Gujarat

ECONOMIC CHALLENGE FOR CHIEF MINISTERS IN 2012

Achieving Fiscal
Stability

Enhancing State
Competitiveness

• Competitiveness is the only way to achieve sustainable job growth, improving
incomes and stable public finances
• Creating a clear economic strategy for the state that engages all stakeholders is
even more important in times of budget cutting and austerity

HIERARCHY OF MEASUREMENT OF STATE COMPETITIVENESS INDEX

4 Major
Pillars

12 Sub Indices

350* Indicators

* Approximate figure

STAGES OF THE ECONOMY

Innovation Driven Economies (Per capita GDP 900 to
City States (Per capita GDP>1300 USD) 1300 USD)

Transition Economies (Per capita GDP 800 to 900 USD)

Investment Driven Economies (Per capita GDP 500 to
800 USD)

Evolving / Changeover Economies (Per capita GDP 400
to 500 USD)

Factor Driven Economies(Per capita GDP < 400 USD)

STATES ACCORDING TO CATEGORIZATION
Microeconomic Competitiveness
Categorization
Ranks
City States (Per capita Incomes >1300 USD)
Delhi 1
Goa 2
Innovation Driven Economies (Per capita Incomes 900 to1300 USD)
Haryana 1
Maharashtra 2
Gujarat 3
Kerala 4
Transition Economies (Per capita Incomes 800 to 900 USD)
Punjab 1
Tamil Nadu 2
Himachal Pradesh 3
Investment Driven Economies (Per capita Incomes 500 to 800 USD)
Andhra Pradesh 1
Karnataka 2
Uttarakhand 3
West Bengal 4
Chhattisgarh 5
Sikkim 6
Mizoram 7
Meghalaya 8
Arunachal Pradesh 9
Tripura 10
Evolving/ Changeover Economies (Per capita Incomes 400 to 500 USD)
Rajasthan 1
Jharkhand 2
Orissa 3
Jammu and Kashmir 4
Factor Driven Economies(Per capita Incomes < 500 USD)
Bihar 1
Madhya Pradesh 2
Assam 3
Uttar Pradesh 4
Manipur 5
Nagaland 6

Source: Institute for Competitiveness Analysis

NEAR TERM STATE PROSPERITY PERFORMANCE
9
Gross Domestic Product per Capita real growth rate, 2008-2011

Haryana
Low but rising versus India Chhattisgarh
Highly Productive and Prosperity
Bihar Rising versus India
Maharashtra
8
Himachal Pradesh
Uttar Pradesh
Andhra Pradesh

Orissa
7 Karnataka Punjab
Arunachal Pradesh
Sikkim
TripuraUttarakhand
Assam Kerala
Gujarat
Rajasthan

6 Tamil Nadu
West Bengal Goa

Points
Index
57.28
Average
All India
Meghalaya Delhi
All India GSDP
Jharkhand
/Capita rate
5
Mizoram
(CAGR) of 6.27 %
Manipur
Madhya Jammu & Kashmir
Pradesh

All India Average
4
Nagaland of 47,998
Low and declining versus India Rupees/capita
High but declining versus India

3
0 20000 40000 60000 80000 100000 120000 140000

Gross Domestic Product per Capita, 2011

COMPETITIVENESS: UNDERLYING CONCEPTS

• Competitiveness is the productivity with which a state utilizes its
human, capital, and natural resources
• Productivity determines wages and the standard of living – Productivity
growth determines sustainable economic growth
• Productivity depends on how a state competes, not what industries it
competes in
• Innovation in products and processes is necessary to drive productivity
growth
• Only productive businesses can create wealth and jobs. States compete to
offer the most productive environment for business
• The public and private sectors play different but interrelated roles in creating
a productive economy

GUJARAT PERFORMANCE SNAPSHOT
Position Trend

Prosperity

Productivity
Labour Mobilization

State of Clusters

Type of Economy Innovation Driven Top 33.33% of the
states

33.33%-66.67% of
Machinery and Equipment the states
Leading Clusters Minerals
Textiles
Chemicals 66.67% to 100% of
the states

GUJARAT COMPETITIVENESS – OVERALL PERFORMANCE INDICATORS

Prosperity Clusters
Gross State Domestic Product per Capita, 2011 Rank: 3 Total Number of People employed in all Factory sector Rank: 2
• In Gujarat Rs. 64,639 • In Gujarat 11,55,239
• In India Rs. 47,998 • In India 1,15,06,838
• State Difference to India +34.67%. • State Employment to total
India Employment (factory sector) 10.07%
Growth in Gross State Domestic Product per Capita, 2008-11 , (CAGR) Rank: 4
• In Gujarat 6.21%
• In India 6.28%

