magnitude like those of the CWG or 2G or Coalgate and also proudly declaring zero loss to the exchequer.

Does the GUJARAT MODEL need more elaboration?

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