India's most Competitive States 2013

20 In detail City-states

DELHI

Performed well at an aggregate level on demand conditions, reflected by income distribution and demographic spread.

Performed exceptionally on macroeconomic factors, reflected in its innovation capacity and competitive intensity, which help breed a diversity of firms.

Per capita GDP

1,761

996

Microeconomic competitiveness

Factor conditions

Institutional support

65.18

Business incentives

Supplier sophistication

Financial

63.67 67.58

54.85 Related and supporting industries

Institutional support

Physical

50.61 55.92

53.16

91.60

85.92

Communication

51.46

CI and diversity of firms

60.21

20

40

Context for strategy

Human capacity

60

80.54

60.38

70.46

80

Demographics

Administrative

67.04

46.85

71.53

Income distribution and spending pattern

Related and supporting industries

69.94

Business 76.37 incentives

94.88

58.32

85.63

89.82

80

Innovation Demand conditions

100

B Y R EMYA N AIR, N IKITA M EHTA A SIT R ANJAN M ISHRA ·········································

I

ndian vice-president Hamid Ansari summed up how important it is for the country to bridge the disparities between various states of the Union.

“There should be no doubt in anyone’s mind that India can only realize its destiny of emerging as a modern, developed nation-state when all its sub-national units and peoples, irrespective of caste, religion, ethnicity, language or origin, are included in and benefit from the country’s growth story,” Ansari said.

The vice-president made his point in a speech at the Mint state competitiveness awards event in New Delhi on 26 June.

The awards, based on a report by the Institute for Competitiveness, India, were conferred on 13 states across various categories. Chief ministers and other state representatives received the awards from Ansari.

The Institute for Competitiveness, based in Gurgaon, is an affiliate of the Institute for Strategy and Competitiveness at the Harvard Business School started by Professor Michael Porter.

The report compares states with similar per capita gross domestic product to assess their competitiveness. It looks at factors like availability of land, labour and capital, the role played by the governments in facilitating businesses and the profile of consumers in each state to evolve a state competitiveness index.

The report stresses that the 28 Indian states, with their varied demography, sizes, natural resources and

Per capita GDP

738

Factor conditions

Institutional support

65.23

Institutional support

Financial

65.47

Supplier sophistication

62.57

Related and supporting industries

54.75

Physical

CI and diversity of firms

Communication

58.10

20

104.78 55.72

57.47 56.60 60

Demographics

Human capacity

Innovation

56.05

Business incentives CI and diversity of firms

Physical

63.87 Communication

56.81

55.76 71.42

61.20

20

55.29

Human capacity

57.15 56.22 60

80

Demographics

100

Administrative

56.66

40

Context for strategy Income distribution and spending pattern

Demand conditions

100

Financial

67.13

67.79

63.59

79.97

80

Income distribution and spending pattern

Administrative

56.65

40

Factor conditions

69.42

61.46

44.26

63.61

70.51

Related and supporting industries

65.46

74.11

Microeconomic competitiveness

Innovation Demand conditions

112.74

HOW THEY FARE

Changeover economies (per capita Income US$400-525)

RAJASTHAN

Performed strongly in administrative and infrastructure development and has strong economic clusters.

Ranking of states across the various categories:

Gujarat

Goa

Andhra Pradesh

Punjab

Kerala

Microeconomic competitiveness Institutional support

Delhi

53.27

56.47

Microeconomic competitiveness

58.38

57.38

53.38

62.53

Related and supporting industries

56.11 Physical

48.73

69.57

CI and diversity of firms

Communication

53.80

54.15

61.20

20

61.86

59.85

40

54.79

Context for strategy Income distribution and spending pattern

Administrative

57.01

60

55.90

55.90

Human capacity

80

Demographics

Business incentives

63.67 45.81

CI and diversity of firms

54.74

Strategic intent backed by business incentives propel growth, reflected through its corporate diversity.

58.26

Financial

63.60

100

Innovation Demand conditions

58.88 55.43

62.76

Physical

87.99

Financial

54.52

Related and supporting industries

Communication

57.07

58.23

57.65

60

61.06

80

Demographics

Administrative

57.88

40

Human capacity Innovation

100

Demand conditions

Factor-driven economies: These economies focus on low-cost basic factor conditions, such as low-skilled labour, natural resources and geographic location.

