World Bank ranks Gujarat India’s most investor-friendly state

Investor-friendly Prime Minister Narendra Modi's home state Gujarat is also the most investor-friendly state in India, according to the first-ever such ranking by the global financial institution.

The first ever ranking of states on the ease of doing business in India was based on the implementation of 98-point reform agenda over a six-month period.

States were assessed on the implementation of business reforms agreed between the central government's department of industrial policy and promotions and state and union territory governments on 29 December 2014.

However, it turns out that the largest recipients of foreign investments, Maharashtra and Tamil Nadu, are ranked eighth and twelfth with less than 50 per cent scores on reforms implementation.

State chief secretaries participating in the `Make in India' workshop inaugurated by Prime Minister Modi in New Delhi last December finalised this action plan on `Ease of Doing Business'. It was later decided to evaluate states to assess progress by June 2015.

BJP-governed states dominate the top ranks:

• Gujarat implemented 71.14 per cent of the reforms, according to the assessment.
• Andhra Pradesh came second with a score of 70.12 per cent,
• Jharkhand third at 63.09 per cent,
• Chhattisgarh fourth with 62.45 per cent and
• Madhya Pradesh fifth with 62 per cent.

The largest recipients of foreign investments, Maharashtra and Tamil Nadu, are ranked eighth and twelfth with less than 50 per cent scores.

''The rankings reflect the ease of doing business in these states by the small and medium enterprises rather than foreign investors,'' said World Bank country director Onno Ruhl.

The Department of Industrial Policy and Promotion, the Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry (CII) and KPMG were involved in the exercise.

The rankings of states will be released annually.

''It is expected that investments will begin to flow to states that make it easier to do business, seeing which low-rank states could be encouraged to take up reforms,'' said former CII president Sunil Munjal at the release of the report.

The report was based on reforms in eight key areas, including the setting up of a business, allotment of land and obtaining construction permit, complying with environment procedures, complying with labour regulations, obtaining infrastructure-related utilities, registering and complying with tax procedures, carrying out inspections and enforcing contracts.

States made good progress in terms of tax reforms, the report stated:

• Punjab emerged the best performer in the category 'setting up a business'
• Maharashtra in 'obtaining infrastructure-related utilities'.
• Madhya Pradesh topped 'allotment of land and obtaining construction permit'
• Karnataka in 'registering and complying with tax procedures'.
• Gujarat was assessed as the best for 'complying with environment procedures'.
• Jharkhand is the best in two categories: 'carrying out inspections' as well as 'enforcing contracts'.

''While the World Bank has been working for many years with officials of the Government of India, this gained traction only in the last one year thanks to the political commitment coupled with renewed efforts of officials of Central and State governments to make India an easy and simple place to do business,'' said  Ruhl.