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Gujarat urban upsurge leads to absolute rise in poverty despite high growth rate

By Rajiv Shah 
Not that economists have not noticed urban poverty in Gujarat; but they have focused on urban Gujarat in passing. For instance, there is a calculation that the percentage of urban poverty in Gujarat during the second half of the decade ending 2010 has gone down by 2.2 per cent, from 20.1 per cent to 17.9 per cent. Which means, the annual poverty reduction in the state has been just about 0.44 per cent. Notably, this is lower than a dozen out of 20 major states, including Madhya Pradesh, which saw a whopping 12.2 per cent reduction in urban poverty, followed by Orissa (11.7), Rajasthan (9.8), Maharashtra (7.3), Tamil Nadu (6.9), Karnataka (6.3), Kerala (6.3), Andhra Pradesh (5.7), Chhattisgarh (4.6), Bihar (4.3), Uttar Pradesh (2.4) and West Bengal (2.4). The all-India average percentage in poverty reduction is 4.6. Obviously, huge investments and a high growth rate have not helped Gujarat’s downtrodden sections, in any way.
In fact, one economist has calculated, in absolute terms, the number or urban poor in Gujarat has gone up 4.3 million in 2004-05 and 4.5 million in 2009-10. This should be worrisome for Gujarat, which is already the fastest urbanizing state of India. According to the latest Census of India data, Gujarat experienced a whopping 35.83 per cent rate of growth in urban population between 2001 and 2011. Currently, 42.6 per cent of the state’s population lives in urban areas, next to Tamil Nadu and Maharashtra. Yet, there has been little or no analysis on the impact of the drastic change in the state’s urban demography on overall social, economic and cultural scenario. Not that the Gujarat government is not aware of it. A government document, presented at the Chintan Shibir, a bureaucratic conclave, in early 2011, “records” the following as a fact: “While nutrition indicators appear worse in rural areas (48 per cent) compared to urban areas (39 per cent), the urban poor are at an equivalent disadvantage compared to rural populace and much worse than their affluent urban neighbours… Among urban poor, under-five under-nutrition is 56 per cent against 36 per cent among urban non-poor.”
Even then, National Sample Survey (NSS) data, released in September-October 2012, provide some indication of the status of different social groups in urban areas in Gujarat – scheduled tribes (STs), scheduled castes (SCs), other backward classes (OBCs) and others (mainly upper castes) – as to where things stand for each of them. NSS data (which are the most authoritative figures in the absence of Census of India figures) suggest that 75.7 per cent of urban ST households, 79.6 per cent SC households, 51.5 OBC households and 51.7 “other” households depend either on wages/ salaries or casual labour for their survival. As many as 19.7 per cent ST households, 18.2 per cent SC households, 44 per cent OBC households and 41.3 per cent “other” households are found to be“self-employed”. From available indications, this is not very different than most other states. However, when it comes to purchasing power in the urban areas, calculated as monthly per capita expenditure (MPCE), one gets a totally different story.
The picture that one gets is quite interesting picture, suggesting, that it is the SC households whose MPCE in urban Gujarat is worse than any other category. The SC households’ MPCE is Rs 1,292 as against the ST households’ Rs 1,624, OBCs households’ Rs 1,457, and “other’” households’ Rs 2,343. The average MPCE in urban Gujarat for all social groups is found to be Rs 1,909, which is lower than the national average of Rs 1,984. Gujarat’s average MPCE is worse than most major states, including Andhra Pradesh (Rs 2,238), Haryana (Rs 2,321), Himachal Pradesh (Rs 2,654), Karnataka (Rs 2,053), Kerala (Rs 2,413), Punjab (Rs 2,109), Tamil Nadu (Rs 1,948), Maharashtra (Rs 2,437), and West Bengal (Rs 1,965). But when it comes to SC households, the situation vis-vis other states is even worse. SCs’ MPCE (at Rs 1,292) is worse than Andhra Pradesh (Rs 1,757), Chhattisgarh (1,376), Haryana (Rs 1,429), Himachal Pradesh (Rs 1,553), Jammu & Kashmir (Rs 1,781), Karnataka (Rs 1,637), Kerala (Rs 1,709), Maharashtra (Rs 1,709), Punajb (Rs 1,462), Rajasthan (Rs 1,229) , Uttarakhand (Rs 1,371), and West Bengal (Rs 1,296). The national average for SC households is Rs 1,444. What is equally interesting is that, for the other three category of social groups, too, Gujarat’s MPCE is worse than the national average. Urban Gujarat’s ST households’ MPCE is Rs 1,624, as against the national average of Rs 1,797; it is Rs 1,457 for OBC households, as against the national average of Rs 1,679. And for “others”, as against Gujarat’s Rs 2343, the national average is Rs 2467.
