State Competitiveness Report 2015

THE INDIA STATE COMPETITIVENESS REPORT 2015 What makes one state more competitive than another? Hard and soft infrastructure and regulatory and policy framework are the obvious answers. There are some other factors at play as well. The Mint-Institute for Competitiveness study on India’s most competitive states provides some lessons

02 SPECIAL REPORT WEDNESDAY, SEPTEMBER 30, 2015, DELHI

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BLOOMBERG

The competitive advantage of states B Y R . S U KU M A R sukumar.r@livemint.com

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ational prosperity is created, not inherited.

It does not grow out of a country’s natural endowments, its labour pool, its interest rates, or its currency’s value, as classical economics insists. A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade.”

Michael Porter The Competitive Advantage of Nations March-April 1990, Harvard Business Review In mid-September, India’s Department of Industrial Policy and Promotion (DIPP) released a federal government-sponsored ranking of states in terms of the ease of doing business. Modelled on the World Bank’s Ease of Doing Business ranking—India dropped two places to 142, out of 189 nations in the 2015 edition and it is the lowest ranked country in South Asia—the state ranking was based on eight parameters ranging from the time and effort involved in setting up a business to

the sanctity of contracts, the ease of acquiring land and construction permits to the tax regime, and the transparency of environmental approval processes to the broader labour context.

The objective of the exercise was to assess the progress of states in implementing key regulatory reforms—and, indeed, to motivate them to do this, especially in the area of land acquisition and labour rules where the Union government has not been able to make much legislative headway.

The move is a logical one. India’s states have, since the 1990s, and especially in the past decade or so, become hyper-competitive in wooing domestic and foreign investors. When one state does something that is considered investorfriendly, others immediately follow suit. For instance, soon after Rajasthan changed some of its labour laws, Haryana and Maharashtra said they were considering doing the same.

Gujarat topped the DIPP rankings. The next four spots were taken by Andhra Pradesh, Jharkhand, Chhattisgarh and Madhya Pradesh. Four of the five states are ruled by the Bharatiya Janata Party (BJP), which is also the dominant constituent of the National Democratic Alliance government at the

centre. The fifth, Andhra Pradesh, is ruled by a BJP ally, the Telugu Desam Party. Andhra Pradesh chief minister N. Chandrababu Naidu made a name for himself in the 1990s as one of the most progressive and reform-minded chief ministers in the country in his earlier stint (he was chief minister of Andhra Pradesh between 1995 and 2004).

Earlier today (30 September), the World Economic Forum released its own survey of competitiveness, the Global Competitiveness Report.

India moved up 16 places to 55 (out of 140 countries surveyed). China, the country with which India likes to compare itself, is ranked 28.

The Mint-Institute for Competitiveness study on India’s Most Competitive States should be seen in the context of the two reports mentioned above.

The Global Competitiveness Report is based on an adaptation of Michael Porter’s methodology for assessing the competitiveness of nations. So is the Mint-Institute for Competitiveness study titled State Competitiveness Ranking (SCR), 2015 (For a methodology of the study, see below).

The Institute for Competitiveness works closely with Porter’s Institute for Strategy and Competitiveness at the Harvard Business School.

What makes states competitive?

The answer looks straightforward at first—hard and soft infrastructure and the regulatory and policy framework. The first encompasses everything from the existence of and access to markets to the availability of power to the presence of a talent pool that can be tapped. The second deals with issues such as land (a sticky one in India), tax (stickier) and other aspects of doing business.

But there are other factors as well—such as clustering. Porter himself has written on the competitive logic of a geographical concentration of companies in the same business.

And there is also the intent of the state’s political leadership—difficult to measure, but crucial in convincing companies that they are making the right choice. Foxconn’s announcement in August that it would invest $5 billion over five years in Maharashtra was preceded by seven meetings (including two over lunch and one over dinner) between chief minister Devendra Fadnavis and Foxconn CEO Terry Gou. That probably points to the need for an investor survey to complement the data on which the state competitiveness ranking is currently based.

The methodology T

he process for assessing competitiveness was undertaken in the following stepby-step manner.

First, indicators that were considered imperative for the study of the states were identified. Some indicators, which were thought to be redundant, were eliminated, and some that were thought to capture more interesting insights were added to the previous year’s datasets.

Second, the identified indicators were then sourced from various information sources such as government websites, research organizations funded by the government, international organizations, etc. Prominent among the organizations from which data was sourced were the World Bank Group, the Reserve Bank of India, the ministry of statistics and programme implementation and various other government ministries and independent regulators.

Third, the various indicators thus collected were then made fit for use in the analysis. This was done by filling in the data gaps and cleaning up the data.

Fourth, the indicators were categorized and put into the specific framework of competitiveness. The indicators are distributed across these broad-level pillars and sub-pillars of the index.

The State Competitiveness Index, 2015, was thus computed taking into account the four major pillars of competitiveness that form the basis of the diamond model of Professor Michael Porter of Harvard Business School. These are: 1. Demand condi-

tions, 2. Factor conditions, 3. Context for strategy and rivalry, and 4. Related and supporting industries These four major pillars were further categorized into sub-indices. There are six sub-indices for factor conditions, two for demand conditions, two for context for firm rivalry and two for supporting and related industries. These sub-indices have further indicators. Thus, there is a three-level hierarchy of measurement for the overall competitiveness score of states.

Fifth, weights were assigned to specific indicators, sub-pillars and pillars on the index. The total reality that the state competitiveness index represents is the cumulative whole of all the individual indicators.

From the viewpoint of the policymakers, the State Competitiveness Report, 2015, brings forth a comprehensive study of the factors necessary for studying and enhancing the competitiveness of Indian states. Nearly 350 indicators were used for assessing the competitiveness of states in 2015.

Finally, the index was computed using statistical tools and techniques and thus scores and ranks were obtained across each sub-pillar and pillar. The states this year, like the previous year, are categorized on the basis of the stage of their development into six broad categories and city-states. These are north-eastern economies, factordriven economies, evolving/changeover economies, investment-driven economies, transition economies and innovation-driven economies.

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Goa IS TOCKPHOTO

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he state has good related and supporting industries with the presence of industrial clusters and good overall context for strategy resulting from sound financial and physical infrastructure.

Goa is one of the fastest-growing states in the country. It is also one of the few power surplus states in the country. The state achieved 100% rural electrification in 2011-12 and has a total installed capacity of 405.20MW as on 31 August. It also has one of the highest per-capita net state domestic product (NSDP) levels in India. Goa’s economic growth is driven by the strong performance of its industrial and service sectors such as mining, tourism and pharmaceuticals. The state is a prominent tourism hub with good airport and port connectivity.

Microeconomic competitiveness Institutional support

Factor conditions Financial

65.14

Supplier sophistication

60.85

60.2 Related and supporting industries

69.87 Physical

68.64

76.66

64.42 Business incentives

POPULATION

LITERACY RATE

1,458,545

88.70%

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP* AT CURRENT PRICE

10

R48,897cr (2013-14)

CI and diversity of firms

57.67

82.12

Context for strategy

20

50.49 81.1

Communication

49.42

80.08

57.86

40

60

54.18

80

Income distribution and spending pattern Demographics

Administrative

55.92

100

55.55

Human capacity Innovation

Demand conditions

*GSDP: Gross state domestic product

Delhi VIRENDRA SINGH GOSAIN/HINDUSTAN TIMES

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he national capital has performed well on the factor and demand conditions fronts. It has also done well in terms of administration and communication.