Productivity Labour Mobilization
Population, 2011 Rank: 2
Gross State Domestic Product per labour force participant, 2011 Rank: 4 • In Gujarat 6,03,83,628
• In Gujarat Rs 1,55,348. • % of India 4.98%
• In India Rs 1,21,265
• State Difference to India +28.11% Population Growth, GAGR, 2001-2012 Rank: 2
Growth in Gross State Domestic Product Rank: 2 • In India 1.61%
per Labour force participant, 2001-11
• In Gujarat 10.43% Employment, 2010 Rank: 2
• In India 8.44% • In Gujarat 23780814
• % India 5.03%
Average Private Wage in 2008-09, Rank: 3
• In Gujarat Rs 68,090 Employment growth, annual rate, 2000-2010 Rank: 1
• In India Rs 64,741 • In Gujarat 2.34%
• State Difference to India +5.17% • In India 2.05%
Private Wage Growth, CAGR, 2000-2009 Rank:2 Unemployment, 2010 (Per hundred People) Rank: 1
• In Gujarat 4.70% • In Gujarat 8.70
• In India 4.53% • In India 9.39

Change in Unemployment rate, 2000-2011 Rank: 1
• % India 41.37

UNDERSTANDING STATE ECONOMIC PERFORMANCE

Gujarat
400000

369431
350000
GSDP at current price at factor cost in Rupees Crore

342962
337217
300000

303734
250000

262723
226897
200000

189118
150000 168080
141534
123573

100000
111139
109861

50000

0
Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11

Source : Institute for Competitiveness Analysis

CONTRIBUTION OF GUJARAT’S GSDP TO INDIAN GSDP

6000000

5000000

4000000

3000000

2000000

1000000

0

Indian GDP


Ratio of
Gujarat's GSDP
to Indian GDP in 6.45 6.19 6.41 6.80 7.14 7.16 7.59 7.56 7.55 7.35 6.86 7.39
Percentage
Terms


WHAT DRIVES STATE PRODUCTIVITY

3. Proper Policy
1. Overall business 2. Stage of Economy enactment and strong
climate conducive to (strong clusters)
rule of law
growth

MODEL USED FOR ANALYSIS

Climate for
Innovation based
local rivalry

• Local rules and incentives that encourage
investment and productivity e.g.
- salaries,
Factor - incentives for capital investments, Demand
Conditions - intellectual property protection
Conditions
• Vigorous local competition i.e.,
- Openness to foreign and local competition;
- Sophistication of company operations

Access to high quality business inputs
i.e., Sophisticated and demanding local
- Natural endowments, customers and needs e.g.,
- Human resources, - Strict quality, safety, and environmental
- Capital availability, Clusters of Related standards
- Physical infrastructure, and Supporting – Consumer protection laws
- Administrative infrastructure, Industries – Government procurement of
- Information infrastructure, advanced technology
- Scientific and technological infrastructure – Early demand for products and
Local availability of suppliers and supporting industries Services.
Presence of clusters instead of isolated firms

Source: Michael E Porter

IMPROVING PRODUCTIVITY IN BUSINESS ENVIRONMENT

Key Issues for States
• More power in terms of tax sharing with center
• Reduce costs of doing business
• Developing training programs which meet the specific needs of the state
industrial clusters
• Focus on infrastructure investments on the most leveraged areas for
productivity and economic growth
• Implementing policies to support small growth businesses

• Enhancing the state’s skill development and training institutions for the same
• Relentlessly improve of the public education system, the essential foundation

GEOGRAPHIC INFLUENCES ON COMPETITIVENESS

• Influence and access federal
Nation policies and programs

• Integrate policies and
Neighboring states infrastructure with
neighbors

States

• Assist each city area in
City Regions developing its own strategy

• Connect rural regions with
Rural Regions urban areas

CONTRIBUTION OF AGRICULTURE SECTOR TO GSDP

400000

350000

300000

250000

200000

150000

100000

50000

0


Ratio of
Agricultural
GSDP in Gujarat
to the total 16.11 14.76 16.29 14.30 17.65 14.65 15.74 15.66 17.00 15.15 15.85 15.86
GSDP in Gujarat
in Percentage
terms


