Andhra, Telengana on top but investments paint a different picture

Andhra Pradesh and Telangana shared the first slot and Gujarat came second in the list of states in implementing reforms under the Centre’s ease of doing business initiative in the latest review period, according to the ranking released on Monday by the World Bank and the department of industrial policy and promotion (DIPP).
NDA-ruled states occupied as many as eight of the top 10 slots in implementing reforms on the 340 issues flagged jointly by the states and the DIPP in the year through June, compared with seven last year.
Delhi, the more important of the two destinations — the other is Mumbai — the World Bank surveys for ranking India among other nations in ease of doing business, scored a meagre 47.62% in the latest ranking of 36 states and Union territories, trailing even the national average of 48.93%. Its rank also worsened from 15 last year to 18 now. This stokes fears that India’s low rank in the World Bank’s ease of doing business index (it was placed at 130 of 190 countries in the latest ranking) may have been partly caused by the multilateral body’s choice of Delhi as the most important survey destination in the country. Delhi accounts for 53% of the World Bank’s ease of doing business index weight (for the ranking of India).
Importantly, Karnataka — which saw its ranking worsen in 2016 and is now placed at 12, compared with 9 last year — has received investment proposals the most. According to DIPP data, Karnataka has received almost 41% of the country’s total investment proposal value of R2.9 lakh crore between January and August this year, up from 10.2% in the entire 2015 calendar year. By contrast, Haryana, which improved its ranking in ease of doing business from 14th last year to 5th this year, barely attracted any investments (just 0.4% of the country’s total investment proposal value from January to August, compared with 0.9% in 2015).
This is because the ranking in ease of doing business is an assessment of how the states fare in implementing an action plan adopted by them with the help of the Centre within a particular time-frame. So it doesn’t accurately reflect the level of business-conducive nature of the states.
Interestingly, the World Bank noted that four of the seven states with the lowest income levels in India have grabbed a place in the top 10, while all seven of them showed an reform implementation rate of over 75% this time. These low-income states that have scored well in implementing the reforms are: Chhattisgarh (at number 3 with 97.32% score), Madhya Pradesh (fourth position with 97.01% score), Jharkhand (96.57% and sixth rank), Rajasthan (96.43% and seventh rank), Odisha (92.73% and 10th position), Uttar Pradesh (84.52% and 13th position), Bihar (75.82% and 15th rank).
Commerce and industry minister Nirmala Sitharaman said: “While last year only seven states had implemented over 50% of the total reform points (98 points in total) and no state had an implementation percentage of over 75%, this year saw 17 states crossing the 50% implementation mark and 16 states have an implementation percentage of over 75%.”
This time, the 340 issues — flagged jointly by the states and DIPP, for implementation — cover areas such as construction permit, environmental registration, labour regulations, obtaining electricity connection, online tax-returns filing, inspection reforms, access to information and transparency, single-window facilities, land availability and commercial dispute resolution.
The ranking of states this time has been done solely by the World Bank, and the DIPP assumed the role of a facilitator between the bank and states. Last year, when states were ranked for the first time, DIPP, industry chambers CII and FICCI, and consultancy firm KPMG — apart from the World Bank — were involved in the rigorous exercise.
Separately, Junaid Ahmad, the World Bank’s new country director for India, said the implementation of the goods and services tax regime (from April 1, 2017) and the insolvency and bankruptcy code will augur well for India’s ranking in the years to come.

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