The city-state recorded an above 12% rate of growth in the period between 2004-05 and 2014-15. The key industries in the state include IT (information technology) and IT-enabled services, tourism, food processing and construction and engineering. Delhi has an attractive real estate market and is a preferred tourist destination. Delhi’s economy is primarily service driven. The state had an installed power-generation capacity of 8,346.72MW as on 31 August. Teledensity was recorded at an astounding 236 (236 connections per 100 persons), the highest in India.

Microeconomic competitiveness Institutional support

Factor conditions

Supplier sophistication

60.89 52.41

Related and supporting industries

Business incentives

87.24

Financial

61.23 60.78

49.11

60.66 50.76 67.55 50.47

CI and diversity of firms

68.85 69.66 55.73

Administrative

40

60

80

Income distribution and spending pattern Demographics

100

Communication

59.65

20

53.11 Context for strategy

Physical

65.56 Human capacity

62.69

Innovation Demand conditions

POPULATION

LITERACY RATE

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE FOR 2014-15

16,787,941 25

86.2%

R4,51,154 cr

04 SPECIAL REPORT WEDNESDAY, SEPTEMBER 30, 2015, DELHI

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LAXMIKANT PARSEKAR/GOA

Our plan is to stop brain drain RAKESH MUNDYE/MINT

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axmikant Parsekar, 59, took charge as chief minister of Goa last year at a time when the state’s economy was going through a crisis due to a Supreme Court ban on mining.

Since then, the ban has been lifted and mining activity has resumed, but the state is looking to diversify and encourage investments into sectors such as information technology that will create jobs for its youth.

In an interview, Parsekar shares his vision, prospects and concerns for the state.

Edited excerpts: What is your vision for the state?

My target is to get better investors to the state and creating maximum number of jobs. We are careful to ensure that we welcome environment-friendly projects to the state and those projects that suit the requirements of the people of the state.

Goan people are a little whitecollared. Whatever is their job, they want a chair and a table.

We have 22 industrial estates in Goa, which is a very good number for a small state like Goa. But while these estates were coming up, no care was taken to see whether the industries that are coming up would really meet the requirements of the Goan people. A large number of workforce from adjacent states migrated to Goa. Over a period of time, the pressure on all aspects has increased on a small state like Goa because of this influx of population. More than 75% of the workforce employed in these industries is non-Goan.

My problem is that local youth are unemployed as they are not willing to work in these industries. Past governments should have considered encouraging those industries where local youths would have been willing to work.

How is your government planning to address this?

We are insisting on IT (information technology)-related projects now. We have identified two sites—one at Tuem in Pernem taluka and the other at Chimbel near Panjim.

We are proposing an electronic city for ESDM (electronic system design and manufacturing) at Tuem, where assembling will take place.

The idea is that even matriculate, non-matriculate and ITI (industrial training institute) students can do this assembling after some training. At Chimbel, we are looking at an IT park.

There are around 2,000 youths who get degrees in IT and allied sectors every year.

Most of these people are compelled to go out of the state to Pune, Hyderabad or Bengaluru looking for jobs.

We should be able to stop this brain drain once this takes off.

Else, if this trend continues, Goa may become a land of senior citizens.

What are the other strategies that you have in mind to generate jobs?

Besides IT, we are focusing on tourism, agro-processing, horticulture and floriculture. We have come out with a large number of schemes.

In the modified Kamdhenu Yojana, we pay 75% subsidy to the farmers for purchase of animals. They are also given an additional loan amounting to 20% of the cost. So, effectively, farmers can buy cows without facing any financial difficulty.

Even for the milk that is sold, we give them a support price of around `10 per litre. The milk yield in Goa was 25,000-30,000

litres per day, whereas our requirement was about 300,000 litres. Now, because of these schemes, the regular yield has increased to 75,000 litres. Still there is a lot of scope.

In the agricultural sector, equipment is subsidized to the extent of 75% to 90%. For floriculture in particular, the green houses or the polyhouses that are being built are being given a subsidy of up to 90%. We are on the verge of exporting our floriculture.

How did the ban on mining affect Goa’s economy? Now that it has been lifted, when do you expect mining activity to resume?

There was a blanket ban on mining for three years. It was a huge challenge for the state since mining was the backbone of the state’s economy and the

main source of income for a large part of our population.

Now all procedures have been adopted and complied with and mining is gradually starting.

Vedanta has already started. The Salgaocars and others are also planning to start by midOctober. So, legal mining will definitely start.

How is the falling global commodity prices impacting you, especially given that a majority of the lowgrade iron ore mined in Goa is exported?

Global prices have collapsed and, therefore, people are wor-

ried. Mine owners, in particular, were a bit reluctant. But they forget that the rates in 2006-08 were similar to what is prevalent at present. It was only during the intermediate boom period that prices zoomed.

Mine owners are forgeting this.

How will they get the same rate prevalent in the boom period all the time?

The government has done what it could.

The central government has reduced the export duty to 10% from 30% after we pushed for it.

Also, as per the verdict of the Supreme Court, it was not bind-

How will they (miners) get the same rate prevalent in the boom period all the time?

ing on us to renew the licences.

We could have auctioned. Auctioning would have been more beneficial for the state. But, inspite of that, we opted for renewal because mine owners had an existing structure. Their workforce and machinery were in place.

We were more worried about the serious unemployment problem that was being created and, therefore, we opted for renewal.

So, when the government has taken two steps forward to help address unemployment and help mine owners, I think it is the responsibility of mine owners also to take some steps forward. They have done so and I am very happy about it.

What kind of land law is Goa looking at?

We have tenancy law here. But it has its own limitations. We have reached a stage where the name of the owner and the tenant is there on the land deed.

Both of them can’t make the best use of this land.

We are thinking of encouraging contract farming so that the fragmented lands which are uneconomical for taking up cultivation on a large scale could be utilized by using the concept of contract farming. People are not ready to give their farms fearing that it will attract tenancy laws and they will lose ownership.

This contract farming will be exempt from tenancy laws. This will solve this problem of land lying idle.

One more area that was neglected over the years is our khazan land (saline floodplains).

We have rivers all over in Goa. Due to high and low tides, there has been a constant pressure on the bunds, which have over the years disappeared or broken.

Because of this, the salt water has entered the fields leading to high levels of salinity which has destroyed crops. We have 22,000 hectares of khazan lands that are unused in Goa. If we take up on priority the construction of these bunds, these fields can be converted back into agricultural lands or for alternative crop and fisheries.

What about land for industries?

We have a challenge there. We have 60-65% of forest cover. Rest of the land is covered under CRZ (coastal regulation zone). So, we are left with hardly any land. So, whatever is possible, we are taking care of that.

As it is, we have 22 industrial estates. We have formulated an industrial investment policy wherein we have constituted an investment promotion board.

We have started giving singlewindow clearances to environment-friendly projects, particularly those that generate jobs. In the field of tourism, we have approved a number of projects.

In six sittings of this board, we have cleared 46 projects that will provide employment to around 9,000 youths. But we are very careful in sanctioning these projects.

What about business tourism? Are you looking to create some institutional set-up to encourage this?

People like to come down to Goa for conferences. Some infrastructure is needed. We need to develop proper facilities for this.

