A Look In The Mirror (m.outlookindia/article.aspx/?289889) Two academics hold Gujarat up against other states to see if it grew more in the Modi decade than in the preceding 20 years Gujarat shining? The state’s growth is neither universal nor exceptional Gujarat shining? The state’s growth is neither universal nor exceptional Magazine | 31 March 2014 Maitreesh Ghatak, Sanchari Roy ................................................................................... ............................... In particular, this is what we tried to figure out: did a state that has for a long time been one of the most developed states in terms of per capita income, and was already improving at a rate higher than the rest of the country, accelerate further and significantly increase its growth margin under Modi’s stewardship? Our analysis shows that this did not happen. Both Maharashtra and Gujarat improved upon an already impressive growth trajectory in the 2000s, but the margin of improvement was too small to be statistically meaningful. So while Gujarat’s overall record is undoubtedly very good all through the last three decades, its performance in the 2000s does not seem to justify the wild euphoria and exuberant optimism about Modi’s economic leadership. Of course, it is possible that there are trends that this evidence cannot capture. Maybe with a longer time horizon, the effects of some of Modi’s policies will show up in the evidence, although given that he is now in his fourth consecutive term of power, this argument is not very strong. It is also possible that if Modi comes to power at the Centre, he may well achieve a turnaround of the Indian economy due to his governance style. All that is possible in theory, but the existing evidence is insufficient to support these views. As John Maynard Keynes had famously said in the context of stockmarket bubbles, often our decisions to do something, the full consequences of which will be drawn out over many days to come, can only be “taken as the result of animal spirits”—a spontaneous urge to action rather than inaction or rational calculation. In politics, too, maybe it is animal spirits that rule, not rational calculations based on statistical evidence. However, while election campaigns are run on slogans and sentiments, good governance depends on facts and figures. Bubbles eventually burst, waves of euphoria recede. At some point, the numbers need to add up. By Maitreesh Ghatak and Sanchari Roy (Maitreesh Ghatak is Professor of Economics at the London School of Economics; Sanchari Roy is a research associate at the Department of Economics, University of Warwick, UK.)
Posted on: Mon, 24 Mar 2014 07:34:50 +0000
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