A study sponsored by the Planning Commission shows that Haryana, Gujarat and Madhya Pradesh are the top three industry-friendly states in the country. Orissa is at the fourth position, and Andhra Pradesh the fifth.
Bihar ranks sixth, while Kerala, Rajasthan and Tamil Nadu are in the seventh, eighth and ninth positions respectively. Nagaland, interestingly, ranks 10th. Maharashtra, traditionally considered a favourable destination for industry, is in the bottom five.
Because of the model code of conduct, the government is unlikely to release the report officially, a source in the Planning Commission said.
Among the bottom five states too, two are Congress-ruled (Assam apart from Maharashtra) and two by the BJP (Goa and Jharkhand). The fifth state faring poorly is the Trinamool Congress-ruled West Bengal.
If Maharashtra appears to be losing the race to neighbour Gujarat, the study shows that Punjab needs to perform more to be among the top five while Karnataka is way behind Tamil Nadu.
Barring Nagaland, Northeastern states continue to perform poorly. A Plan Panel official attributed this to difficult geographical terrain and inadequate infrastructure.
The Plan Panel had asked consultancy firm Deloitte Touche Tohmatsu last year to rate states based on certain parameters that would help them improve the regulatory ecosystem for the manufacturing sector. With the World Bank ranking India 132 among 185 nations in overall ease of doing business, a need was felt for states to do more to help industry.
The states were ranked as per their prevailing business regulatory environment, and the variables measured were availability of skilled labour, land and building approvals, pace of environmental clearances, taxation, approvals for infrastructure, and utilities.
The states ranked low are dogged by taxation issues, inflexible labour laws, poor infrastructure, lengthy land and building approvals and slow green clearances.
Deloitte relied only on “secondary information sources and primary interactions with various stakeholders” and not on any in-depth review of the current state government policies. The method employed was the globally recognised ‘Business Regulatory Impact Analysis’.
“Rating of states is aimed at giving a comparative picture on the issues where they need to facilitate the industry,” a senior official of the Planning Commission said, adding that this is expected to help prospective foreign investors make their choices.