We need to have one or two good convention centres.

We are proposing one in Dona Paula. It has a unique location surrounded by the Arabian Sea, river Mandovi and river Zuari on three sides.

You are also looking at a new airport?

The present airport, though it is an international airport, is managed and controlled by the Navy and has its own limitations.

It cannot cater to the large-scale tourist arrivals and cargo. It does not have the facilities for parking of aircraft.

Therefore, we were in need of an additional airport. This is a greenfield airport which is coming up in Mopa in Pernem. We are on the verge of finalizing the contractor now.

Probably, by this year-end, we should be able to give the work order also... Five companies have been shortlisted—three from Delhi and two from Mumbai.

What will be the impact of the goods and services tax on Goa? Do you expect revenue to dip in the initial few years?

I think there should not be any impact on revenue. It is better to have a uniform tax structure across India and I support the tax reform. anil.p@livemint.com

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Punjab PRIYANKA PARASHAR/MINT

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unjab performs well in the overall context of strategy and in factor and demand conditions, which has resulted in a good overall environment for business.

Punjab is one of the most agriculturally fertile regions of the planet.

Occupying only 1.5% of India’s geographical area, the state accounts for about 17% of the country’s wheat production and 11% of rice production.

More than 80% of the state’s land is under cultivation compared with the national average of 40%. The major industries of the state include tractors and auto components, agro-based parts, bicycle and bicycle parts, chemical products, food products, light engineering goods, metal and alloys, pharmaceuticals, sports goods and textiles.

Punjab has emerged as a key hub for textile-based industries, including yarn, readymade garments and hosiery. The clusters around food and dairy products are the other major sectors of the state.

Microeconomic competitiveness Institutional support

Factor conditions Financial

Supplier sophistication

53.43 Related and supporting industries

Business incentives

56.94

50.52 51.98

55.45

60.63

LITERACY RATE

27,743,338

75.8%

GSDP AT CURRENT PRICE FOR 2014-15

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

R3,49,826 cr

28

CI and diversity of firms

Communication

56.08 55.85 20

61.55

Context for strategy

Physical

55.96

62.47 POPULATION

57.36

40

55.98 57.72

60

56.85

80

Income distribution and spending pattern Demographics

Administrative

55.96

100

64.88

Human capacity Innovation

Demand conditions

Karnataka ANIRUDDHA CHOWDHURY/MINT

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he state has strong demand conditions, factor conditions and has a considerable presence of related and supporting industries.

Karnataka is the IT hub of India and home to the fourth largest technology cluster in the world. The state also has seen solid infrastructure development with three domestic and two international airports. Similarly, the state is home to 12 minor and one major port. The highways (6,540km in May 2015 up from 4,688km in May 2014) and power sectors (approximately 15,000MW in June 2015) have similarly seen rapid growth in the recent past. With respect to people, the state has around 5% of the country’s total population with a literacy rate of 75.6%, just above the Indian average of 73%. It has plenty of avenues for higher education with 44 universities, the fifth highest number in the country, as well as almost 300 polytechnics and 206 engineering colleges. As of 2014-15, exports from the state were worth $52.02 billion, around 13% of India’s total exports. Karnataka has close to 50 IT/ITeS SEZs, three software technology parks and dedicated IT investment regions.

Bengaluru, the capital, has a very strong cluster of IT and biopharmaceutical companies.

Microeconomic competitiveness Institutional support Supplier sophistication

Factor conditions

67.77

63.83

89.5 Related and supporting industries

Business incentives

67.14

78.64

Communication

59.89

53.23

57.83

20

57.07

Context for strategy

Physical

58.69

60.91 CI and diversity of firms

Financial

60.81

59.93

40

57.66

60

80

Income distribution and spending pattern Demographics

100

Administrative

56.72 58.79

POPULATION

LITERACY RATE

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE FOR 2014-15

61,095,297

64.62

Human capacity Innovation

Demand conditions

32

75.6%

R7,02,131 cr

06 SPECIAL REPORT WEDNESDAY, SEPTEMBER 30, 2015, DELHI

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HEMANT MISHRA/MINT

K. SIDDARAMAIAH/KARNATAKA

We are not against GST B Y A N I L PA D M A N A B H A N A NUJA ···························

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arnataka chief minister K. Siddaramaiah is nearly midway through his term of leading the Congress state government, whose key priorities are social security, especially those of labour, farmers and children, as well as employment generation for the youth.

In an interview with Mint, he talks about the steps taken by the government to encourage more investments in the state and to tackle drought.

He shares his experience of being chief minister of a Congress-ruled state at a time when the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government is in power at the centre.

Edited excerpts: The Department of Industrial Policy and Promotion’s (DIPP’s) report has singled out Karnataka as a reform example. They have presented you as a case study for transformation of the commercial tax regime, and as a role model.

Yes, of course. As far as the commercial tax regime is concerned, we were the first state that introduced VAT (valueadded tax) in the country. After the decision was taken by the government of India at a national level, Karnataka was the first state to introduce VAT in 2004-05.

Till then, no state had introduced VAT. As a matter of fact, Gujarat and Tamil Nadu were opposed to it.

Even now, we are for GST (goods and services tax). We have some reservations but, otherwise, we are for GST. Otherwise, as it is, this law was drafted by the previous UPA (United Progressive Alliance) government. We are not against GST. The only thing is we have some reservations and those things will have to be addressed by the government of India.

Are these reservations the ones that have been flagged by your party members in the standing committee or are these at the

state level?

This is at the level of the state.

Because we are levying entry tax in lieu of octroi tax. Earlier, there was octroi tax. And we are transferring these (proceeds) totally to the local bodies. Local bodies will face financial problems.

Either we must be allowed to carry on (with) this entry tax or they have to give compensation with this, additional compensation over and above (what has been promised).

The Congress government in Karnataka is midway through its term. What do you think have been the key achievements under your leadership?

We have implemented so many programmes, in the social sector particularly; we are giving 5kg (of rice) per head (to the poor) and there is no upper limit for the families, and it is free. There is one programme which we introduced immediately after coming to power and we are implementing it—we are giving milk to schoolgoing children—anganwadi children and schoolgoing children from first standard to the 10th standard— three days in a week, 150ml per child.

We have waived off all the loans due from the poorer sections of society, those who have taken loan from development corporations such as SC/ST (Scheduled Castes and Scheduled Tribes) development corporation, labour development corporation. All the loans have been waived off. After we came to power, we have cleared about `1,20,000 crore (`1.2 trillion) worth of proposals of investments. They will bring about 240,000 jobs in the state. That is also one of the achievements we have made and work is going on.

We are spending every year `10,000 crore for irrigation purposes. This is one of the promises we made to the people of Karnataka during our assembly election campaign. A lot of railway projects are coming up.

T h e U PA g o v e r n m e n t amended the Constitution for Article 371 and inserted a clause (j) giving special status to Hyderabad-Karnataka region.

Every year, we are spending more than `1,000 crore for the development of the HyderabadKarnataka region. This is a longstanding demand—for 30-35 years. The people of that area are demanding this. So, immediately after we came to power, we requested the UPA government and they amended the Constitution.

We have given statutory status to the special component plan, which is for Scheduled Caste people and tribal people for whom we have the Tribal Sub Plan (TSP). Earlier, in 2012-13, the amount earmarked for SCP (special component plan for the integrated development of Scheduled Castes) and TSP was `8,600 crore.

