Is Madhya Pradesh’s economic turnaround in recent years more creditable than the economic performance of Gujarat?
L.K. Advani, senior leader of the Bharatiya Janata Party (BJP), which rules both states, seems to think so. Addressing party workers on Saturday, Advani lavished praise on Madhya Pradesh chief minister Shivraj Singh Chauhan.
He argued that Chauhan’s performance was more creditable than that of Gujarat chief minister Narendra Modi since he had turned around an underdeveloped state.
Advani’s statement was probably aimed at taking some sheen away from Modi’s governance record and to keep the BJP’s leadership race open, in the run up to the general elections due in 2014.
But do the numbers back Advani’s claim?
At first glance, Gujarat’s growth performance in the six years leading up to 2010-11 appears superior to that of Madhya Pradesh. Gujarat’s economic growth exceeded the national average, while that of Madhya Pradesh was slightly lower. But a look at Table 2 shows that Advani could have a point. The Madhya Pradesh growth performance in the preceding five-year period leading to 2004-05 was abysmal. We have considered a five-year period rather than a six-year period since the earlier state GDP data begins in 1999-2000.
Madhya Pradesh’s growth acceleration has been faster. Its average growth in the latter half of the last decade was 6 percentage points higher than the first half, while Gujarat’s growth in the second half of the decade was roughly 3 percentage points higher. Even in the nineties, Gujarat’s growth performance was significantly faster than that of Madhya Pradesh.
Even though state GDP data are not strictly comparable because of methodological differences, Madhya Pradesh appears to have had a sharper turnaround. The problem for Madhya Pradesh will be to sustain it. Quite like Bihar and quite unlike Gujarat, Madhya Pradesh’s industrial base remains poor, and growth in construction rather than in manufacturing accounts for a large share of overall growth. So the sustainability of the growth acceleration in Madhya Pradesh is open to question.