CONTRIBUTION OF MANUFACTURING SECTOR TO GSDP

400000

350000

300000

250000

200000

150000

100000

50000

0


Ratio of
Manufacturi
ng GSDP in
Gujarat to
the total 30.75 29.21 27.51 29.01 28.75 29.59 31.39 32.08 31.62 31.08 31.49 31.58
GSDP in
Gujarat in
Percentage
terms


CONTRIBUTION OF SERVICE SECTOR TO GSDP

400000

350000

300000

250000

200000

150000

100000

50000

0

Ratio of
Services
GSDP in
Gujarat to
the total 42.17 44.14 45.00 44.10 41.66 42.87 40.01 39.90 39.33 41.19 40.08 39.94
GSDP in
Gujarat in
Percentage
terms

COMPOSITION OF GUJARAT’S ECONOMY

Agriculture, forestry
and fishing
16%
Services
40%

Industry
44%


COMPOSITION OF GUJARAT’S ECONOMY

3000000

2549085
2500000
GSDP in Rs. Crore

2000000

1492375
1500000

1000000 924340

500000

163294 147558
58579
0
Agriculture, forestry and fishing Industry Services

Indian contribution
Gujarat’s contribution

COMPOSITION OF GUJARAT’S ECONOMY IN GREATER DEPTH
18

16
Manufacturing

14
Gujarat/National GSDP share (Percent) ,2011

12

10

Mining and quarrying
Electricity, gas and water supply
8 Trade, hotel and restaurant

Agricuture
Fishing Communication
6 Banking and insurance
Transport by other means

Construction
Railways
4 Other services
Real states, ownership of dwellings and
Public administration and defence
business services

Storage
Forestry and logging
2

0
0 2 4 6 8 10 12 14 16 18 20

-2
Change in contribution of GSDP of Gujarat to total Indian GSDP, CAGR (2000-2011)

STATE PRIVATE WAGE PERFORMANCE

160000

140000
Jharkhand Wage Growth
rate 4.53%
Average Wages in Rupees ,2009

120000

Uttaranchal
Orissa
100000 Maharashtra
Goa
Average Wage :
Rupees 64,741
80000 Chattisgarh West Bengal Madhya Pradesh
Haryana Karnataka
Gujarat Meghalaya
Delhi Himachal Pradesh
Uttar Pradesh
60000 Andhra Pradesh
Punjub Tamil Nadu
Kerala Rajasthan
Jammu & Kashmir
Bihar Assam

40000
Manipur

Tripura Nagaland
20000 Low and declining versus India Low but rising versus India

0
0 2 4 6 8 10 12 14
Wage Growth (CAGR), 2001 to 2008
Source : Institute for Competitiveness Analysis, Data as of 2010

LABOUR PRODUCTIVITY

400000
GSDP at Current Prices per labour force participant, 2011

Goa

350000 High but declining versus India Highly productive and Productivity
rising versus India

300000

Points
Index
57.28
e
Averag
India
All
Delhi
All India Average of
250000 8.44%

Haryana
200000
All India Average of of Punjab Maharashtra
Kerala Gujarat
1,21,265 Rupees/Labour Himachal Pradesh
150000 force participant Tamil Nadu
Karnataka Andhra Pradesh
Sikkim
Uttarakhand
West Bengal Chhattisgarh
Mizoram Nagaland
100000 MeghalayaTripura Pradesh
Arunachal Orissa
Rajasthan
Jammu & Kashmir Assam
Madhya Pradesh Jharkhand
Manipur
Uttar Pradesh
50000 Bihar

Low and declining versus India Low but rising versus India
0
5.00 6.00 7.00 8.00 9.00 10.00 11.00 12.00 13.00

GSDP /Labor force participant growth rate(CAGR)

LONG TERM JOB GROWTH

90000000

Uttar Pradesh
80000000

70000000

All India Average of
60000000
2.05%
Number of Jobs, 2011

50000000
Maharashtra

Bihar

40000000
West Bengal
Andhra Pradesh
All India average of
Madhya Pradesh
30000000 1,62,99,464 Jobs Tamil Nadu

Rajasthan
/State Karnataka
Gujarat

20000000 Orissa

Jharkhand
Kerala Assam
Punjab
Haryana
Chhattisgarh
10000000 Delhi
Uttarakhand Jammu & Kashmir
Himachal Pradesh
Nagaland Goa Tripura Mizoram Manipur
Arunachal Pradesh Meghalaya

0 Sikkim

0 0.5 1 1.5 2 2.5 3 3.5

Losing Jobs Job growth rate CAGR, 2001-2010 Gaining Jobs

LONG TERM UNEMPLOYMENT RATE
30
Goa
jharkhand

25

s
Point
Index
57.28
ge
Avera
India
All
Below average Unemployment All India Average of -
20 2.12%
Rajasthan
Unemployment rate 2010