After this special legislation was pass ed, now this year, we have earm a r k e d `16,232 crore— it almost became double and the entire money goes to Scheduled Castes and Scheduled Tribes people only. It is non-lapsable.

Suppose this money is not spent in this current (fiscal) year, it will be carried over next year.

So, this is a very, very progressive legislation that we have got.

Andhra Pradesh, of course, is the first state which passed this type of legislation and Karnataka is the second.

You have maintained that Karnataka is the favourite destination for investors. How does the state government plan to bring in more investment and simplify the process of setting up businesses in the state?

As I have already mentioned, investment is already coming to Karnataka. We have cleared proposals worth `1.2 trillion in the last two years. We have brought out a new industrial policy in which we are trying to bring investment to the tune of `5,00,000 crore, creating 15 lakh (1.5 million) jobs. We are going to hold an investors’ meet soon which was supposed to happen in November but now we have

postponed it by two-three months owing to the drought situation.

The drought you mentioned— there is rural distress across the country. Some states are affected more, some less. Some states have already declared drought in parts.

Out of 176 talukas, we have declared 136 talukas as droughtaffected. That is very serious.

After 40 years, we are witnessing this kind of drought. For the first time, all our reservoirs are at 50% capacity—that is why there is a problem of power, water, fodder, and that is why we are effectively addressing all these problems.

We have requested the government of India to release `3,800 crore to a d d re s s t h e issue. But the total loss the state has incurred is about `15,600 crore. This year, we are facing a s e v e r e drought—30 lakh hectares of land has been affected.

Has the centre responded?

It has sent a central team.

They have visited about 16 districts and they have met officials and people here to assess the severity of the drought. I hope they are convinced about the situation.

The central government has talked about increasing the number of NREGA (national rural employment guarantee Act) work days. They have also talked about the rurban (rural-urban) areas.

This provision of increasing work days during drought has already been there. Just increasing the number of days will not help the states; they have to give more money to the states.

The new fiscal arrangement after the 14th Finance Commission, how do you see it? Are you critical or do you appreciate that the states would get more power to spend?

The government of India, both the prime minister and the finance minister, claim that they have given more money to the

We’ve cleared investment plans worth `1,20,000 crore in the last two years

states after the Finance Commission (recommendations).

But in reality, it is not so. If I give you the figures, by 14th Finance Commission, we are getting about `16,560 crore in 2014-15.

After the implementation of the Finance Commission, we are getting `24,790 crore—it means we are getting `8,230 crore more, when compared with the last year.

But in centrally sponsored schemes, in 2014-15, we were getting `16,626 crore; this year we are getting only `8,146 crore.

They have cut down the grants to centrally sponsored schemes drastically like mid-day meal scheme, ICDS (integrated child development services) scheme, drinking water schemes. The total impact is, we are losing `1,987 crore. For the ongoing centrally sponsored schemes, because of that, the burden on us would be `4,689 crore. That is the kind of money we have to spend from our exchequer.

Have you approached the central government on this issue, and what do they say?

Yes, we have conveyed this.

They just say, “We will look into it”.

Being a chief minister from an opposition party, how has your experience been with the change of regime at the centre? What is the single most important concern that you have with the NDA government?

One thing that I have already mentioned is the cut in grants; under the UPA government, this did not happen. No. 2, as far as the farmers’ problems are concerned, the NDA government is not doing enough. Because there are so many problems of the farmers. Now, farmers are committing suicide—not only in Karnataka but across all the states. The government of India should have come up with a big package to help the farmers and so far they have not done it.

So, in cooperative federalism, is there a gap in its practice?

It is not in practice, cooperative federalism is on paper.

Has mining activity in Karnataka resumed in full force after the Supreme Court lifted the ban?

There are reports that many

mines are still shut even after the ban has been lifted.

Twenty nine mines of A and B categories are working. As far as C category mines are concerned, 15 such mines, there is an evaluation going on and we are going to auction them.

The Supreme Court has given us (the permission to mine) 30 million tonnes (mt, of iron ore per year). Now we are producing 18-20 mt per year; but next year onwards, we will be touching 30 mt.

Internationally, commodity prices have collapsed because of China’s retreat from the market; so iron ore prices are really falling. Do you think it will impact your auction?

For domestic purposes, I do not think there would be any problem.

On the contentious issue of land acquisition, the centre’s stance is states can do it in whichever way they want. Firstly, is there a problem of land shortage in the state?

There is no problem as such because now we will follow the 2013 UPA Act and that is in force now. We are not going to make any changes to that.

How do you see the disruptions caused by the Congress party in Parliament?

As a prime minister of the country in a democratic set-up, you should have taken the opposition into confidence, but that has not happened. The prime minister (Narendra Modi) never attends Parliament; in the entire (monsoon) session, he attended it twice or thrice. The BJP does not believe in democracy in the strict sense.

For your remaining tenure, what is the vision that you have for Karnataka?

We had made 165 promises to the people in our manifesto in the last assembly election and we have fulfilled more than 100 of them. The remaining promises will be fulfilled in the remaining years.

Another thing is that we have to bring a change in Bengaluru city since it is a global city. We have to bring a visible change in Bengaluru so far as infrastructure and traffic are concerned, and that is a big task for us. anil.p@livemint.com

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Jammu and Kashmir PRIYANKA PARASHAR/MINT

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he state has a good administrative capacity and has shown good performance in building infrastructure for economic growth.

Horticulture is the mainstay of the rural economy, providing employment to a large number of locals. The state accounts for 66% of apples and 92% of walnuts produced in India. It is well-suited for adventure, pilgrimage, spiritual and health tourism.

The state government has an industrial policy that offers attractive incentives along with a single-window clearance. Land is allotted at concessional rates in industrial areas on lease for 90 years. To boost infrastructure, the government is planning to build two highways that will provide all-weather connectivity from Jammu to the Kashmir valley.

Microeconomic competitiveness Institutional support

Factor conditions Financial

Supplier sophistication

52.65 Related and supporting industries

52.24

53.59

56.96

48.3 Business incentives

60.64

POPULATION

LITERACY RATE

12,541,302

67.2%

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE FOR 2014-15

39

R87,921 cr

Communication

50.51

45.69 CI and diversity of firms

Physical

49.53

43.95

53.16

Context for strategy

59.39

20

40

Administrative

55.37 49.75

51.94 55.89

60

80

Income distribution and spending pattern Demographics

Human capacity

53.92

100

Innovation Demand conditions

Chhattisgarh SHAMIK BANERJEE/THE INDIA TODAY GROUP/GETTY IMAGES

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he state shows tremendous performance on the fronts of strategy and related and supporting industries, resulting in overall competitiveness.

Chhattisgarh is often touted as the power capital of India and is one of the few states that are profitable in terms of utility-based electricity. The state is power surplus and has an installed capacity of 13,728.39MW as on 31 August. The state has rich mineral deposits and is very strong in the mining sector as a leading producer of coal, iron ore and dolomite, accounting for about 22.6%, 22.8% and 37.55% of India’s production, respectively. The state also accounts for 35.4% of tin ore reserves in India.

