With a population of around 60 million, Gujarat is an Indian state bordering Pakistan. Endowed with similar arid conditions as of Southern Pakistan, it has emerged among the most economically vibrant Indian states in recent years. Reputed publication Economist has equated Gujarat with Guangdong province, the economic powerhouse of China. Its investment charm can be gauged from the fact that around 8,000 MoUs amounting USD 450 billion were signed in the biannual Venture Gujarat Investor Summit of 2011. This figure is over 2 ½ times of the annual GDP of Pakistan amounting USD 175 billion. It has sustained a double digit economic growth since 1994 well above the Indian average annual GDP growth rate of 7.5%. With only 5% of the 1.2 billion Indian population, Gujarat contributes 15.5% to total value of output and 22% to total exports of the country. Against the popular perception of attributing Indian economic growth to IT sector, the manufacturing sector has remained the mainstay of growth in Gujarat.
Now the natural question arises about the contributing factors to these impressive performances. Political stability and pro-market approach of the state government are the pivots of this growth. Mr. Narendra Modi, who earned notoriety due to his complicity in 2002 anti-Muslim pogrom, has been the state Chief Minister since 2001. He has won all the elections in the state since then and was even able to court some Muslim votes in 2010 local elections due to his economic performances. What is the Mantra of Mr. Modi for sustaining this growth? He described it in simple terms of ‘Minimum Government with Maximum Governance’. In plain language, it means that state government has concentrated on building infrastructure for growth and facilitating regulatory environment, whereas the task of wealth creation is left to private sector. Can we learn something from this Gujarat model?