Amid intense poll-time discourse over claims of development in Gujarat, the latest report on the economic freedom of Indian states has revealed that the western coastal state retained in 2013 the No.1 slot it held in 2011. Gujarat also widened the gap with Tamil Nadu, which lost the top rank in 2011, in what could give ammunition to BJP’s prime ministerial candidate Narendra Modi in the electoral sweepstakes.
Bihar continued to languish at the bottom of 20 major states reviewed since 2005 despite “significant” improvement under chief minister Nitish Kumar, showed the latest report on Economic Freedom of the States of India (EFSI).
Madhya Pradesh chief minister Shivraj Singh Chouhan — BJP’s other poster-boy of development — hasn’t been quite successful though, with the state slipping four notches since 2005 and three notches since 2011 to No. 6 last year. Moreover, of the top five states that enjoyed economic freedom the most in 2013, Andhra Pradesh and Haryana were ruled by the Congress for the period under review, while there was an AIADMK-led government in Tamil Nadu.
The report — authored by Bibek Debroy, Laveesh Bhandari and Swaminathan S Anklesaria Aiyar and is a joint effort of the Friedrich-Naumann-Stiftung für die Freiheit, the Cato Institute and the Academic Foundation — is based on an index that factors in three major parameters: Size of the government with focus on expenditures, taxes and enterprises; legal structure and security of property rights; and regulation of labour and business.
Compared with 2005, the sharpest improvement in overall economic freedom scores has been registered by Gujarat (0.19 points), Chhattisgarh (0.11 points) and Andhra Pradesh (0.10 points) – all of which, unsurprisingly, also witnessed faster GDP expansion. The GDP growth averaged 12% in Gujarat, 10.6% in Chhattisgarh and 10.4% in Andhra Pradesh between FY06 and FY12. On the other hand, Jharkhand, Madhya Pradesh, Tamil Nadu, Punjab and Odisha have experienced declines in their index value since 2005.
What contributed most to Gujarat’s top rank in economic freedom was its stellar performance in “regulation of labour and business” in which it has scored 0.87 out of 1, leaving No.2 Tamil Nadu at a far distant 0.51, and retaining its top position since 2005.
“A host of factors have contributed to