The Modi metric

Gujarat has delivered growth under Narendra Modi, but such growth has been neither equitable nor inclusive

The Gujarat state election is on, and many contend that Narendra Modi is a likely contender for the top slot on the BJP ticket in the 2014 general election. His detractors, primarily amongst the ruling Congress party, point to the 2002 Gujarat riots as a strong indicator that Modi is unfit for the job. Given the Congress's alleged involvement in the 1984 anti-Sikh riots, it is a bit improper for Congressites to level charges of murderous riots against anybody.

An argument for prime ministership that all can respect, including all contenders, is that the best choice for PM is one who can deliver the most inclusive growth. Now, inclusion means different things to different people, and especially to different economists, so one needs a more concise definition of what inclusion means.

Inclusion is another word for good governance and good governance generally implies equitable growth. And equity should incorporate concerns about gender, caste and religion. As a first step, let me offer two different indicators of growth and four different indicators of equity. The two years chosen for analysis are 1999-2000 and 2009-10. These years correspond to the availability of NSS household data. The two growth indicators are (i) per capita growth, as given by state GDP accounts; and (ii) state per capita consumption growth as given by NSS data. The NSS data on consumption miss out more than half of national accounts consumption and may not be an accurate indicator of growth or welfare gains, but are reported here in the interest of completeness.

For equity, there are four indicators. There is change in inequality, change in poverty reduction, and improvement in male and female youth education (years of education, ages 8 to 24). Except for inequality, all the other changes are computed for three different classes of people: Muslims, Scheduled Castes and Scheduled Tribes (SC/ST) and the remainder — the non-minorities. If the minorities share equally in the growth process, then the growth indicators should be broadly comparable. However, this simple comparison becomes problematic for indicators like education and poverty reduction. These are subject to ceiling and floor constraints. In such circumstances, a rank ordering of relative performance is preferable; the reference group for each indicator is the growth observed for the non-minorities in the same state.

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