Vadodara, 11 April 2013

In a battlefield, what do you expect soldiers to do when they find themselves incompetent to fight against an army which is going all guns blazing. They would hope to change their position to some advantage, geographically or strategically. And how do they alter their position amidst incessant enemy fire? They depend on cover fire provided by their team to occupy their enemies while they move. Similarly what does our ruling UPA coalition do to shift the discourse away from their corruption, inept policies and economic mishandling? It uses friendly elements within the media to deflect the attention towards Narendra Modi and Gujarat, bringing up convenient data to defame Narendra Modi.

Eminent media personalities who were floored by Rahul Gandhi’s emotional overtures during the Jaipur Chintan Shivir suddenly find faults with the BJP party workers gathering marking the 33rd anniversary of the BJP. Some deem it not appropriate because the state of Gujarat is going through a drought like situation. But these media personalities were conveniently silent when a Congress MLA from Rajkot organised a rain dance for Holi celebrations and wasted gallons of water! Again, the building collapse in Mumbra failed to draw much outrage or empathy from the media. But hell would have broken loose if such an event occurred in Gujarat!

Certain dailies based in Gujarat have actually made it a habit to portray Gujarat’s success on various fronts in negative light and blame Modi for the illusionary problems. Hit jobs on Narendra Modi are published without fail . Just last week, a story on Gujarat’s alleged failure in tackling Swine Flu was published with a clear intention to ridicule Modi. But on digging deeper, the facts conveyed a totally different story which can be read here.

Now the recent salvo on Modi comes in form of an article in the Times of India from the same author who did the Swine Flu story. But as soon as the story was published, vigilant Twitter folks soon lampooned this piece and came up with a lot of data pointing out the loopholes in this write-up. The author quotes the absolute amount of debt in rupees to portray Modi as being ineffective in tackling debt, yet again veiling the larger picture! Going by the amount of debt, the author claims only two states to have debt more than Gujarat. Now this raises serious apprehensions, because this article in Times of India shows that Maharashtra is numero uno when it comes to the state debt with 2.53 billion. It is followed by Uttar Pradesh with 2.445 billion, West Bengal with 2.115 billion, Andhra Pradesh with 1.53 billion, Tamil Nadu with 1.32 billion and Karnataka with 1.1billion! Now, does this point to an intentional misinterpretation of facts, lack of co-ordination among the staff of TOI or does the staff of TOI not read it’s own paper? Or did the desperateness to vilify Narendra Modi got the better of their senses?

A better and holistic criteria of surveying the debt situation would be to look at the figures Debt as % of GSDP! According to Planning Commission data, when Narendra Modi took over as the CM of Gujarat in 2001-02, the public debt of Gujarat was a whopping 38.78% of GSDP. The Government has been steadily decreasing the debt over the years and the Budget Data shows that revised estimates of Public Debt for 2012-13 were at 19.93% of GSDP. It is amply clear that the Gujarat Government has been phenomenal in reducing the load of debt. Also a major chunk of this debt is due to the Narmada project which is very important for the water needs of Gujarat. While on the topic of debt, it is imperative to discuss the interest on the debt repayment. The Interest payment on the debt as a percentage of revenue receipts also has been on a constant decline, from 26.82% in 2004-05 to 14.52% in 2012-13.

The ratio of total public debt as a percentage of total revenue receipts is considered to be one of the parameters for evaluating the sustainability of debt. As per the review of Fiscal Reform Facility by Ministry of Finance (MoF), a benchmark of 3 for this ratio indicates that the State is highly stressed in terms of debt and debt servicing. In case of Gujarat the total debt to total revenue receipts is showing a declining trend indicating an improved debt sustainability of the State, This ratio dropped from 2.86 in 2004-05 to 1.83 in 2012-13 emphasising that Gujarat’s debt is well sustainable.

While we are at it, it would be interesting to examine the situation at the centre. The Public debt of the Central Government was an astronomical Rs 44,68,714 crore, or 49.8% of the GDP. In contrast Gujarat’s public debt was Rs 1,38,978 crore or 19.93% of GDP. Aren’t these figures a testimony to the jaundiced vision of the media? An IMF Report estimated India’s debt to GDP Ratio as 68.05%, thus making it the highest among the BRIC countries. Further, High debt to GDP ratio tends to dampen the credit worthiness of our economy. Viewing its increasing debt, Fitch had cut India’s outlook to negative from stable in the recent past. So much for the Holier than thou attitude!

The author also says that VAT on petrol is one of the highest in Gujarat and also that it is one of the few states having VAT on fertilizers. These questions were well answered by Gujarat Finance Minister Nitinbhai Patel few days back. He informed that VAT on petrol in Gujarat is 23%, but in Andhra Pradesh it is 31%, in Maharashtra it is 25%, Rajasthan has 26% and Madhya Pradesh has 27% VAT on petrol. Most of the states in the country have provision of 5% VAT on chemical fertilizers, while in Gujarat it’s 5% including all taxes. Not only this but only first phase selling is taxable. Rest of stages in chain are free from taxes. In India only Uttar Pradesh has such provision, other than Gujarat.

Again, the author uses bits and pieces from the CAG report to push his biases. CAG reposrt also notes a lot of positive things about Gujarat, which few seem to be taking notice of. It can be read here.

If the so called well-wishers of Gujarat had focused so extensively on the Indian state of affairs and the economy in general, the story would have been quite different. India wouldn’t have been awaiting a knight in a shining armour to come and rescue it. But these facts also prove literally that Narendra Modi needs to ascend to the Centre to get India rid of it’s enormous debt!

Follow Nirav Shah on Twitter no @Niravshah112