Performance of Gujarat economy: an analysis of growth and instability

Since the State’s inception, the growth process in Gujarat and its regions has experienced ups and downs in the economic activities. Not much attention is attributed to short term fluctuations in the growth of economic activities as long as the long term growth depicts an upward trend. However, if the short term fluctuations become frequent and adversely affect the long term rate of growth, there is a need for a closer look. Tackling instability acquires importance for improving the lot of small and marginal farmers, who are more affected by spells of bad years. Instability in agricultural production raises risk in farm production, affecting farmers’ incomes and decisions for investments to adopt new technologies. This paper is devoted to looking at the long term macro-economic growth pattern of Gujarat since its inception. It highlights the problem of instability in economic growth – both for the economy and in particular for agricultural sector. The comparative picture of Gujarat in the national economy is presented, together with a discussion on changing structure of Gujarat’s economy from early 1960s to 2008-09. The analysis of instability is also carried out at the sectoral level. Analysis of instability is attempted in terms of structure of the economy. Income is the variable selected for analysis as it is a comprehensive measure of economic activity. For agriculture, the paper opts ‘output’ for the sectoral analysis.