International Research Journal of Management Sociology & Humanities ISSN 2277 – 9809 (online) ISSN 2348 - 9359 (Print) An Internationally Indexed Peer Reviewed & Refereed Journal Shri Param Hans Education & Research Foundation Trust www.IRJMSH.com www.SPHERT.org Published by iSaRa Solutions IRJMSH Vol 6 Issue 1 [Year 2015] ISSN 2277 – 9809 (0nline) 2348–9359 (Print) Relevance of governance model of Gujarat in the development of India Ishta Vohra The present paper begins by looking at the development strategies of Gujarat to analyse the politics of governance of the state. This is done to stir a subsequent debate amongst us over the relevance of this model for India, and the course of governance strategies by the BJP led NDA government. It is important that in making policy suggestions, or talking of policy strategies, one be aware of the politics of governance of the State. This is required so to be aware of, to gauge, and anticipate its governance and policy measures. The governance model of Gujarat provides an interesting starting point for the debate for two reasons – 1) one can analyse the scope of compatibility between capitalist development and Hindutva through study of the state: Gujarat is known to generate remarkable economic growth through ‘maximum governance, minimum government’, while also bearing the tag of being the laboratory of Hindutva. The state has been under the rule of BJP since 1998. 2) Secondly, one of the appeals of PM Modi amongst voters during the 2014 General Elections campaigning had been the highly celebrated model of governance of Gujarat, attributed to his leadership as its Chief Minister from 2001 to 2013. ECONOMIC AND POLITICAL DEVELOPMENTS IN GUJARAT In analysing the culture of efficiency of a ‘minimum government and maximum governance’ environment, that translates into high economic growth and development in Gujarat, its development trajectory has to be understood in the context of its economic, political, and social history. The State of Gujarat, carved out during bifurcation of the Bombay State on May 1 1960, had limited resources in hand, despite the strong financial presence of the Gujarati community. The loss of Bombay City was felt both emotionally and financially, and stirred Gujarat’s political leadership to outshine the economic glory of Maharashtra. After deliberation between the political leadership and policy-makers over the kind of economic trajectory the State should follow, it was agreed that prioritising industrialisation would fetch faster and desirable economic outcomes needed for its development. Innovations of State bureaucracy Gujarat’s bureaucrats worked diligently to place the State on the path of industrialisation from the start. Despite the strict license regime, they had a trick or two up their sleeves to grab investment opportunities, creatively strategising ways to bypass obstructions. So, for example, they would infiltrate the corridors of power in Delhi, and hobnob with its politicians and bureaucrats to squeeze out details regarding companies interested in investing in Gujarat, to be able to get in touch with them and offer lucrative incentives. Companies unsure about investing International Research Journal of Management Sociology & Humanity ( IRJMSH ) Page 549 www.irjmsh.com IRJMSH Vol 6 Issue 1 [Year 2015] ISSN 2277 – 9809 (0nline) 2348–9359 (Print) in Gujarat would be sent personal invitations with a bag of opportunities to think over (Sinha 2005). Private investors were provided with all possible lures, from both supply and demand side. Tax incentives, subsidies, land holdings, power supply, and other infrastructure facilities were put in order by the State. The Chief Secretary and Finance Secretary of government of Gujarat, and Managing Directors of its various State Industrial Development Corporations (SIDCs) would meet weekly over an informal cup of tea in the Gujarat Industry Commissioner’s office to discuss ways of strengthening Gujarat’s investment opportunities. During these discussions, a plan was drawn for gathering “industrial intelligence” for easy dissemination to investors. By 1977, these meetings formalised into Industrial Extension Bureau (iNDEXTb), which sought to coordinate actions of various agencies involved with processing of industrial investments in Gujarat to ensure single window clearance of proposals. Importantly, the “i” and “b” were kept in lowercase to convey that egos and red-tapism of bureaucrats would be kept at minimum (ibid 137). Officials also hit upon a novel idea of hoodwinking a reluctant Centre into giving out licenses to private firms interested in setting up shop in Gujarat. Permissions would be sought for setting up state Public Sector Units (PSUs), which would then be converted into joint sector projects