NITI Aayog has released its inaugural Investment Friendliness Index, evaluating 36 states and Union Territories on a scale of 100. No state scored above 60, indicating room for improvement across the board.
Of the states assessed, five—Goa, Gujarat, Maharashtra, Odisha, and Tamil Nadu—achieved scores above 50, earning the designation of “top performers.” Fifteen states were labeled as "frontrunners" with scores ranging from 45 to 50, while eight states fell below 40 and are classified as "aspiring states."
Gujarat led among the 17 large states with a score of 56.6, followed closely by Maharashtra and Tamil Nadu. In the group of 12 hilly and northeastern states, Uttarakhand garnered the highest score of 47.5. Among city states and Union Territories, Goa stood out with a score of 53.1, surpassing Delhi and Chandigarh.
The index incorporates eight pillars: infrastructure, business climate, resources, government policy, regulatory ease, financial health, institutional environment, and environmental resilience. Each pillar has its own scoring system, revealing that while no state excels uniformly across all categories, performance varies significantly by metrics.
Ashok Lahiri, Vice Chairman of NITI Aayog, emphasized that this index serves as a diagnostic tool for states rather than a competitive ranking. It aims to highlight areas of strength and those needing enhancement. For instance, Chandigarh received the highest score in infrastructure with 15 points, while Gujarat excelled in business climate with a top score of 9.4.
Lahiri underscored that while the federal government plays a role in investment facilitation, the onus largely rests on the states to foster an environment conducive to growth, which is vital for achieving the nation’s vision of a developed economy.
Why this story matters
- The index provides valuable insights into investment dynamics across India.
Key takeaway
- States have varied strengths and weaknesses, highlighting the need for targeted improvements.
Opposing viewpoint
- Some critics argue that the index may not fully capture the complexities of state investment climates.
