22

Oct

Gujarat: Cracks in the Model Of Economic Growth, Good Governance

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Prof Shivaji Sarkar

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New Delhi | Wednesday | 22 October 2025

Gujarat — the state long showcased as India’s model of prosperity and governance —  recently witnessed a political tremor. Sixteen ministers abruptly resigned, paving the way for the induction of 25 new faces, including 12 first-time MLAs. The reshuffle, executed with characteristic swiftness, signals deep undercurrents beneath the surface sheen of stability and success.

For a party like the BJP, which prides itself on discipline and continuity, such a sweeping shake-up is unusual. In a state considered its ideological bastion, this “Diwali clean-up” has raised questions: is it simply administrative renewal — or an attempt to douse simmering dissent and anti-incumbency?

The decision to overhaul the cabinet, announced on October 16, left Chief Minister Bhupendra Patel as the lone survivor of his earlier team. The move, insiders suggest, is aimed at tackling bureaucratic inefficiencies, rebuilding public trust, and reenergising the government ahead of local body elections. It also aligns with the local belief that the fortnight following Diwali is inauspicious for major changes — hence the rush to act before the festival.

 Rise of a New Power Centre

Among the new power brokers is Harsha Sanghavi, a Jain leader and one of Gujarat’s youngest deputy chief ministers. His elevation to the home ministry — traditionally held by the CM — underscores his growing clout. Sanghavi becomes the sixth deputy CM since the Chimanbhai Patel era, a sign that political balancing remains essential even within Gujarat’s tightly managed BJP apparatus.

 

Article at a Glance
Gujarat, long hailed as India’s model of prosperity, has seen a major political upheaval with 16 ministers resigning and 25 new faces inducted in a cabinet reshuffle led by CM Bhupendra Patel. The move, dubbed a “Diwali clean-up,” aims to revive efficiency, counter dissent, and rebuild public trust amid rising scandals and inequality.
Despite Gujarat’s industrial dominance — contributing heavily to India’s exports, petrochemicals, and MSMEs — deep social and economic divides persist. NITI Aayog data reveal 38% undernourishment, 23% poor housing, and widening rural-urban inequality, with thousands of MSMEs shutting down. Corruption scandals, such as the ₹71-crore MGNREGA fraud and the Vadodara bridge collapse, have dented the government’s image.
The state’s paradox — economic brilliance versus human deprivation — exposes flaws in the “Gujarat Model.” Experts warn that unless growth becomes inclusive, investing in health, education, nutrition, and jobs, Gujarat’s success may turn into a cautionary tale of development without equity.

 

Trouble Beneath the Shine

While Gujarat consistently tops national indices on industrial strength, fiscal prudence, and infrastructure, recent data reveal a troubling paradox. The Reserve Bank of India reports that Gujarat, along with Madhya Pradesh, has the lowest daily wage levels in the country. NITI Aayog’s human development indicators tell a similar story — prosperity for some, precarity for many.

Several recent controversies have exposed cracks in the “Gujarat Model.” The most damaging involved a ₹71-crore scam in the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme in Dahod district. Investigators allege that funds were siphoned off using fake documents. The scandal exploded when the sons of Minister Bachubhai Khabad, then Minister of State for Panchayat and Agriculture, were arrested as key accused. The case dented the government’s image and became a symbol of its administrative drift.

Earlier, in July 2025, tragedy struck Vadodara when a section of the Gambhira bridge collapsed, killing 22 people. Locals said their repeated warnings were ignored for years. Four engineers were suspended, but accountability questions lingered.

The BJP’s troubles are not limited to governance. Internal squabbles have surfaced publicly. On October 14, two party legislators came to blows over a road construction dispute in Neelwai, Mancherial district. The spat, captured on camera, embarrassed the leadership and reportedly hastened the reshuffle.

Gujarat’s Economic Might

There is no denying Gujarat’s industrial dominance. It contributes over one-third of India’s chemical output and 62 percent of petrochemical production. With hubs like Kandla, Mundra, and Dahej, it handles 40 percent of India’s cargo and 30 percent of exports. More than 33 lakh MSMEs power its economy, providing jobs and sustaining exports.

In 2023–24, Gujarat emerged as India’s top destination for bank-funded industrial projects — a sign of continued investor faith. The state’s efficient ports, pro-business policies, and infrastructure have turned it into a manufacturing powerhouse.

The Other Gujarat

Yet, the other side of this success story paints a starkly different picture. According to NITI Aayog’s Multidimensional Poverty Index, nearly 38 percent of the population remains undernourished. In rural Gujarat, nearly half of residents suffer from nutritional deprivation — a staggering statistic for a state celebrated as India’s growth engine.

The same data show that 23.3 percent of Gujaratis live in inadequate housing, particularly in Dahod, Narmada, and Chhota Udepur — districts bypassed by the industrial boom. In contrast, cities like Surat and Ahmedabad boast some of the highest per capita incomes in India. The inequality between urban affluence and rural neglect has never been sharper.

The report also revealed the closure of 7,269 MSMEs over the last five years, leading to over 33,000 job losses. Migration from rural regions continues unabated as labourers seek work in industrial zones or other states.

Growth Without Inclusion

While Gujarat’s poverty intensity has fallen over time, it still trails states like Telangana, Maharashtra, and Tamil Nadu in poverty headcount ratios. The benefits of industrialisation have not percolated evenly. Jobs in the formal sector remain limited, and wage disparities persist.

The labour market, though active, is marked by informality and low social protection. The mismatch between industrial prosperity and human development reflects a policy imbalance — one tilted toward production and away from people.

The “Convoluted” Model

The Gujarat paradox lies in its duality: economic brilliance coexisting with human deprivation. The state’s success in manufacturing, logistics, and exports contrasts with underinvestment in health, education, and welfare.

As NITI Aayog’s Sustainable Development Goals (SDG) Index highlights, Gujarat performs strongly in “Industry, Innovation and Infrastructure” but lags on “Zero Hunger” and “Good Health and Well-being.” These disparities reveal that economic expansion alone cannot guarantee social equity.

Lessons and the Road Ahead

For Gujarat, the challenge ahead is not about building more factories or highways — it is about building human capital. The state’s fiscal surplus and industrial prowess need to be redirected toward improving nutrition, healthcare, housing, and education.

The Bhupendra Patel government’s reshuffle may provide short-term administrative relief, but it will not bridge Gujarat’s deeper divides. Unless governance focuses on inclusive growth, the “Gujarat Model” risks becoming a cautionary tale of success without substance.

The state that prides itself on being India’s growth laboratory must now also become a laboratory for social equity. That means expanding rural healthcare, strengthening nutrition programs, creating more quality jobs, and ensuring that prosperity is not limited to the ports and industrial corridors.

Gujarat’s story remains one of paradoxes — where expressways and undernourished children coexist, and where political stability masks social fragility. The great reshuffle, for all its symbolism, may only be the beginning of a more profound reckoning with the state’s unfinished development agenda. ( A senior journalist and media activist , Prof Shivaji Sarkar specialises in financial reporting)

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