Changeover economies: These economies are in transition stage and can easily move up by making clear policies for attracting more investments and focusing on efficiency improvements in producing goods and services to boost growth.

58.55

58.37 57.15

56.36

Business incentives

Physical

64.25

57.80

53.00

20

Factor conditions

55.26

60.00

CI and diversity of firms

Microeconomic competitiveness

Supplier sophistication

64.42

Income distribution and spending pattern

Demographics

Institutional support

Factor conditions

67.83

Context for strategy

Human capacity

80

852

Institutional support

75.37

51.21 57.12

Per capita GDP

Microeconomic competitiveness

Business incentives

60

Proactive in granting business incentives, backed by demand conditions that have resulted in an encouraging environment for business.

1,001

Related and supporting industries

55.32

PUNJAB

Per capita GDP

82.18

Administrative

55.82

40

58.93

Context for strategy

59.07

20

Transition economies (per capita income US$800-925)

GUJARAT

Supplier sophistication

Communication

59.11

Demand conditions

Innovation driven economies (per capita income US$925-1,300)

Physical

67.37

63.27

Income distribution and spending pattern

Innovation

100

Financial

88.92

59.75 63.38

67.94 56.26

Related and supporting industries

55.97

57.04 Business incentives

Supplier sophistication

Financial

Supplier sophistication

Factor conditions

Institutional support

Factor conditions

Institutional support

70.26

CI and diversity of firms

Communication

61.74 53.55

20

64.03 57.88

Context for strategy

56.10 56.66 60 57.27

Human capacity

80

Income distribution and spending pattern

Administrative

56.21

40

Demographics

100

Innovation Demand conditions

Changeover economies (per capita income US$400-525)

MADHYA PRADESH

Strong human capacity and factor conditions and good overall business incentives.

Jammu and Kashmir

Manipur

Bihar

Per capita GDP

56.76

57.55

60

80

Demographics

100

57.15

Haryana

Himachal Pradesh

Tamil Nadu

Chhattisgarh

Sikkim

Karnataka

Meghalaya

Madhya Pradesh

West Bengal

Jharkhand

Uttar Pradesh

Assam

Nagaland

Microeconomic competitiveness

57.96

1 1

2 2

1 1

2 4

3 2

4 3

1 1

2 2

3 3

1 1

2 2

3 7

4 3

5 4

6 9

7 5

8 8

9 10

10 6

1 1

2 2

3 3

4 7

5 4

6 5

7 6

1 1

2 2

3 3

Microeconomic competitiveness Factor conditions

1

2

2

3

1

4

3

2

1

3

1

2

8

6

7

5

10

9

4

2

5

7

3

4

1

6

2

3

1

Demand conditions

Context for strategy

1

2

1

2

3

4

1

2

3

2

1

3

5

8

4

9

6

7

10

1

3

4

2

6

5

7

1

3

2

Context for strategy

Demand conditions

Related and supporting industries

3

Related and supporting industries

2

1

1

2

3

4

1

3

2

2

1

4

5

3

7

8

10

9

6

1

3

2

5

4

6

7

1

2

Financial

51.74

Related and supporting industries

54.85

55.16

54.61

Business incentives

56.74 Communication

52.82

57.00 52.69

54.57

20

54.85

Administrative

59.17

40

54.13

57.56 60 55.84 80

Income distribution and spending pattern

Physical

51.00

52.88

Context for strategy

Human capacity Innovation

Factor conditions

Supplier sophistication

CI and diversity of firms

Administrative

58.01

40

Factor conditions

Demand conditions

55.68

20

56.37

Maharashtra

Communication

57.04

58.92

Income distribution and spending pattern

Physical

50.22

53.82

Context for strategy

Microeconomic competitiveness

Microeconomic competitiveness

Odisha

Rajasthan

1,901

Institutional support

56.41

55.62

CI and diversity of firms

Tripura

Per capita GDP

334

Factor conditions Financial

Supplier sophistication

Business incentives

Arunachal Pradesh

Mizoram

Well-built infrastructure, backed by financial capacity and institutional support, are Goa’s main assets.