Microeconomic competitiveness Institutional support

Factor conditions Financial

Supplier sophistication

56.86

53.17

52.49 Related and supporting industries

49 Business incentives

CI and diversity of firms

51.77

62.93

Communication

49.42 52.85

20

78.03

Context for strategy

Physical

54.85

45.52

Administrative

70.48

40

53.48 56.12

60

80

Income distribution and spending pattern Demographics

100

57.85 54.8

52.26 Human capacity Innovation

Demand conditions

POPULATION

LITERACY RATE

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE FOR 2014-15

25,545,198 47

70.3%

R2,10,192 cr

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RAMAN SINGH/CHHATTISGARH

Skill development is our focus RAMESH PATHANIA/MINT

B Y G YA N V A R M A gyan.v@livemint.com

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hhattisgarh chief minister Raman Singh proudly lists the reform of the public distribution system as his greatest achievement. For him, all other social indicators are linked to food security—“If a person is struggling to find food two times a day, how will these indicators improve?” is his argument. He believes the state is a hot investment destination, having already attracted `1.6 lakh crore (`1.6 trillion) so far. But a lot remains to be done, especially with regard to connectivity and skill development, he says in an interview.

Edited excerpts: As the chief minister of Chhattisgarh, you have championed the cause of social security and introduced a number of schemes, including a refurbished public distribution system (PDS). What are the other key areas of social security that the state government is focusing on?

We started with the public distribution system because the biggest challenge was poor families facing malnutrition, which also resulted in migration from the state.

The other challenges were IMR (infant mortality rate), MMR (maternal mortality rate) and malnutrition. If a person is struggling to find food two times a day, how will these indicators improve? So, we have tried to change food security into nutrition security. We are now giving channa and salt free of cost.

We have managed to reach 60 lakh families in the entire state.

Now, we have decided to go beyond food security and nutrition security and focus on health. And all families in Chhattisgarh—APL (above poverty line), BPL (below poverty line)—have been given health security. We are providing smart cards to people under these categories so that they can go to government and private hospitals for treatment.

Secondly, to promote institutional delivery (of babies), we are providing ambulances to people. We are also focusing on labourers, especially those involved in construction work and we have also included farm labourers in this scheme. We launched a scheme through which facilities for education of their children, scholarships for their children, jobs and marriage will be provided.

Skill development is an area of focus. We are also providing people with sewing machines and cycles. For labourers registered with us, their children will get scholarships for higher education; medical colleges, engineering colleges, ITIs (industrial training institutes) and nursing colleges will be free. We are trying to work for the development of labourers, farmers and people below the poverty line.

The law and order situation has improved in the state. How do you plan to invite investments to the state now? What steps are being taken by the state government to boost the prospect of setting up businesses?

It is correct that the law and order situation has improved.

We are in the top four in the Ease of Doing Business report published recently. The state policy and state industrial promotion board (SIPB) provide better facilities for industries and have helped build a positive environment in the state. We believe Chhattisgarh is the hottest investment destination. The state has tremendous potential for investment ; we have got investment of `1.6 lakh crore so far; the best in the country.

We now want to go beyond core sectors. Earlier our focus was steel, coal, cement, power and aluminium. Now we have made policies to develop newer sectors. The other sectors we are focusing on are information technology (IT), electronics, automobiles, herbal, agro processing, infrastructure and the services sector. We are putting up three food processing units, along with the central government.

We are building a large IT facility in New Raipur. Manufacturing units for laptops and tablets are coming up there and we expect more such industries will come to Chhattisgarh. We are also promoting BPOs (business process outsourcers).

We hope these steps will create jobs for the youth.

The 2014 policy has identified these sectors as being crucial for the state. Chhattisgarh has the cheapest power in India for industry and agriculture; skilled manpower and water is also available. Chhattisgarh is becoming a destination of

choice and we hope our growth will be faster now.

The NDA government at the centre has a keen interest in the Make In India initiative. What are the areas that the Chhattisgarh government is looking at? What are the benefits that the state can get from this initiative?

We have the raw material to take Make in India forward; we have started value-addition within the state. We are going to start large-scale production of steel, aluminium and cement. This will also lead to employment generation. A steel plant is coming up in Bastar.

Now, our focus is to improve railway connectivity so that we can bring more industries to the state.

In the next three years, we are going to add 500km of railway

connectivity through the PPP (public-private partnership) model. We want to provide rail and road connectivity, which are the basic necessities to bring investment so that there is no problem of transport.

How do you plan to bridge the divide and bring in more inclusion to ensure that social conflict decreases in the state?

The reason there was social conflict was because people had no food, no rice to eat, no employment opportunities. In Bastar, where there were a lot of such problems, we are trying to promote skill development among youth. We have set up a livelihood college.

Even Prime Minister Narendra Modi had come to see the college. We are providing them skill development and now the students are skilled and prepared

States should get the power to plan. They should get funds and be allowed to plan, implement schemes according to needs

for jobs.

We are making special efforts for employment generation in Bastar and Surguja. We realized that during state-level competitions, students of these two districts were unable to compete.

We have provided employment to 8,000 youth and another 20,000 are being provided skill training.

There is no problem of labour conflict in the state. Bhilai steel plant has been working for 50 years, not a day has been lost.

We have public sector and private sector industries in the state. We have no labour problems. The state has never seen communal riots. Chhattisgarh has not faced caste violence.

Except for the Naxalite threat, Chhattisgarh is an island of peace.

Chhattisgarh has always been in favour of the goods and services tax (GST). How do you see the delay in its implementation and how will this delay affect the state?

If GST gets implemented, it will be a good step for the coun-

try. We had some issues about it earlier, so we spoke to the government and finance minister Arun Jaitley has assured us our concerns will be addressed and the government will compensate revenue losses due to GST rollout. Implementation of GST is a major step for the country and there should be no delay because of political reasons.

What is your view on the recommendations of the 14th Finance Commission? Apart from the share which the state government has got, the recommendation also calls for strengthening of smaller cities. How are you looking at firming this up?

We have been attending NITI Aayog and finance commission meetings. States should get the power to plan. They should get the funds and be allowed to plan and implement programmes according to their needs. Programmes should not be made in Delhi and implemented in Chhattisgarh. Every state’s demands are different. We need roads, many areas have not been electrified in the state. Planners in Delhi don’t understand Chhattisgarh. So, we asked for funds. Our funds have increased 10% because of the 14th Finance Commission’s recommendations. We got more money and the decision-making process will now happen locally. Funds will now go directly to the panchayats. We talk of cooperative federalism. This step will strengthen it. Prime Minister Modi’s initiative of building Team India for development of states is historic.

With a deficit monsoon this year, a lot of states are faced with the critical issue of farm distress. As a farming state, Chhattisgarh is also affected. How serious is the situation in the state and how do you plan to address it?

Farmers of Chhattisgarh are in deep trouble. Around 93 tehsils (sub-districts) got less than 50% rainfall, so we declared them drought-hit. We have made a special plan for these areas. We have allowed 150 days of work under MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) and district collectors will monitor this.

We are giving one quintal of rice to every panchayat, so people don’t remain hungry, and people are not forced to migrate.

We have given subsidy for pumps for drinking water ; 10,000 new hand-pump connections have been sanctioned.

Thankfully, we have had good rainfall in the last five days because of which our dams are full. The drinking water problem has been solved, water is available for irrigation. We hope that the losses will be undone. The government has set up monitoring cells in every district. With rainfall improving, we expect a better yield.

