Gujarat & Delhi Most Investment Friendly; Bihar, Jharkhand Worst

The report released by NCAER evolves an index to rank states on being investment-friendly. 

2 min read

Gujarat and Delhi are India’s most investment friendly states. (Photo: Reuters)

Gujarat and Delhi are India’s most investment-friendly states. Bihar and Jharkhand are the worst. Andhra Pradesh and Tamil Nadu are the most corrupt states for doing business. West Bengal is the most difficult for land acquisition, environmental clearances and approvals.

These are the findings of a recent report, “The NCAER State Investment Potential Index”, released by the National Council for Applied Economic Research (NCAER), which evolved an index to grade states on five main issues: Labour, infrastructure, economic climate, political stability and governance, and perceptions of a good business climate.

The report contains two types of rankings: First, N-SIPI 21, an index that ranks 21 states on the issues above, including through industry surveys; second, N-SIPI 30 which includes all states – including nine not covered by industry surveys – and are based on four issues, excluding perception.

The data reveals that Gujarat tops the N-SIPI 21 index, followed by Delhi and Tamil Nadu, whereas the N-SIPI 30 index is topped by Delhi, followed by Gujarat and Tamil Nadu.

Bihar and Jharkhand fall in the bottom five states in both rankings.

Last week, the Department of Industrial Policy and Promotion listed how Delhi’s ruling Aam Aadmi Party was making it easier to do business, adding that the Centre was working with Delhi and Maharashtra to propel India’s rank into the Top 50 in global ease-of-doing-business rankings.

Corruption: The Biggest Issue Faced By Businesses

As many as 79 percent of industry respondents said corruption was a major issue, followed by approvals before starting business (72.1 percent ) and getting environmental clearances (66.7 percent).

Earlier this year, India was ranked 76 out of 168 countries in the Corruption Perception Index 2015 by Transparency International.

In a recent editorial on crony capitalism, however, The Economist said: “Encouragingly, India seems to be cleaning up its act. In 2008, crony wealth reached 18 percent of GDP, putting it on a par with Russia. Today it stands at 3 percent, a level similar to Australia. The pin-ups of Indian capitalism are no longer the pampered scions of its business dynasties, but the hungry founders of Flipkart, an e-commerce firm.”

Bengal Worst In Land Acquisitions, Environmental Clearances And Getting Approvals

Upto 82 percent of respondents reported that they had problem in acquiring land in West Bengal (WB), whereas only 5 percent reported having any problem in Uttarakhand.

More than half of respondents (54.3 percent) reported that environmental clearances were a “severe” problem in WB; 11.4 percent said it was not a problem.

It was easiest to get such clearances in Himachal Pradesh, with no more than 2.5 percent of respondents reporting it as a “severe” problem, while 87.5 percent said it was not a problem at all.

In terms of getting approvals for business, West Bengal was, again, the worst, with 68.6 percent reporting a “severe” problem; 5.7 percent said it was not a problem. Himachal Pradesh performed the best with no respondent (0%) reporting approval problems.

Andhra Pradesh And Tamil Nadu Report Maximum Corruption Issues

In Andhra Pradesh, 74.3 percent of respondents reported corruption as a “severe” problem; no one (0 percent) in Himachal Pradesh reported corruption as a “severe” issue.

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