Source: Business Standard


The report has been prepared by known policy expert Bibek Debroy of the Centre for Policy Research, Laveesh Bhandari, Indicus Alaytics, Swaminathan S Anklesaria Aiyar, the Cato Institute and Ashok Gulati, Commission for Agricultural Costs and Prices, Government of India.


"Delighted! Gujarat emerges as top state in the Economic Freedom Rankings for the States of India 2012," Gujarat Chief Minister Narendra Modi said on Twitter. The report was released by the Center for Global Liberty and Prosperity, Cato Institute in collaboration with Friedrich-Naumann Stiftung, in Hong Kong on Wednesday.


The aim of this report is to measure the level of economic freedom within India. Twenty states of India were included in the study for which data was available. It has been able to establish a strong empirical relationship between economic freedom and prosperity, growth, and improvements in the whole range of indicators of human well being.


The economic freedom Index is based on the three parameters -- size of the government, legal structure and security of property rights, and regulation of business and labour. The Index shows the direct correlation between economic freedom and the well-being of citizens. 


States in India which are economically more free are also doing better in terms of a higher per capita growth for its citizens, unemployment levels are lower in these states, sanitary conditions are better and the states also attract more investments.


"Gujarat has shown a remarkable increase... has moved up from 5th position in 2005 to become India’s top state in economic freedom today. However some other states have slipped back, the worst performer being Jharkhand. Bihar has improved significantly but remains last in the table," the report stated.


"The ratings reflect that as Gujarat leaves behind its sordid past of communal violence and destruction, other states are unable to improve security of life and property in the manner required," the report further stated, adding that Gujarat has seen significant improvement in its regulation of labour, and business index values and has retained its pre-eminent position. 


"The overall ratings are a simple equal weighted average of the three ratings and the top three states are Gujarat, Tamil Nadu and Madhya Pradesh. Gujarat has significantly improved in its rating mainly driven by better legal and regulatory performance," the report said.