Gujarat topped among states in implementing an ‘action plan’ on ease of doing business, with Andhra Pradesh next, and Jharkhand rather surprisingly coming in at third position, according to a World Bank report released on Monday, heralding a system of regular ranking of states in the spirit of competitive federalism. The NDA-ruled states occupied the top six slots.

Outlined in December 2014, the plan, the first in a series, was carried out in earnest by many states during the six-month assessment period (January-June 2015) and improvement was most visible in tax (VAT/CST) reforms, the world body said, but revealed that on average, only 32% of the proposed reforms had been implemented on a pan-India basis.

In enforcement of contracts, one area where India was ranked among the last 10 countries in the World Bank’s own Ease of Doing Business Survey 2015, only 20% of the action plan materialised in the assessment period, although, the bank noted, this was a medium-term objective. But when it came to dealing with construction permits, where again India was found among the 10 most laggard nations, a reasonable improvement was noticed.

It is pertinent to note that this study doesn’t accurately reflect the level of business-conducive nature of the states — rather, it shows how the states fared in implementing the 98-point action plan adopted last December.

So, in the overall ranking, West Bengal came in at a better-than-expected 11th with Tamil Nadu, Haryana and Punjab below it at 12th, 14th and 15th positions. No state got the “leader” tag, which require implementation status of 75% and above (top-ranking Gujarat’s score was 71.14%), while seven states were accorded the status of “aspiring leaders” with scores between 50% and 75%.

Some states had complained that the time frame was too short to resolve legacy issues, and had raised apprehensions of the report being politicised by ‘naming and shaming’ the low-ranked ones. The World Bank report also has a list of ‘good practices’ of all states (irrespective of their ranking), which can be emulated by others, in what could underscore its apolitical trait.

According to the assessment, some states with lower per capita incomes recognise the need to attract investment to create jobs and generate incomes and, therefore, are more willing to undertake reforms to attract investments. Also, in general, states that enjoy higher investment interest may tend to be more interested in implementing reforms.

Onno Ruhl, World Bank country director in India, said the report was not so much about assessment of the implementation of reforms that “hurt” but those that would help SMEs and entrepreneurs to do business easily.

Indicating the political importance of these reforms, he said, “These are reforms that help create jobs and win elections.”

Sunil Kant Munjal, industrialist and past president, CII, said: “Some states could get upset with the report, but they have to accept that it was objective and not aimed at promoting Congress or BJP or the Left parties. States must use the report as a tool to improve. Only a positive approach can help states improve their ranking and attract investment.”

The idea, official sources said, is to help India leapfrog from the 142nd rank (out of 189 countries) that it got last year in the World Bank’s global ease of doing business report to 50th by 2017 with the help of states through a ‘competitive and cooperative’ federalism-approach.

The ranking by the World Bank, completed with the help of consultancy firm KPMG and industry bodies CII and Ficci, and coordinated by the department of industrial policy and promotion and synchronised with the Modi government’s Make in India campaign, was based on eight specified parameters. Apart from tax reforms, contract enforcement, land allotment and grant of construction permits, these included (ease of) setting up of business, infrastructure (electricity, water and sewage), labour reforms, procedure for environmental clearances, etc.

An interesting finding is that although World Bank’s famed global Ease of Doing Business Report takes into account only Delhi and Mumbai in India (as they are the biggest cities), Delhi (ranked 15th with an implementation status of 37.35%) and Maharashtra (where Mumbai is located, and ranked 8th with an implementation status of 49.43%) were nowhere near the top destinations in India where it is easy to do business.

After the bank’s report gave India a very low ranking, the government had taken up with it the issues regarding the imperfections in the global report. “This shows that the largest centres are not necessarily the best place to do business. This is even more interesting than the bank’s report. It is well recognised by us that if you pick just two big cities, there will be imperfections,” Ruhl said.

While Gujarat, Andhra Pradesh, Jharkhand, Chhattisgarh, MP, Rajasthan and Odisha were placed in the “aspiring leaders” category, these were followed by the “acceleration required” group (with 25%-50% overall implementation status), which had states including Maharashtra (ranked overall eighth), followed by Karnataka, UP, West Bengal, Tamil Nadu, Telangana, Haryana, Delhi and Punjab.

Bihar, which is going for assembly polls next month, was ranked a poor 21st, while states that are otherwise progressive based on human development index/literacy/gender ratio criteria such as Kerala (18th), Puducherry (20th), Himachal Pradesh (17th) and Goa (19th) were also ranked low. All these states had an implementation status of below 25% and, therefore, were placed in the “jump start needed” category.