What are the key initiatives that the state government wants to bring in to promote skill development?

We started the first livelihood college in Dantewada in 2010, which was our first initiative in skill development. Now, these livelihood colleges are functioning in 27 districts. After carrying out initial counselling, we give three months’ training to youth.

We have good vocational training providers who train people in trades like electricians, fitters, machine operators, air conditioning technicians, security guards and horticulturists.

We are now taking livelihood training to the block level from the district level. In Chhattisgarh, it is the right of the youth to get skill development training. District collectors monitor the programme. We have a budget of `200 crore for the project.

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Madhya Pradesh BLOOMBERG

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he state has performed exceptionally on factor conditions and demand conditions due to its strong human capacity, income distribution as well as innovation.

Madhya Pradesh is the second-largest state in India by area. It is centrally located and because of the access to various parts of the country, many companies have set up manufacturing bases here. It has a large forest cover and is competitive in tourism.

The state represents 8.3% of the country’s coal reserves and has 218.04 billion cubic metres (bcm) of estimated coal-bed methane reserves. The main industries include automobiles and auto components, textile, cement, agro-based, pharmaceuticals, mineral, manufacturing and tourism. There are several industry clusters located in the state, notably in Bhopal, Indore, Ujjain, Gwalior, Rewa and Jabalpur.

Microeconomic competitiveness Institutional support

Factor conditions Financial

Supplier sophistication

55.11

54.08 Related and supporting industries

56.37 60.83

49.67 Business incentives

51.28

60.14

LITERACY RATE

72,626,809

69.3%

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE FOR 2014-15

56

R5,08,006 cr

CI and diversity of firms Context for strategy

Communication

56.69

54.06 POPULATION

Physical

45.26

53.47

20

57.1

40

57.49

Administrative

58.71 57.22

57.09

60

57.29

80

Income distribution and spending pattern Demographics

100

Human capacity Innovation

Demand conditions

Uttar Pradesh RAMESH PATHANIA/MINT

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he state has strong demand and factor conditions, resulting from tremendous demographics and income distribution as well as strong supporting industries.

Uttar Pradesh has the largest population in the country (around 200 million), close to the population of Brazil. It is also a favoured tourist destination due to the location of the Taj Mahal, Buddhist destinations such as Sarnath and Kushinagar and important Hindu pilgrimage places such as Allahabad and Varanasi. In the year ended 31 March, the state was ranked second and third in terms of domestic and foreign tourists, respectively.

It has very fertile land and its economy is overwhelmingly driven by agriculture with industry clusters also emerging now. The prominent industries in the state include information technology, agro-processing, tourism, mineral-based industries, textiles, handlooms and handicrafts, food processing, leather-based and sports goods industries. Uttar Pradesh is the largest milk-producing state, accounting for nearly 17% of the total milk produced in India in the last fiscal year.

Microeconomic competitiveness Institutional support

Factor conditions Financial

Supplier sophistication

56.42 Related and supporting industries

Business incentives

58.54

63.48

52.95 54.68

Physical

52.13 67.68

56.63 52.95

CI and diversity of firms

60.27

56.23

20

Administrative

54.79

60.34

40

Context for strategy

61.74

60

67.42

80

Income distribution and spending pattern Demographics

Human capacity

64.4

61.38

100

Communication

Innovation Demand conditions

POPULATION

LITERACY RATE

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE FOR 2014-15

199,812,341 53

67.7%

R9,76,297cr

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SANJAY KANOJIA/AFP/GETTY IMAGES

AKHILESH YADAV/UTTAR PRADESH

We have bridged digital divide B Y A S TA F F W R I T E R feedback@livemint.com

···························· lected in 2012, Akhilesh Yadav, 42, is one of the youngest chief ministers in India and heads the politically crucial state of Uttar Pradesh.

The Samajwadi Party-led government in the state has been focusing on attracting more investments to the state, which is predominantly agricultural.

In an interview, Yadav talked about focusing on social security schemes, especially for the youth, generating employment by imparting skills to people and the steps that the state government is taking to attract more investment. Edited excerpts:

E

You are midway through your term. What do you think has been the key achievements of the Samajwadi Party government?

During the last three-and-ahalf years, the state government’s first achievement has been the fulfilment of promises made by the Samajwadi Party in its manifesto. I am satisfied on the achievement of all the promises.

In a nutshell, our government has made concerted efforts to transform Uttar Pradesh into a model state with inclusive governance as its main agenda. To achieve this aim, many policies have been formulated and programmes implemented. While the government is committed towards developing world-class infrastructure facilities in the state, it is giving equal importance to the social sector. Health and education are our priorities.

The efforts of the Samajwadi government in the improvement of health services has resulted in substantial reduction of the maternal mortality rate and child mortality rate.

Uttar Pradesh has made qualitative progress in agriculture,

infrastructure, construction, small industries, power, IT electronics and other sectors. With focus on infrastructure and industry, the investment activity in Uttar Pradesh has been gathering momentum over the past three years. The PPP (public-private partnership) model has also been adopted by the state in various sectors like road, power and urban rejuvenation. The state has emerged as a hub for ITITES industries, including software, business process outsourcing and electronics.

Some people may have launched the Digital India campaign now, but we started way back in 2012 the distribution of laptops free of cost to Class XII pass students, which has drastically removed computer illiteracy from rural Uttar Pradesh.

The state also offers huge potential in sectors like agriculture, food processing, skilling, textiles, leather-based and mineral-based industries. Its young population, improving education infrastructure, initiatives like the Nivesh Mitra (singlewindow clearance system) all add to the investment appeal of the state.

To give a boost to the economy of the state, we decided to construct the longest expressway of the country—Agra-Lucknow Expressway. This will significantly reduce the travel time between Delhi and Lucknow.

Once it becomes operational, this project will transform the industrial scenario of Uttar Pradesh. Besides, farmers would benefit from it because they would get a big and better market for their produce as large mandis would be constructed alongside the expressway.

The proposed eastern dedicated freight corridor with about 57% of the corridor passing through the state will facilitate Uttar Pradesh to get easier

access to seaports in West Bengal and also the eastern coalfields. The Delhi-Mumbai industrial corridor planned along the alignment of the western dedicated freight corridor will provide further impetus to trade and investment in the state.

In addition, the state has implemented a number of industrial infrastructure projects, including export zones, theme parks and SEZs (special economic zones). The state is an attractive market, accounting for 16.5% of India’s population.

We have created a favourable investment climate through policy interventions. This can be amply proved by the fact that during the Investors’ Conclave held at New Delhi in June 2 0 1 4 , Mo Us (memorandum of understanding) worth `54,000 crore were signed.

Besides, at the e - U t t a r Pradesh Conference, organized this year in January at Lucknow, seven MoUs worth `5,000 crore were signed with leading electronics and communication entities.

Recently, letters of comfort were awarded to eight mega units. These companies will invest `7,500 crore. Recently, the Investors’ Conclave was organized in Mumbai during which investors and industrialists proposed to invest `51,000 crore in different sectors.

So, you can conclude that the infrastructure situation is only getting better for good. Investor confidence has also increased and if the state continues to progress like this, it would set an example for others. Our pro-industry policies have started showing results.

New power-generation plants at Lalitpur, Harduaganj and Anpara and the commencement of Mahoba and Lalitpur solar power plants along with the electrification of two villages in Kannauj district from solar energy also reflect the success of the government’s efforts in improving the energy sector.