401

519

59.16

Uttarakhand

GOA

Per capita GDP

Investment-driven economies: Investment-driven economies have the ability to produce standard products and services of high quality using efficient methods but at lower wages than advanced economies.

Transition economies: These economies are very efficient in producing goods and services but need to move toward production of more innovative products.

Innovation-driven economies: These economies focus on innovative products and services at the global technology frontier.

City-states: These are more cities than states and their dynamics are different from other states. They are at an advanced stage of development and have high per capita gross domestic product (GDP).

Per capita GDP

Related and supporting industries

Exceptional human capacity, strong physical infrastructure and offers great incentives for business.

income levels cannot be compared without accounting for such differences. To this effect, states are categorized under various categories starting from factordriven economies—states like Uttar Pradesh and Bihar with most basic level of development with per capita gross domestic product (GDP) levels of less than $400 to city-states like Delhi and Goa that have a per capita GDP of more than $1,300.

The other categories of states include changeover economies under which states such as Madhya Pradesh and Rajasthan, having a per capita GDP of $400-525, are grouped. A large number of the Indian states, however, are categorized under investmentdriven economies where per capita GDP levels vary between $525 and $800. States such as Andhra Pradesh and Karnataka are among these.

States such as Punjab and Tamil Nadu that have a moderately high level of development are termed transition economies. States under these categories have per capita GDP levels of $800-925.

Innovation-driven economies are states with a high levels of per capita income of $925-1,300. States with hubs of industrial activity like Maharashtra, Haryana and Gujarat fall under this category. With a majority of the Indian states still lagging behind on many social and economic indicators, the governments—both at the states and the centre—will have to take steps to improve infrastructure, generate jobs, revamp the education and healthcare systems and step up the quality of governance to meet the growing aspirations of the country’s population, says the report. remya.n@livemint.com

&

NEW DELHI

Exemplary performance on physical infrastructure, innovative capacity and depth of firms because of strong economic clusters.

Microeconomic competitiveness

Context for strategy

Human capacity

ANDHRA PRADESH

844

74.52

57.28 6057.80

City-states

UTTAR PRADESH

India is a nation of 28 states and seven Union territories marked by wide disparities in the size of their economies, pace of growth, demographics and depth of resources.

The State Competitiveness Report, a joint effort by MintAsia and the Institute of Competitiveness, India, measures and ranks states on parameters that are critical for the Indian economy, examines what makes some states more successful than others and what the laggards need to do to catch up

Administrative

56.21

40

Per capita GDP

Business incentives

58.88

20

CI and diversity of firms Context for strategy

Communication

58.58

Investment driven economies (per capita income US$525-800)

Exceptional hard and soft infrastructure backed by overall institutional support.

87.43

Physical

77.35

Demographics

TAMIL NADU

Supplier sophistication

64.68 55.70

Demand conditions

Transition economies (per capita income US$800-925)

Factor conditions Financial

69.34

90.97 68.28

Income distribution and spending pattern

Innovation

100

Microeconomic competitiveness

Factor driven economies (per capita income < US$400)

INDIA’S MOST COMPETITIVE STATES

MAHARASHTRA

Per capita GDP

GRAPHICS BY NAVEEN KUMAR SAINI/MINT

COMPETENCE GAUGE

Innovation driven economies (per capita income US$925-$1,300)

Supplier sophistication

21 mintasia

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Demographics

100

54.80 Human capacity Innovation

Demand conditions

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Innovation driven economies (per capita income US$925-1,300)

HARYANA Well-developed communication and administrative infrastructure have helped propel the state forward.

Per capita GDP

1,119

Microeconomic competitiveness

Factor conditions

Institutional support Supplier sophistication

64.86

Related and supporting industries

(From left) Andhra Pradesh principal secretary K. Pradeep Chandra; Andhra Pradesh chief secretary Prasanna Kumar Mohanty; Maharashtra state minister for forest rehabilitation and relief work Patang Rao Kadam; Haryana chief minister Bhupinder Singh Hooda; Goa state health minister Laxmikant Parsekar; Indian vice-president M. Hamid Ansari; Madhya Pradesh chief minister Shivraj Singh Chouhan; Delhi chief minister Sheila Dikshit; resident commissioner of Gujarat in Delhi Bharat Lal, and resident commissioner of Bihar in Delhi Sunil Barthwal, in New Delhi on 26 June.

