To allay fears that the ranking of states on ease of doing business could lead to “naming and shaming” of lower-ranked states and politicisation of the exercise, the Centre has decided to appreciate even the relative underperformers in the overall ranking by giving them the status of ‘hand-holders’ in areas where they follow best practices.
Such states will in turn be asked to hold workshops to help the others adopt these best practices, commerce and industry ministry sources told FE, adding that “the exercise is not about choosing winners and losers, but instead to create a win-win outcome for all”.
The Department of Industrial Policy and Promotion (DIPP), which is coordinating the exercise, wants to institutionalise the ranking. To maintain neutrality, the DIPP has given the inputs received from states to a team comprising representatives from the World Bank and consultancy firm KPMG. The ranking is expected to be out this week.
Some states/union territories have declined to respond citing law and order problems (eg: Mizoram) and lack of sufficient data (Lakshadweep). However, it is learnt that state governments, including that of Bihar (which incidentally is going for polls next month), have concerns that they could be ‘named and shamed’ if they are ranked low, and have therefore called for a level-playing field. They have informed the Centre that the challenges they face are legacy issues that would take a long time to resolve, adding that a few months given to them prior to the exercise was therefore insufficient as a preparatory period.
The states are being ranked on areas including setting up a business, allotment of land and obtaining construction permit, complying with labour and environment procedures, obtaining infrastructure-related utilities, tax procedures, carrying out inspections and enforcing contracts.
The idea is that once the spirit of ‘competitive federalism’ is established through this exercise, it will help India in improving its ranking in the World Bank’s Ease of Doing Business report. India is now ranked a low 142nd among 189 nations. The Modi government wants India to be in the top 50 within the next few years.
In an interview to FE last month, DIPP secretary Amitabh Kant had said: “Whatever the legacy issues are, the 98 points (for ranking the states) were all accepted by the states. They were to complete their actions against those points by July and give their reports.”
The report of a similar exercise done during the UPA regime, which was published just prior to the general elections last year, has resulted in a huge controversy as it mentioned ‘land related interventions and implementation of e-Governance in pollution’ in Gujarat (a BJP-ruled state with Narendra Modi at the helm) as among the six select best practices. The Centre then tried to downplay it saying it had nothing to do with the study.