Bihar

Unemployment Rising
15
Unemployment rate
All India Average of Meghalaya

9.39% West Bengal kerala
Gujarat
Punjab MizoramOrissa
Uttar Pradesh
10
Haryana Nagaland
Manipur
Tripura Andhra Pradesh
Madhya Pradesh
Arunachal Pradesh Above Average
Himachal Pradesh Assam Unemployment
Sikkim Maharashtra
Jammu Tamil Nadu
5 Uttarakhand

Chattisgarh

Karnataka Delhi

0
-25 -20 -15 -10 -5 0 5 10 15
Change in Employment rate 1999-2010

NEAR TERM UNEMPLOYMENT RATE

30
Goa
jharkhand

25

Points
Avera

57.28
Index
All India Average of -

India
6.55%

All

ge
20
Unemployment rate 2010

Rajasthan

Bihar

15

All India Average of Meghalaya
West Bengal
9.39% Punjab
Gujarat kerala
Orissa
Haryana 10
Uttar Pradesh
Manipur
Mizoram Nagaland Madhya Pradesh
Arunachal Pradesh
Sikkim Assam
Himachal Pradesh Maharashtra Tamil Nadu
Jammu Uttarakhand
5
Chattisgarh
Karnataka

Delhi

0
-30 -25 -20 -15 -10 -5 0 5 10

Change in Employment rate 2008 to 2010

GROSS AREA SOWN VERSUS IRRIGATED AREA

100000

Madhya Pradesh
Maharashtra
Uttar Pradesh
Rajasthan
Tamil Nadu Karnataka Pradesh
Andhra
Gujarat
10000 West Bengal
Punjab
Chhattisgarh BiharOrissaHaryana
Log of area sown in ‘000 hectares

Assam
Kerala
All India Average Jharkhand
67,41,000 Uttarakhand
1000 Himachal Pradesh & Kashmir
Jammu
hectares

India
All
All India Average
Meghalaya Nagaland
Arunachal Pradesh Tripura 30,03,000 hectares
Goa
100 Sikkim
Mizoram

Delhi

10

1
1 10 100 1000 10000 100000

Log of Irrigated Area in ‘000 hectares
Source: MOA, Institute for Competitiveness Analysis, Data as of 2010

HEALTHCARE
Percentage of Total government Expenditure on Medical, Health

10
Delhi

9

8

7
and Sanitation

6 Goa
Jammu & Kashmir

Uttarakhand
All India Average
5 Manipur
Himachal Pradesh 4.02%
AssamKerala

Meghalaya West Bengal Tamil Nadu
Tripura
Nagaland Uttar Pradesh
Mizoram Rajasthan
4 Gujarat
Sikkim Chhattisgarh Karnataka
Jharkhand Haryana Andhra Pradesh
Madhya Pradesh Maharashtra
Orissa
Punjab Bihar

3

Arunachal Pradesh
India
All

2
All India Average 1633
Crores
1
0 1000 2000 3000 4000 5000 6000

Total Government Expenditure on Medical, Health and Sanitation in Crores

PERCENTAGE OF VILLAGES ELECTRIFIED

120

100 100.0
100.099.7100.098.2 98.2 99.9100.0 100.0 100.0
All India 100 96.9 96.4 96.9 97.3
94.4
Average of 88.3
85.8
88.3
84.96 % 80.8 80.6
80
69.2
64.4 62.6
61.3
59.3
60 56.8 57.2

40
31.1

20

0


TELEDENSITY
140000
Goa

120000
y = 429.3x + 12630
R² = 0.388
Delhi

100000

Haryana

80000
GSDP per Capita

Maharashtra

Gujarat Punjab
Kerala
Himachal Pradesh
60000 Tamil Nadu
Karnataka
Andhra Pradesh
Sikkim
Uttarakhand
Chhattisgarh
Arunachal Pradesh Bengal
West
Meghalaya
Mizoram
Tripura
Orissa
40000
Jammu & Kashmir Rajasthan
Nagaland Jharkhand
Manipur
Madhya Pradesh
Uttar Pradesh

