Whither Jeffrey Sachs-supported research project which 'created' Gujarat model of development?

By Rajiv Shah 

Even as Donald Trump was swearing-in as US President, a friend forwarded to me a YouTube video in which veteran world renowned economist Prof Jeffrey Sachs participated and sought an answer as to why Israeli Prime Minister Benjamin Netanyahu was "afraid to fly" despite being invited to Donald Trump's swearing in ceremony. This took my memory to 2003, when I -- as representative of the Times of India -- had a short tet-a-tat along with a couple of other reporters with Sachs in the chief minister's office in Gandhinagar.

While across the world, Sachs also calling Netanyahu “deep, dark son of a b*ch”, shared by none other than Trump, has gone viral, in India, Netanyahu not able to fly to the US for Trump swearing in, I thought, is more relevant -- comparable with Prime Minister Narendra Modi allegedly failing to get an invite for the grand event. 

My friend, a politically aware journalist, who had forwarded the video, agreed, reminding me of a Subramaniam Swamy tweet which first created a ripple around it. Meanwhile, twitteratti started making a laughing stock of this alleged failure, with one of them stating, "All Indians must be thankful to S Jaishankar for ensuring Modi didn't receive an invitation to attend Trump inauguration. Just imagine the embarrassing moments Modi might have created trying to steal the camera's focus!" 

I don't know what Sachs, who also happens to be a public policy analyst, thinks of the Indian Prime Minister now, as not much is available in public domain on this. However, in what appeared then to be his all-out effort to whitewash the taint following the 2002 Gujarat riots, Modi tried to befriend Sachs, going so far as to sign a memorandum of understanding (MoU) in 2003 with him to initiate research for developing a growth model for the state's economy and promote foreign direct investment (FDI).

The pact was of a three-year research project on Gujarat, involving the Indian Institute of Management, Ahmedabad (IIM-A), then under the stewardship of Prof Bakul Dholakia, and the Columbia University (CU),  represented by  Sachs, who claimed to three of us following the MoU, that Gujarat does not face any "intrinsic problem" for development as it has a long coastline, an urbanised culture and is close to Mumbai, India's commercial capital. 

Stating that the research would involve "finding out the impact of human rights and social development issues on the economic development of Gujarat",   Sachs underscored, "Peace and social stability are a precondition for development," (I didn't ask if this was with reference to the 2002 riots), adding,  "While industry and agriculture are well-developed, the state lags behind in historical, cultural and beach tourism... I have just come to know about prohibition in Gujarat. We will look into its impact on the state's economy."

A year later, as a follow-up, I did a story on what the project initiated with Sachs' help had done. Titled "What ails state? It doesn’t have a Bangalore",  I reported that the studies by IIM-A and CU, "commissioned" by the State government, painted a grim picture for Gujarat, even as admitting  that Gujarat was not a "laggard" in terms of FDI.

One of these studies finds Gujarat having fewer ''comparative advantages'' compared to Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh, and Delhi. Focusing on FDI, it said, Gujarat's competitive edge is confined to "machinery, vehicles, chemicals and commercial complexes", calling Karnataka the "real winner" in FDI while Andhra is "somewhat behind Karnataka, but is still ahead of Gujarat".

"Gujarat illustrates the problem of the country in a more extreme fashion -- the premature slowing down of the manufacturing sector in the face of conservative macro-economic policies," underscored the study, adding, "Inability of Gujarat to create a city of the type and scale of Bangalore in terms of functions served and to attract key service industry pioneers which could then have served as attractors for smaller firms."

The second study for the Gujarat project suggested that despite a very high savings rate of 38.94 per cent in Gujarat, the society "invests only a fraction of what it saves in the state". It said, Gujarat's savings rate was "very comparable" to those in China, Korea, Malaysia, Japan, Singapore and Hong Kong, yet it was unable to "retain its savings and utilise them productively giving high returns". Estimating that Gujarat's own resources could generate an "additional growth rate of about 2.5 per cent per annum," it added, "this involves a Herculean task".

A third study called for "change of attitude" that "under-emphasises the role of industrial facilities, infrastructure, land areas, effective port facilities". Suggesting how China had assured foreign investors "low taxes, reliable infrastructure, physical security, adequate power, decent logistics for the import and export of goods", it wanted the State to give up its policy of "expensive and counter-productive charity" (does it mean huge subsidies given to the farm sector? I don't know).

Bajpai with Modi

Those involved in the research project, apart from Sachs and IIM-A scholars like Prof Bakul Dholakia and his brother Prof Ravindra Dholakia, included Nirupam Bajpai, a senior scholar at the Earth Institute at Columbia University, who had agreed to work on climate prediction, hydrology, and seismology in Gujarat with development strategies to attain and sustain high rates of economic growth, attract higher levels of foreign direct investment, and promote labor intensive manufacturing exports.

A decade after the project was launched, in a LinkedIn post, Bajpai stated that the "joint research-cum-policy advisory project of CU and IIM-A on sustainable development of Gujarat" led to the preparation of as many as 24 papers/reports, all of which were written presented to the Gujarat government between July 2003 and September 2005.

Important outcomes were two major publications following the research project: "Regional Economic Policies, Geography, and Growth Episodes in China’s Coastal Provinces: Lessons for the State of Gujarat" (February 2004), and "Foreign Direct Investment in China’s Provinces: Lessons for the State of Gujarat" (March 2004), both published by the Columbia University, New York, he said.

Bajpai claimed, among important outcomes of the project included setting up the Institute for Seismological Research in Gandhinagar (not much is heard about it today); a soil health card scheme (still eludes to poor farmers); an FDI and domestic private investment promotion event to be held once every two years, which led to holding of Vibrant Gujarat global summits, begun 2005; and policy reforms in the agriculture sector. 

While it is for experts to decide how much of these policy reforms suggested with Columbia help succeeded in creating what came to be known as the Gujarat model of development, it is a fact that these failed to percolate down to the under-privileged sections of the State. Gujarat's lag in the social sector continues to be widely reported even today. 

Indeed, except for the Vibrant summits, which helped create a Modi image across the world as a person claims to mean business, the research project didn't seem to succeed in what Sachs had told us reporters in 2003 -- pursuing human rights and social development issues.