Development should be inclusive, equitable India’s vice-president on the need for various states of the Union to bridge disparities so that all ‘its sub-national units and peoples’ reap the benefits of the country’s economic growth

I

ndian vice-president Hamid Ansari presided over the Mint state competitiveness awards ceremony in New Delhi on 26 June, stressing the need for various states of the Union to bridge disparities so that all “its sub-national units and peoples” reap the benefits of the country’s economic growth. The awards, based on a report by the Institute for Competitiveness, India, were conferred on 13 states across various categories. Chief ministers and other state representatives received the awards from Ansari. Edited excerpts from the Ansari’s speech at the ceremony: India is a vast country of 1.2 billion people marked by a diversity which is staggering in economic, social, cultural and geographical terms. While we are unique in terms of having a fundamental unity in this immense diversity, there is no denying that the diversity adds to the complexity of the myriad challenges which the nation faces.

Despite our achievements in pursuit of socio-economic development since independence in the last six decades, we remain a developing country confronted by considerable challenges of poverty, inequality, unemployment and underdevelopment, especially in areas of health, education and shelter.

Moreover, the socio-economic indicators vary significantly from state to state and from region to region within the same state. This sub-national diversity can be explained to a degree by various natural, historical and contemporary factors.

However, the fact remains that if we are to fully realize our core national objective of sustained, inclusive and equitable economic growth, it has to be through a development process which is inclusive, equitable and balanced, both in the social and geographical sense.

Otherwise, economic and social inequity at sub-national scale will become a potent threat to our political union and could also disrupt societal harmony in our republic. It is in this context that the contents of the India State Competitiveness Report 2013 become relevant and important.

The report studies the diversity of resources, means of production and types of markets and consumers that help a state become competitive in India and aggregates into a State Competitiveness Index. It is on the basis of this index that our awardees today have been chosen. The report defines competitiveness as the ability to use factors of production to derive maximum output per unit of input. Given that factors of production, such as skilled labour, capital, technology and natural resources, are limited and often scarce, the concept of competitiveness becomes all the more important, especially in large, populous, developing countries like India, where resources are scarce and needs almost infinite.

In an increasingly globalized and integrated world, competition from within and without is on the rise.

Countries like India, and their constituent units will have to become more and more competitive by enhancing efficiencies through innovation, adopting cutting-edge technology and creating conducive policy/ institutional frameworks to overcome these challenges in the global market place. Against this background, this exercise by Mint and the Institute for Competitiveness to study the comparison between the Indian states on their level of competitiveness attains importance, as it attempts to bring out the deficiencies and highlight the positive steps being taken for the creation of growth and prosperity in India and its states.

According to the authors, and rightly so, the comparison is not aimed at exposing flaws but is largely done for benefiting from the lessons learnt and best practices in the growth and development process in various Indian states.

The report should benefit policymakers, businesses, investors and researchers by providing them with an informed assessment of India’s growth and competitiveness in the past few years and the prospects for its overall competitiveness in the future.

We all recognize that each Indian state has its own unique set of opportunities and challenges. The states are different in relative sizes, demographics, gross domestic product (GDP) levels, growth rates, factor endowments, etc. Therefore, any inter-state comparison, without taking into account their differences and specificities, would be unfair and untenable.

It is to be noted that this study categorizes the states according to their level of development and desists from cross-category comparisons. This categorization is helpful to assess competitiveness relative to states with a similar level of prosperity and economic development as indicated by their respective GDP. The result of the exercise is before us. I congratulate the award winners in different categories, particularly the chief ministers who are present in the audience. I am sure the conferment of the awards will be an added incentive to them for further improving upon the already commendable performance of their states. It will also inspire others to learn and make the effort to join the ranks of the awardees.

It is noteworthy that despite elaborate and comprehensive categorization, more than half the states of the Indian Union (16 out of 29, Delhi included) need to catch up with the states being felicitated here today.

There should be no doubt in anyone’s mind that India can only realize its destiny of emerging as a modern, developed nation-state when all its sub-national units and peoples, irrespective of caste, religion, ethnicity, language or origin, are included in and benefit from the country’s growth story.