upon partnership with private firms. Gujarat’s leadership and administration made friends with the business class to accelerate the industrial sector, unlike other states that eyed them with suspicion and disdain. As the case of Gujarat State Fertilizer Corporation, the first joint venture in Gujarat shows, the first chief minister Dr Jivraj Mehta, on suggestions of his bureaucrats V. Isvaran and K.R Srivastva, had felt that with some scrutiny “Gujarat industrialists could be trusted in such a venture, given that government-business ties in Gujarat have been cordial” (Erdman 1973:42). The government of Gujarat gave assurances of a free hand to the businessmen to get them to participate in the venture. No unnecessary interference from the government’s side, no compulsory auditing by CAG, or prying by the State. The government’s direct role was kept limited, though it could have dictated control over the management of these enterprises. Partnership with private enterprise roused joint sector units with efficiency to produce superior results. Entrepreneurial ambitions were instilled in the work culture by employing private sector managerial workforce at these units, along with appointing entrepreneurs to Trust Boards. Business acumen and ethics were also encouraged at PSUs by employing former private sector officers at managerial positions. Therefore, the State of Gujarat had been pursuing Capitalist Development through industrialisation on a priority by forging alliance with the capitalist class from the beginning. The State established support for its economic goals by boosting a hegemonic coalition of three socio-economic groups – Gujarat’s foremost economic elites belonging to Brahmin-Bania castes who were erstwhile traders turned industrialists; traditional Patidar farmer capitalists International Research Journal of Management Sociology & Humanity ( IRJMSH ) Page 550 www.irjmsh.com IRJMSH Vol 6 Issue 1 [Year 2015] ISSN 2277 – 9809 (0nline) 2348–9359 (Print) turned agro-based industrialists; and newly turned entrepreneurs of small scale industries. Together, the three groups consolidated their hold over industries, agriculture and the service sector by 1970s in collaboration with, and assistance from an interventionist State. A foresighted State provided support and resources not just to the traditional economic groups in the society but also to lower castes and classes from 1960s onwards. Subsequently, by 1970s, economic nationalism also found legitimacy among the new entrepreneurs arising from ranks of artisans’ castes, some groups of Kshatriya castes, and other lower castes and classes, who moved beyond traditional careers and ventured into chemical and petrochemical industries, to reap advantages of capitalist development and “thus contributing to the creation of the Golden and Silver Corridors of industrial development” in Gujarat (Yagnik and Sheth 2005: 235-236). The State also made these economic groups politically relevant for ensuring their long term commitment towards its goal. Notably, State came in partnership with the market to pursue goals for itself. This was unlike a State-controlled or self-controlled situation. The State would keep a check on private players, but not arbitrarily interfere, to ensure they were contributing to the overall industrial growth of Gujarat and not merely profiteering. The State was in charge charge through its competent bureaucracy composed of meritocrats at the top of their fields. The bureaucracy maintained communication with the capitalists to ensure smooth cooperation, as opposed to having a state- controlled or self-controlled form of relation to stimulate the entrepreneurial instinct of businessmen in directions that would reap benefits for Gujarat’s economy as much as their businesses. Even as the bureaucracy worked ‘autonomously’, it remained ‘embedded’ in the society – to provide institutionalised channels for continuous negotiations over economic goals and policies with capitalists.1 Economic liberalisation in 1991 didn’t reduce relevance of the State and its instruments; on the contrary, they became even more crucial, no longer performing covert operations. Given that it was already in a position of economic vibrancy, Gujarat took full advantage of the reforms. When economic reforms were announced, Gujarat was following its Industrial Policy 1990- 1995. It came up with the New Industrial and Incentive Policy 1995-2000: the Best Now Becomes Better. In 1994, it drew the Gujarat 2000 AD and Beyond plan (Mahadevia 2005: 296). The policies outlined State support to private entrepreneurs in market development, promotion of products, patent registrations etc. Gujarat began giving green signal for Build-Own-Operate- Transfer projects (BOOT), offering concessions