Land has been made available in Allahabad, Jalaun and Mirzapur for the setting up of solar parks.

The GDP (gross domestic product) growth of the state is much higher than the national average. We have excelled in every possible indicator. However, there is always scope for improvement.

What is your big vision for the state’s development? Especially for the youth of Uttar Pradesh, and given that you are among the youngest chief ministers in the country.

With an increased emphasis on skill development and industrialization, the Samajwadi Party government will look to provide jobs to a large number of youths in the state in as short a span of time as possible. No other government had provided jobs in such large numbers earlier.

Besides, the government is filling up vacant posts in various departments in a big way. We have launched the Uttar Pradesh Skill Development Mission, the largest and first of its kind integrated, employment-linked skill development programme for youths between 14 and 35 years of age across 75 districts.

With a long-term strategic vision of our government, the Free Laptop Distribution Scheme was launched to

We gave laptops free of cost to Class XII pass students, which has decreased computer illiteracy

improve the digital baseline of the state and to prepare the young workforce of the country basically from rural background who are already IT empowered to take on the competitive world.

Under this scheme, about 15 lakh laptops were distributed to Class XII pass students.

It can be termed as one of the most popular and successful schemes of one government.

Other state governments are now following the example set by the Samajwadi government.

This scheme provided an opportunity to the rural as well as economically weak students to work on laptops and carve a better future for themselves. It also helped in removing the fear of technology from their minds.

It boosted their confidence as well. Now, you can go to any obscure village in the state where the laptop has reached, you will find that the students are using it with great interest and confidence. It has changed their lives. Our effort has proved successful in bridging the digital divide.

Besides, the state government has already opened recruitments for vacant posts in the government sector. A large number of youths will be getting jobs.

About 15,000 lekhpals (a clerical-level post) are going to be recruited. Written examination has been conducted for these vacancies. Moreover, a large number of policemen have already been recruited. In the near future, vacancies from many more departments would be advertised and the youths would be given jobs.

Besides, our efforts to involve the private sector in the industrial development of the state has created a large number of job opportunities for the youth in this sector as well. For example, 108 and 102 ambulance services, beside playing a crucial

role in saving precious lives, have also opened job avenues for the youth.

The state government is seriously focusing on the education of girls. It is also focusing on the uplift of the girls belonging to economically weaker sections.

In this light, the state government is providing many facilities and financial assistance to them.

Our government is also focusing on the welfare of women.

The 1090 women power helpline has been implemented with the objective of safeguarding the dignity of women.

Besides, the Rani Laxmi Bai Mahila Samman Kosh has been established with a budgetary provision of `100 crore for the welfare of women.

The government is implementing the Samajwadi Pension Yojana from its own resources. It is the largest social security scheme for the poor in India.

Women family heads have been made the beneficiary of this scheme, which has resulted in the enhancement of their status.

What steps are you taking to encourage more companies to invest in the state? Recently, you had held an investor summit in Mumbai. How was the response?

Uttar Pradesh has a lot to offer to investors. The state government’s focus has been to create a facilitative administrative system, reduce time in setting up of industries, remove bureaucratic interventions and provide world-class infrastructure.

Recently, the World Bank had ranked the state 10th in the country in the context of ease of doing business.

One of the major exercises undertaken by the government is to create a policy framework for conducive working environment to the industries in Uttar Pradesh. Through ongoing TURN TO PAGE z11®

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efforts, the state has attracted many corporate giants such as Samsung, Infosys, HCL, Times Group, Azure Group, Reliance, Amul, etc. Uttar Pradesh has become a hub of corporate R&D with a number of domestic players and MNCs establishing their facilities here.

In an effort to further streamline business, we have restructured and strengthened Udyog Bandhu, a nodal organization of the state government dedicated for facilitating investment in the infrastructure, industrial and service sectors.

Udyog Bandhu has been strengthened with a special focus on accessibility of investment-related information and redress of investors’ grievances.

The changes it intend to bring about is becoming visible.

Nivesh Mitra has also been implemented in the state.

The progressive policies and a clear focus on making the state attractive for doing business through fiscal incentives as well as simplification of business regulations have gone a long way towards building brand Uttar Pradesh in the eyes of India Inc. As I had mentioned earlier, the state government is making all-out efforts to strengthen the infrastructure of the state. All district headquarters are being connected with four-lane roads.

Besides the widening of roads, bridges and flyovers are being constructed to ensure a rapid transport system. Apart from this, new power-generation plants, hospitals, dairy plants, etc. are also being set up.

Recently, an investors’ summit was held in Mumbai in which the state government got tremendous response from industrialists and entrepreneurs.

Reposing immense faith in the policies and business environment in Uttar Pradesh, industry magnates have proposed to

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The progress of the country is not possible without the development of Uttar Pradesh, which has a huge population.

invest `51,000 crore in the state across various sectors.

The intent for cooperation for these investments were signed by investors at the investors’ summit organized by the government of Uttar Pradesh.

Among others, the companies that have expressed their intention to invest in the state include Idea Cellular, LG, Reliance Jio, Godrej Agrovet, Toshiba Power, Ceres Bio System, Kanodia Group, AIPMA (All Indian Plastic Manufacturers Association), ITC, Indo-Gulf Fertilizers, Amulya Sanchay, etc.

The sectors in which these investments are likely to come include electronics, food processing, infrastructure, IT, power, solar energy, etc.

The investment policies unveiled by the state, better facilities of roads, power, water and other essential services clearly give an edge to the state.

The state is setting up state-ofthe-art IT parks, mega food parks, logistic hubs, plastic city,

biotech industrial parks and integrated industrial townships.

We have decided to run the metro rail in Lucknow, which will be operational by the end of 2016. The metro rail project would provide a transit system that is convenient, safe, fast, reliable and cost-effective. The government has also decided to run the metro in four more cities, including Meerut, Kanpur, Agra and Varanasi.

The state government has put in place a very forward-looking policy for the film industry. Uttar Pradesh, with its rich culture and diversified locations, offers a vast canvas of opportunities for filmmakers.

The investors’ meet had an interactive and meaningful session between me and prominent bankers of Mumbai. Those present at the interactive session included representatives from leading banks like SBI, ICICI, BoB, Kotak, HDFC, Axis, BoI, IDBI, etc. The bankers committed lending and investment to

the tune of `1.5 lakh crore.

A below-par monsoon has affected agricultural crops in many states.

How severe is the drought situation in Uttar Pradesh? Given that a huge proportion of the state’s population is dependent on agriculture, how are you dealing with the fallout?

Safeguarding the interest of farmers is the foremost priority of the Samajwadi government.

Keeping this in mind, the government has declared the current financial year as a year of the farmer, during which agriculture-related schemes and programmes are being executed with renewed vigour.

During the earlier part of 2015, when crops were damaged substantially due to unseasonal rains and hailstorm, our government opened its coffers for providing compensation to the farmers. Despite its limited financial resources, the government provided relief to farmers, which was the maximum compensation in the whole country.

This was done on the basis of our own resources. In future, too, if the need arises, the Samajwadi government would not hesitate in providing immediate help and relief to farmers.

Now that each state will formulate its own land law, what will be the unique feature of Uttar Pradesh’s land law? How will you maintain the balance between encouraging industry and protecting farmers’ interest, given that you have large tracts of fertile land?