It is my hope that today’s event will contribute in the ongoing discussions on the issue of competitiveness and its impact on inclusive growth.

61.08 59.58

62.08

Business incentives

Physical

54.01

59.00

CI and diversity of firms

Communication

60.64

60.27

66.51

20

59.63 57.85

60

57.81 57.83

Human capacity

70.93

80

Income distribution and spending pattern

Demographics

Administrative

58.17

40

Context for strategy

HAMID ANSARI/INDIAN VICE-PRESIDENT

Financial

60.02

60.23

Innovation

100

Demand conditions

Investment driven economies (per capita income US$525-800)

KARNATAKA Strong communication infrastructure, does well on demand conditions and institutional support.

Per capita GDP

753

Microeconomic competitiveness Factor conditions

Institutional support Supplier sophistication Related and supporting industries Business incentives

Financial

62.82

64.26

79.62

61.72 54.89

70.41

Physical

60.59

67.34

CI and diversity of firms

Communication

60.32

62.66

60.50

20

65.00

57.13

Context for strategy Income distribution and spending pattern

57.65 6057.39

Human capacity

79.14

80

Demographics

Administrative

56.86

40

Innovation Demand conditions

100

Factor driven economies(per capita income < US$400)

BIHAR The state has great institutional support and does well on economic growth and communication infrastructure.

Per capita GDP

273

Microeconomic competitiveness

Factor conditions

Institutional support

Financial

Supplier sophistication Related and supporting industries Business incentives

54.65

52.36

53.39

45.15 50.85

57.71 55.73

Communication

54.24

53.48

50.32

43.39 CI and diversity of firms

Physical

20

Administrative

48.43 40

53.86 Context for strategy Income distribution and spending pattern

56.03

60

46.45

54.68

54.94

Human capacity

80

Innovation Demographics

100

Demand conditions

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Our philosophy has been (that) when you see things happening and when you feel things happening, that is the success of any government. I want to say humbly that we managed to achieve that to some extent because our social sector expenditure is best in the whole country.

We spend 75% of our budget on the social sector.

SHEILA DIKSHIT, Delhi chief minister

There cannot be any competition among states because every state works with its own challenges, own circumstances. There are four parameters for any country or state (based on which development is measured)—per capita investment, per capita expenditure, per capita income and mobilization of resources. I am happy my state Haryana is No. 1 in all these four parameters.

BHUPINDER SINGH HOODA, Haryana chief minister

We have always considered ourselves as the most industryfriendly state and we have the best industryfriendly policies today.

We do have world-class infrastructure including roads, ports and international airports.

We are also taking care of the unemployed, making sure that the industry ties up with the unemployed youth. Apart from that, we are the bulk drug capital of our country, pioneers of the single-window clearance system and we’re doing very well in our food processing sector. These are some areas that people can look forward to investing in further.

GEETA REDDY, Andhra Pradesh state home minister

Maharashtra has promoted industrialization by providing world-class infrastructure. The Maharashtra Industrial Development Corp. provides land and water to globally competitive IT (information technology) companies and chemical industries.

Maharashtra has promoted world-class cities like Mumbai, Pune, Nagpur and Aurangabad.

PATANG RAO KADAM, Maharashtra state minister for forest rehabilitation and relief work

SHIVRAJ SINGH CHAUHAN/ MADHYA PRADESH CHIEF MINISTER

Development is and should be context-sensitive HINDUSTAN TIMES

B Y L IZ M ATHEW liz.m@livemint.com

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G

ujarat chief minister Narendra Modi is increasingly becoming the face of the main opposition Bharatiya Janata Party (BJP), riding on the state’s economic success. Meanwhile, his Madhya Pradesh counterpart Shivraj Singh Chauhan, also of the BJP, has been showcasing a different development model. Chauhan, the recipient of the competitiveness award for the best state in the Change-over Economies category (changeover economies are states having a per capita GDP of $400-525), said in an interview that he prefers to focus on achievements.

“Development everywhere is and should be contextsensitive. I am more interested in achievements than in getting noticed,” he said. Edited excerpts: What’s your first impression on getting this award?

I always think that what you do depends on a number of external factors. We are all inspired by a noble cause. I devote myself to the service of humanity and people. I have envisioned Madhya Pradesh as a prosperous state. In due course, many good things happen, which are appreciated. Awards boost our confidence. They encourage us to do even better. I take awards as an inspiring popular response.

