F280507: The Planning Commission of India has again praised the economy of Gujarat and the intrinsic strength of State’s manufacturing sector.

Gujarat’s economic growth post- liberalization and specifically in the last five years has come in all praise in the draft Gujarat Development Report, prepared by Gujarat Institute of Development Research at the behest of the Planning commission of India.

The report calls the State a “star performer” and a ‘manufacturing specialist” with investments in ports, roads, telecom and other infrastructure attracting unequivocal praise. Exported growth of the country in the last five years allowed labor intensive Gujarat manufacturing clusters (diamonds, textiles, garments, cement, ceramics, tiles, plastics, auto ancillaries, drugs and pharmaceutical) to ride the wave.

The report pointed out that Gujarat has realized average growth rates of only 14 percent in manufacturing despite a potential for crossing the 20 per cent mark, because of conservative monetary and exchange rate policies of the Central Government and the RBI. Calling it policy-induced under-performance, the report says that even tradable policies may have discriminated against manufacturing Gujarat’s intrinsic strength.

Comparing the State with other States, the report finds Gujarat doing exceeding well on most economic measures. The comparisons are made against Tamil Nadu, Karnataka, Maharashtra and Andhra Pradesh. It gives an example of how growing from a much lower level of Rs. 11,500 against Rs. 13,500 of Maharashtra in 1993, the percapita income of Gujarat crossed that of its neighbor in 2003 and stood at Rs. 19,500, a jump of over 70- percent in a decade growing fastest among its peers.

“Gujarat is a class by itself. Among its peer States, Gujarat has the highest rate of GDP growth, manufacturing, and per capita SDP. The openness to immigration of labor, and the natural advantage of much land with little alternative use, local entrepreneurship, State support, and local politics that is not against capital are significant factors, “says the chapter on Economic performance of Gujarat in recent times.