The ranking of states by the DIPP and the World Bank was based on how states fared in implementing an action plan adopted by them within a year, and didn’t exactly reflect the business-conducive nature.
Delhi has grabbed the top spot among states in potential to attract fresh investments, while Gujarat slipped two notches from last year to occupy the third position after Tamil Nadu that moved up four places from the last ranking, according to think-tank National Council of Applied Economic Research (NCAER).
The NCAER State Investment Potential Index (N-SIPI) 2018 is based on six pillars – land, labour, infrastructure, economic climate, political stability and governance – and perceptions of a conducive business climate. The survey covered 1,049 industrial units.
Interestingly, on a survey as to whether transition to the GST regime was smooth, 57.9% of respondents in Telangana, 40.5% in Maharashtra and 31.1% in Andhra Pradesh said they faced severe problems, compared with the all-India average of just 13.3%.
Close to 60% of the respondents said they faced no problem in the indirect tax policy transition.
Interestingly, Jharkhand, which was ranked 20th of the 21 states in the NCAER ranking, occupied the fourth spot on the ease of doing business ranking, announced recently by the World Bank and the Department of Industrial Policy and Promotion (DIPP). Delhi has consistently been a poor performer in the ease of doing business index, having occupied 23rd spot in its latest ranking.
However, both are not strictly comparable. The ranking of states by the DIPP and the World Bank was based on how the states fared in implementing an action plan adopted by them within a year, and didn’t exactly reflect the business-conducive nature of states. The NCAER ranking is based on the six pillars that are crucial for potential investments.
Gujarat slipped to the third spot in the NCAER ranking due to not-so-impressive performance in the labour pillar. “One of the driving factors of this trend is large number of contract workers in the labour force,” the NCAER said. While Delhi has topped the chart, helped by good performance in infrastructure and economic climate, it lags in land, labour, governance and political stability.
Telangana grabbed the top spot in the land indicator, Tamil Nadu in labour and governance, Delhi in infrastructure and economic climate and Gujarat in perception of a good industrial climate, according to the NCAER survey.