You will be fighting for a third term this year. How will you counter anti-incumbency?

Elections are a democratic process. People elect you because of your good work. Individual preferences do not make much difference. One cannot appease everyone so anti-incumbency remains a factor in every election. I do not think anti-incumbency will be an impediment in a third-time victory.

What is the strategy that the BJP will adopt for elections in Madhya Pradesh?

Very simple. We will simply ask the people to vote for the good work we have done. It is a fact that Madhya Pradesh has experienced remarkable growth in every sector. We have been commended by our opponents for pro-poor governance. We are going to ask people to come forward and campaign for us. The disturbing memories of Congress misrule are still fresh so it is BJP’s good governance versus Congress misrule.

Are you happy with the results of the various initiatives taken by you in your first term?

I am more than satisfied as what we did was based on people’s aspirations and the popular wish.

There is a lot of hype about the Gujarat model of development.

Do you think that the achievements of states like Madhya Pradesh are going unnoticed?

The development in Gujarat is for all to see. Kindly do not underrate it by terming it as hype. It is injustice not only to the dynamic leadership provided by Narendra Modiji but also to the industrious people of Gujarat. At the same time, I do not want to get rapped into the media strategy, which intends to pitch one BJP state against another. Development everywhere is and should be context-sensitive. I am more interested in achievements than in getting noticed.

There is criticism that the development model adopted by many states don’t create enough jobs. Have you taken this factor into account while formulating your policies?

It is not so. Every state is conscious of the ills of jobless growth. We have taken care of this. We desire every youth to start self-employment. Vocational education and skill development, self-employment are areas of great concern we are focusing on. Besides, many policy initiatives like 50% jobs to local youth in industry, enrolment of youth in skill development, introducing industry-specific trades in polytechnics and industrial investment. We have launched specific schemes to encourage rural youth to take up economic activities. Requisite support like giving loan grants, sharing payment of interest on loans have been extended.

What is the state’s record on job creation? Have you been able to arrest large-scale migration?

We are creating job opportunities on a larger scale.

Government jobs have been opened in lakhs. Selfhelp groups have been given industry and bank linkages. Thus, job-oriented growth continues. Since jobs are available in rural areas, the process of migration has been slowed.

As per conservative estimates, at least 21,400 children die of malnutrition in Madhya Pradesh annually. Why has the state ma-

I come from the state which was once called (a part of) Bimaru*. I am happy to tell you that for seven successive years, Madhya Pradesh is growing at double-digit rate. In every sector such as in infrastructure, power, agriculture and attracting investment to the state, we have taken many initiatives. We have also focussed on skill development because we want to make our human resources our strength, not our weakness. *Bimaru is a term coined in the 1980s by economist Ashish Bose to collectively describe the backward state of the economies of Bihar, Madha Pradesh, Rajasthan and Uttar Pradesh.

INTERVIEW chinery not been able to address the problem in the past few years? What are the measures taken by the state government to tackle this issue ?

It is not true. We have focused on addressing malnourishment. The Atal Bihari Child Health and Nutrition Mission under its multi-dimensional activities is addressing the malnourishment issue among children. The issue of malnourishment has also been addressed by ensuring food security in the areas which often report a malnourishment problem. Neo-natal care units have been set up in all district hospitals where health of the newborn is constantly monitored.

Supplementary food is being provided in anganwadis (day-care centres). In addition, community participation is also being enlisted.

Do you think the United Progressive Alliance (UPA) government’s food security Bill in its current form will be able to address the issues of malnutrition?

More than the form, the issue is that of intent. They have been discussing so long the content of the Bill that their intent has come under a cloud. The UPA government is still pondering over what we have done in Madhya Pradesh way back in 2008. It is our initiative that the UPA tried to emulate by way of the food security Bill. But while we take another big step in 2013 in the form of the Mukhyamantri Annapoorna Scheme-II (CM’s food security scheme), UPA-II is still indecisive about it. It is a strange strategy of double standards where they have started issuing advertisements on the Bill, but are refraining from making it an Act. Remya Nair and Vidya Krishnan contributed to this story.