'One can't have balanced growth without being inclusive'

Sunil Parekh, corporate advisor and founding curator and mentor of the Global Shapers Initiative of the World Economic Forum (WEF); Reema Nanavaty, Director, Rural Organising and Economic Development, at the Self Employed Women's Association (SEWA); Arun Jagatramka, Chairman and Managing Director, Gujarat NRE Coke Ltd.; B B Swain, Vice Chairman and Managing Director, Gujarat Industrial Development Corporation (GIDC),and Piruz Khambatta, Chairman and Managing Director, Rasna Private Limited, met at the Business Standard Round Table to discuss the topic, 'Gujarat: A Story of Balanced Growth or Inclusive Growth?' The discussion, organised in Ahmedabad, was moderated by A K Bhattacharya. Edited excerpts:

Much has been made of the Gujarat growth model which, for many, translates into an almost parallel growth across agriculture, manufacturing and the industrial as well as services sectors. However, with several counterviews arising against the social development claims made by the state leadership, a need arose to look at the inclusivity of the growth story of Gujarat. The result was a panel discussion that comprised industry representatives, a social activist as well as an industry-social think tank, which debated the presence or absence of inclusive growth as well as its extent in the state of Gujarat.

Held on the topic, 'Gujarat: A Story of Balanced Growth or Inclusive Growth', the round table was inaugurated by the chief guest, Saurabh Patel, cabinet minister for energy and petrochemicals, Government of Gujarat. Part of the round table was the panel discussion that saw panelists debating on various aspects of Gujarat's growth, including the state's noticeable performance in agriculture, manufacturing and services. Also, the experts dwelt on healthcare, education and land acquisition.

  Beginning the discussion was Nanavaty, who gave the bottom of the pyramid a new term - "wheels of the pyramid" - and stated that for balanced and inclusive growth, there was a need to invest in building business organisations run by the poor.

While Gujarat's growth model is widely debated among thinkers and academics, the panel of experts at the round table felt that there was no conflict between balanced growth and inclusive growth in Gujarat's unique growth model.

"There is no 'versus' between balanced growth and inclusive growth. Both coexist. In case of inclusive growth, the popular argument is that (we are) lacking in certain parameters. There have been certain issues in Gujarat but the state government has taken cognizance of these," said Swain while putting forth a government perspective.

Seconding Swain was Jagatramka, who also maintained that balanced growth means inclusive growth. "You can't have balanced growth without being inclusive," he added. For Khambatta too, growth is always meant to be inclusive. However, he added that not just NGOs and the government, but even the private sector was capable of and willing to work towards inclusive growth. "Industry realises that it needs to work in tandem with NGOs and the government towards this. However, we are shifting the emphasis on how the industry can partner with NGOs in building an even more inclusive society," said Khambatta.

On the other hand, Parekh offered a critique on the 'balanced growth versus inclusive growth' debate. He stated that while all three sectors - agriculture, industry and services - growing simultaneously would bring more inclusive growth than when only one of the three is growing, the problem lies in the mindset that economic development in the country is only industrial development.

"Today, the way of development is to help industries grow and collect taxes from them so that you can do more social development. But nowhere does the government make efforts to bring the poor into mainstream economic development," he added.

A major driver of inclusive growth was the empowerment of the backward classes and the introduction of the poor into the mainstream economy. While almost all panelists agreed over the same, few emphasised on how the move could consolidate the state's inclusive growth.

For instance, reiterating her view of empowering the poor and building business organisations run by the poor, Nanavaty emphasised the need for the use of the word 'people' in the current abbreviation of PPP, which stands for public private partnership. "When we talk of PPP, it should be public private and people, and that will foster faster economic growth," she added.

Again, according to Khambatta, it was not only NGOs and government, but even the private sector which thought of involving people in growth. "Today, when industry works directly with farmers, their quality of life gets much better. Even industry also thinks of people. Today we are no longer talking about profit but people," said Khambatta.

The new Companies Bill too has been looking to ensure that corporates talk more about people than profit - through the clause of mandatory spending on corporate social responsibility (CSR) amounting to two per cent of net profit. This also found mention in the discussions, wherein panelists felt that it should not be mandated for ensuring inclusive growth.

For instance, hinting at the new Companies Bill, both Khambatta and Jagatramka agreed that CSR could not be mandated, whereas Nanavaty stated that CSR alone was not going to solve the problem (of lack of inclusive growth). "An integrated approach needs to be taken, such as decentralised skill development, bundling of several amenities such as education, health and credit, and giving equal status in the education system," said Nanavaty.

Continuing the discussion on involvement of people and looking at the welfare of people while working on inclusive growth, Parekh highlighted the need for for overall social development in a state. Offering the example of the tribal population of Gujarat, Parekh said, "Our tribal population is about 25 per cent of the total population and these have been neglected for ages, which in turn brings down the average data on social development, such as the sex ratio or infant mortality rate."

Further, even as the discussion moved towards the land acquisition bill, the panelists agreed that while the situation was better in Gujarat, there was a need for a re-look into the bill due to certain constraints. On his part, Jagatramka agreed that while conversion to non-agricultural (NA) land was a big issue in the past in Gujarat, "in the last five to six years, NA has now been streamlined (in Gujarat) and is better than other states."

Offering the government's view again, Swain said the state government had evolved over a period of time as far as land acquisition was concerned. "Over the last several years, we have evolved into better negotiation of land prices. We have, in fact, begun involving third party agencies to fix prices. We have been relatively successful in forming policy that takes note of fair prices in land acquisition so that another livelihood grows out of that," he added.

Critiquing the land acquisition bill, both Khambatta and Parekh agreed that the bill carried a big negative of not offering a specific time frame for industry. "Land acquisition is necessary but we need to regulate it. While the land acquisition bill is a right decision, it carries a big negative of offering no time frame," said Khambatta, adding that allowing industrialists to work directly with farmers was the best way to ensure fair prices. In Gujarat, however, Parekh pointed out that the process of land acquisition has become "cumbersome and tedious" due to farmers too being "shrewd" in land dealings.

Nanavaty, however, confessed that she told farmers "not to sell their land".

"I advise them to retain their land. Land acquisition by industry is not for employment. It is actually de-skilling the farmers. Earlier he was a farmer, and after selling the land to industry he becomes a labourer. So there was a need for such legislation, but I think unfortunately it has been done very hurriedly," she opined.

The discussion would not have been complete in highlighting inclusive growth without mentioning the education sector, wherein panelists such as Khambatta, Jagatramka and Parekh agreed that at least higher and technical education should be opened up to the private sector.

Meanwhile, Swain and Nanavaty, on the other hand, pointed out that there was an urgent need to invest in teachers' training and attract talented people at all levels of education.

In the end, all the panelists agreed that while there was not much of a difference between balanced and inclusive growth in Gujarat, there were several areas that needed urgent attention if the fruits of growth are to reach all strata of society in the state.