The MPCE of SC wage/salary earning households is found to be Rs 1,437, but of casual workers (who account for 27 per cent of the total SC households) it is extremely low, Rs 1,036. The MPCE of casual workers among ST households (forming 21 per cent of total ST households) is found to be Rs 1,132. The OBCs’ MPCE among the casual workers is worse than all, at Rs 1006. As for “others”, their MPCE is Rs 1,222. In fact, figures suggest that there is enough reason for Gujarat’s casual workers to have less purchasing power than most other states. Here, NSS figures provide a very clear picture. Out of a total of 20 major states, casual labour in Gujarat earns on an average Rs 106, which is worse than as many as 14 other state. It is Rs 106 per day for Gujarat’s urban casual labour, as against Andhra Pradesh’s Rs 138, Chhattisarh’s Rs 111, Haryana’s Rs 143, Himachal Pradesh’s Rs 152, J&K’s Rs 150, Karnataka’s Rs 109, Kerala’s Rs 218, Maharashtra’s Rs 110, Punjab’s Rs 139, Rajasthan’s Rs 142, Tamil Nadu’s Rs 138, Uttarakhand’s Rs 136 and Uttar Pradesh’s Rs 107. The all-India average is Rs 121.
These facts are important, particularly if seen in the context of the fact that well-known international agencies are already predicting that Gujarat will be the most urbanized state of India. An authoritative report prepared by McKinsey Global Institute (MGI) two years ago, for instance, predicted that by the year 2030, a whopping 66 per cent of Gujarat’s population will start living in urban areas as against 42 per cent reflected in the 2011 Census. While this will make Gujarat as the second most urbanized state, fast catching up with Tamil Nadu, the report suggests that this will happen because the rate of growth of urbanization in Gujarat in the next two decades will be higher than any other state.
Called “India’s Urban Awakening: Building Inclusive Cities, sustaining economic growth”, the MGI report says that the states that exhibit higher gross domestic product (GDP) rates also will experience higher urbanization rates in the next two decades. The top consultants say, there is enough reason to conjecture as to why the rate of urbanization will be so high, indeed higher than any other state. In the last two decades Gujarat’s GDP grew at the compound annual growth of 7.5-8 per cent, in 2010-2030, it predicts, it will increase to 8- 8.5 per cent, higher than any major state.
An analysis of how major cities of India will develop over the next two decades, the MGI report states, Ahmedabad, which will have a population of 8.4 million in 2030, will also be one of the richest Indian cities, having per capita GDP of 8,100 dollars, next only to Delhi (11,400 dollars), Bangalore (12,600 dollars) and – interestingly – Vadodara (8,500 dollars). Counted at 2008 prices, all other major cities, including Mumbai, Kolkata, Chennai, Hyderabad and Pune will have lower per capita GDP. AT the same time, the report believes that Gujarat’s cities would need massive investments, more than most other cities, to upgrade their infrastructure to meet city needs. At 2008 prices, by 2030, Ahmedabad would need 246 dollars per capita investment, Surat 235 dollars and Vadodara 263 dollars. This is against 124 dollars per capita needed for the country. “More than half of the capital expenditure is necessary to erase infrastructure backlog and the rest to fund cities’ future needs”, the report underlines.

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