Most of us are aware of the remarkable things going on in Gujarat by way of public administration. From this, we tend to jump to the conclusion that things are going well by way of investment in Gujarat.
Writing in Mint today, Salil Tripathi makes some important new points. He looks at the time-series of investment `under implementation', organised as percentage shares of various states, that's tracked by CMIE.
His main finding is that Gujarat was a leader in investment -- in 1995. The violence in 2002 led to a sharp and dramatic drop in investment. In the last three years, there has been some pullback from the depths, but only partly. While Gujarat has strong public goods in some dimensions, it has paid a high price and continues to pay a high price for weaknesses on the most important public good of all: law and order.
Chief Ministers across India are hearing stories about the remarkable things going on in Gujarat by way of public administration. There is a lot that other states can and should learn from Modi's Gujarat on these fronts. But the most important lesson that they should learn is that law and order is the most important public good of all. When a government falters on the safety of life and property, this induces large and sustained penalties by way of lost economic growth.