While Gujarat’s developmental model has yielded high growth through its rapid industrial expansion it has also exacerbated socio-economic inequalities, while on other indices including health, education and poverty management it is much closer to Bihar – a state that despite its financial constraints has focused on social spending but continues to lag behind, a new study has found.
In a paper titled ‘India: The Challenge of Contrasted Regional Dynamics’ Christophe Jaffrelot, with Vignesh Rajahmani and Neal Bharadwaj, has analysed three states –Bihar, Gujarat and Tamil Nadu to look at the “different Indias within India” and compare the difference in socioeconomic and governance policies that have shaped their developmental trajectories.
The report states that while Bihar is a case of persistent underdevelopment, in contrast Gujarat is the richest state in the country by per capita income. Gujarat’s developmental trajectory has been a model of rapid industrial expansion driven by capital-intensive industries, infrastructure investment, and business friendly policy. However inequalities have persisted due to its low investments in education.
The report looks at the social spending patterns of these three states to state that it is indicative of their priorities.
“Bihar, despite its meagre resources, invests massively in this area while Tamil Nadu allocates even more. In contrast Gujarat lags behind, with its budgets for education, health and housing-among other sectors-being lower, not only falling short of Tamil Nadu’s but also of Bihar’s,” the report states.
The report states that in public health policy for instance, Gujarat despite being wealthy, lags behind in public spending progression. While it spends more than Bihar, “its healthcare expenditure grew by only 10.5% between 2012-13 and 2019-20, compared with 29.5% in Bihar. In Tamil Nadu, where the increase was 20.5%, twice as much as in Gujarat.”
The report adds that Bihar’s high social spending puts it in a unique position in the Hindi belt.
“Bihar has consistently allocated a significantly higher share of its GSDP to social spending, reaching an impressive 22.25% in 2021-22. This reflects its emphasis on bridging developmental gaps despite limited resources. In contrast, Gujarat, known for its infrastructure-led growth, has maintained relatively low social spending, with figures stagnating around 4.46% in 2021-22. Tamil Nadu, with its focus on human development, displays a steady commitment to social sector investments, maintaining expenditure between 4.90% and 6.01% during the same period,” it says.
The report says that these trends show that while Tamil Nadu has prioritised social welfare like its southern counterparts, the Gujarat model “remains skewed towards infrastructure development.”
“Bihar’s higher expenditure underscores its unique position among Hindi-speaking states in prioritising social investments despite fiscal constraints.”
Speaking to The Wire, Jaffrelot said that the Gujarat model has become representative of India where there has been growth but it has been one with jobs:
“When you compare Gujarat and Tamil Nadu you find that Gujarat is very similar to Tamil Nadu in terms of infrastructure and industry. It is doing better (than Tamil Nadu) in terms of electricity production and roads. Roads are probably what Narendra Modi invested in the most as chief minister. But Gujarat is close to Bihar in many respects including malnutrition, poverty gap-the rate of people living below the poverty line. Rate of education is not great at all, at least English medium education is very poor. It is interesting to see that if there is a model in India today it is Tamil Nadu. Here is a state that has almost eradicated poverty, industrialised at a high pace and where services are taking over from industry. This is something you don’t see in Gujarat.”
Jaffrelot said that there is a need to look at the BJP “not only as a Hindu nationalist party but as an elitist party”.
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“An elitist party by definition almost because it was anti-Mandal, and also a party that is prone to crony capitalism. At the moment when job creation should be a priority it is counter productive,” he said.
The report says Bihar’s continued lack of progress has significant implications because the relative stagnation of the Hindi belt, which will represent more than 50% of the Indian population by 2050, “limits India’s ability to fully integrate into the global economy as a developed country, affecting its attractiveness as a strategic partner for European nations.”
The economic divide is also likely to exacerbate regional disparities and the lack of development in the Hindi belt would perpetuate inequality shaping India’s overall economic landscape and its appeal as a trade and investment destination.
India’s continued dependence on China
In a second paper, titled ‘India’s Industrial Ambitions: Will They Materialize with the Help of China or with That of the West? Ten-Year Scenarios’, Jaffrelot states that while the Make in India initiative was launched in 2014 to stimulate industrial growth, a decade later its reliance on China raises key questions about the direction of India’s industrial trajectory and its implications for global supply chains even as it seeks to become “atmanirbhar” or self-reliant.
By analysing four key sectors – automotive, textile, electronics and pharmaceuticals – the report states that “India’s reliance on Chinese imports – particularly in electronics and pharmaceuticals – poses risks for Europe’s own supply chain resilience.”
“The ‘Make in India’ project has not put India in a position where it can compete with China, on the contrary it has developed parallel to put India on more reliance on China. The more India exports, the more it imports as well. You need to import from China to export to the world, whether medicines or electronics. And this is the big question: Can India emancipate itself from China? That is very costly,” Jaffrelot said to The Wire.
“The word self reliance is used all the time but to be self reliant India needs industrialists to invest and to give purchasing power to the people,” he added.
Jaffrelot presents two scenarios, which are likely to emerge in the coming decade-one includes India’s greater reliance on China, and the other is becoming self reliant.
Also read: What Make in India Has Brought to India
The paper states with FDI plummeting from $82 billion in 2021-22 to $71 billion in 2023-24, and further to a projected $42 billion in 2024-25, it is likely to make India more economically dependent on China.
“It should be noted that Indian imports from China are essentially intermediate goods that Indian manufacturers need for their own production processes – including for exports,” it states.
In an alternative scenario India could receive investment from other Western countries including those in Asia like Japan and Taiwan that will allow it to become emancipated from China.
“On the domestic front, increased industrial investment could be further catalyzed if a stronger redistribution effort boosts demand for manufactured goods. Such a policy would be more likely under an opposition-led government in 2029, given that demand-side economic measures are central to its agenda – much like the Congress-led government pursued between 2004 and 2014,” it says.
However, Jaffrelot adds in the paper that it is likely that the trajectory of Indian industry over the next ten years will lie somewhere between these two scenarios and remain plurilateral.