20000

0
50 70 90 110 130 150 170 190 210 230 250

Teledensity
Source: Ministry of telecom, Institute for Competitiveness Analysis

DEBT TO GDP RATIO
West Bengal 42.8 Prescribed limit according to the
Uttaranchal 41.1 growth and stability Pact of EU
Uttar Pradesh 43.5
Tripura 42.2
Tamil Nadu 25.5
Sikkim 80.6
Rajasthan 41.1
Punjab 35.2
Orissa 30.6
Nagaland 59.4
Mizoram 109.1
Meghalya 37.3
Manipur 77.4
Maharashtra 25.1
Madhya Pradesh 34.4
Kerala 34.3
Karnataka 24.3
Jharkhand 33.6
Jammu & Kashmir 70.1
Himachal 55.7
Haryana 19
Gujarat 32.1
Goa 35.5
Delhi 13.8 Prescribed limit according
Chattisgarh 15.2 to WTO for developing
Bihar 39.7 economies
Assam 28
Arunachal 115.9
Andhra 30.1

0 20 40 60 80 100 120


RURAL POPULATION VERSUS RURAL POPULATION GROWTH RATES

4.000

Meghalaya
Arunachal Pradesh Bihar
Manipur Jammu & Kashmir Jharkhand Rajasthan
Mizoram Chhattisgarh Madhya Pradesh Uttar Pradesh
2.000 Assam
Himachal Pradesh
Uttarakhand Orissa Maharashtra
Haryana Gujarat
Punjab KarnatakaBengal
West
Tamil Nadu

0.000 Sikkim

10 100 1,000 10,000 100,000 1,000,000
Growth rate (CAGR 2001-2011)

Nagaland
Goa Thousands
-2.000
Kerala

-4.000

-6.000

Delhi

-8.000

-10.000

Population in Rural areas as per census (provisional Data) in Thousands

Source: Census 2011, Institute for Competitiveness Analysis

URBAN POPULATION VERSUS URBAN POPULATION GROWTH RATES

12

Sikkim
10
Growth rate (CAGR 2001-2011)

8

Kerala

Tripura
6
Nagaland

Haryana
4 Manipur
Uttarakhand
Chhattisgarh
Arunachal Pradesh Andhra Pradesh
Jammu & Kashmir
Goa Bihar Gujarat
Meghalaya Jharkhand Karnataka
Rajasthan West Bengal Uttar Pradesh
Mizoram Assam Orissa Delhi Madhya Pradesh Tamil Nadu
Punjab
Maharashtra

2
Himachal Pradesh

0
0 10000 20000 30000 40000 50000 60000
Thousands
Population in Urban areas as per census (provisional Data) in Thousands

100,000,000
120,000,000
140,000,000
160,000,000

20,000,000
40,000,000
60,000,000
80,000,000

0
151,726
455,962
561,977
529037
313,446
1069165
906,309
551414
573,741
1406861
822,132
1899624
595,036
2368971
960,981
2,710,051
688,704
6167805
3,091,169
7,025,583
3,414,106

9134820
16,333,916
419319
8,821,588

Urban Population in 2011
16531493
5,936,538
19603658
10,387,436
RURAL AND URBAN POPULATION IN INDIA

17,316,800
4,388,756
26780516
7,929,292
25,036,946
15,932,171
17455506
6,996,124

Rural Population in 2011
34,951,234
25,712,811
34670817
23,578,175
37552529
17,080,776
51,540,236
34,949,729
37,189,229
20,059,666
52537899
28,353,745
56311788
29,134,060
62,213,676
11,729,609
92075028
50,827,531
61545441
44,470,455
155,111,022

DEMOGRAPHIC PROFILE IN GUJARAT

5445000

5624000

5651000
6000000

5321000

5283000
5193000

4763000
5000000

4278000

3890000
Population in Numbers

3467000
4000000

2883000
3000000

2257000

1676000
2000000

1236000

932000

627000

494000
1000000

0
0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+
years years years years years years years years years years years year years years years years years


RURAL URBAN AND TOTAL POPULATION

120

Delhi
Urban Population as a percentage of total Population

100 All India Average

India
67.02%

All
80

Goa
Tamil Nadu
Maharashtra
60 Kerala
Mizoram Gujarat
Karnataka
All India Average Punjab Pradesh
Andhra Bengal
West
Haryana
32.98% MadhyaUttar Pradesh
Pradesh
40 Rajasthan
Uttarakhand
Manipur
Jammu & Kashmir
Jharkhand
Nagaland
Chhattisgarh
Tripura
Sikkim
Orissa
Arunachal Pradesh Bihar
Meghalaya
Assam
20
Himachal Pradesh

0
-20 0 20 40 60 80 100 120

-20
Rural Population as a percentage of total Population

Gujarat

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