The Samajwadi Party government is against the forcible acquisition of the land of farmers. The Agra-Lucknow Expressway is a unique example of the acquisition of land with the consent and cooperation of farmers.

In fact, this Samajwadi model can be emulated by other state governments if they really want to strike a balance between development and farmers’ interests. We are of the belief that maximum compensation should be given to the farmers on the acquisition of their land. The state government has always made the balance between encouraging industry and protecting farmers’ interest. We firmly believe that farmers’ interest should be weaved into the development model.

What is your government’s view on the goods and services tax (GST)? Do you think it will benefit the state? What are your concerns?

The proposed GST system will affect the financial autonomy of the states. In the present constitutional system, the states have complete rights for imposing taxes on the purchase and sale of any article or goods. After the implementation of GST, this present system will be abolished.

Appropriate provisions should be made in the proposed GST Bill on the basis of positive and constructive thinking in the direction of cooperative federalism. We have emphasised that the states’ interest should always

b e k e p t i n m i n d . I h av e requested the prime minister on this regard.

The 14th Finance Commission has reordered the fiscal relations between the centre and the states.

Are you happy with the way the commission has allocated funds to the state?

The progress of the country is not possible without the development of Uttar Pradesh, which has a huge population. The primary aim of distribution of the central resources should be to bring the backward states at par with the national average, so that such states get an equal opportunity to progress with the developed states.

Though the allocation of funds to the states has been increased from 32% to 42% on the recommendations of 14th Finance Commission, the reality is different.

Owing to the percentage-wise decrease in the share of the states in the divisible pool, the states would be getting less money as compared with the recommendations of the 12th and 13th Finance Commissions.

The financial assistance and special assistance to the state has been abolished and some centrally sponsored schemes have been delinked. These factors will also decrease the amount of the state. The central share of centrally sponsored schemes should be enhanced, so that different welfare schemes for the weaker sections, farmers, villagers, workers, women and child development, backwards, scheduled castes and tribes etc. do not face any difficulty in implementation.

Keeping in view the increasing expenditure on social and infrastructure development, the enhanced role of the state governments in maintaining law and order and strengthening of three-tier administration, the share of states from the central pool should be increased.

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HOW THE STATES STACK UP A comparison of the states on crucial parameters that define their competitiveness on the ease of doing business front

City-State economies: These are more of cities than states and their dynamics are totally different from those of big states. They are at an advanced stage of development and have high per capita GDP.

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

These are at the forefront of technology creation and dissemination.

The depth of their economies is significant both in terms of demand for better goods and services as well as the inherent capacity of the companies and associated clusters to meet this demand.

Maharashtra

Delhi

Goa

Haryana

Punjab

Kerala

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 in advanced economies. However, they have not attained the mastery required to be at the forefront of innovation.

Himachal Pradesh

Uttarakhand

Gujarat

Tamil Nadu

Transition economies: These economies are in transition between investment and innovation-driven economies. These are very efficient in producing goods and services but need to adopt innovation as a paradigm to make more innovative products.

Andhra Pradesh

Jammu and Kashmir

Odisha

North-Eastern economies: The north-eastern economies have been considered as a single bloc because the region is distinct when we take into account the stages of development. This is in line with the view of the central government, which considers the development of the region as imperative to progress and allocated `53,706 crore for the North-East out of a total plan allocation of `5,70,000 crore in 2014-15. Though some states within the region have a high per capita income, overall conditions tend to be similar, especially with respect to infrastructure, the business environment and general social and political systems.

Factor-driven economies: Factor-driven economies focus on low-cost basic factor conditions, such as low-skilled labour, natural resources and geographic location. These have a large number of people, which may turn out to be a demographic dividend or disaster, depending upon the institutions which these economies have for people to be skilled, have education, etc.

Madhya Pradesh

Chhattisgarh

Rajasthan

West Bengal

Karnataka

Evolving/changeover economies: These economies are in transition and can easily move up by making clear policies to attract investments and by focusing on efficiency improvements in producing goods and services to boost growth. These are at an intermediate stage of developmentbetween the factor- and investment-driven economies.

Uttar Pradesh

Jharkhand

Nagaland

Sikkim

Arunachal Pradesh

Bihar

Tripura

Assam

Manipur

Meghalaya

Mizoram

Microeconomic competitiveness

2

1

5

1

3

4

2

3

1

2

2

1

4

3

5

3

1

2

4

1

2

1

3

5

6

2

7

4

8

Microeconomic competitiveness

Factor conditions

2

1

3

1

2

4

5

6

2

3

1

1

3

2

3

4

2

1

5

1

2

1

2

7

3

6

4

5

8

Factor conditions

Financial conditions

1

2

5

1

2

4

3

6

2

3

1

1

2

3

4

2

3

1

5

1

2

1

6

4

3

5

7

2

8

Financial conditions

Physical conditions

1

2

6

1

2

5

3

4

3

2

1

2

3

1

1

2

4

3

5

1

2

4

1

5

2

6

3

8

7

Physical conditions

Communication

2

1

5

1

3

2

4

6

2

3

1

2

3

1

2

4

3

1

4

1

2

8

6

5

7

2

3

1

4

Communication

Administrative

2

1

1

2

3

5

4

6

2

3

1

1

3

2

1

5

2

4

3

1

2

4

3

8

1

5

7

6

2

Administrative

Human capacity

2

1

2

3

4

1

6

5

2

3

1

2

3

1

5

2

3

1

4

1

2

3

5

7

4

6

1

2

8

Human capacity

Innovation

1

2

2

3

1

6

5

4

1

3

2

1

3

2

4

3

2

1

5

1

2

1

2

7

4

5

3

8

6

Innovation

Demand conditions

2

1

5

1

2

4

3

6

2

3

1

1

2

3

5

4

3

1

2

1

2

2

7

5

8

3

6

1

4

Demand conditions

Demographics

1

2

5

1

3

4

2

6

1

3

2

1

2

3

5

4

1

2

3

1

2

3

8

6

5

2

7

4

1

Demographics

Income distribution and spending pattern

2

1

5

1

2

3

4

6

2

3

1

1

3

2

5

3

4

1

2

1

2

2

5

4

8

3

6

1

7

Income distribution and spending pattern

Context for strategy

1

2

5

2

3

1

6

4

1

3

2

1

3

2

4

1

2

3

5

1

2

1

5

7

4

2

3

8

6

Context for strategy

CI and diversity of firms

1

2

4

2

3

1

6

5

1

3

2

1

3

2

5

1

2

3

4

1

2

1

7

6

8

4

3

2

5

CI and diversity of firms

Business incentives

2

1

4

1

3

5

6

2

1

3

2

1

2

3

3

1

2

4

5

2

1

1

4

6

2

3

5

8

7

Business incentives

Related and supporting

1

2

5

2

1

3

6

4

3

2

1

1

3

2

4

3

1

2

5

1

2

1

5

3

2

6

4

7

8

Related and supporting

Supplier sophistication

1

2

5

2

1

3

6

4

3

2

1

1

3

2

5

3

1

4

2

1

2

2

7

1

7

5

4

3

6

Supplier sophistication

Institutional support

1

2

5

2

1

3

4

6

3

2

1

1

3

2

3

4

2

1

5

1

2

1

4

6

2

5

3

7

8

Institutional support

IS TOCK PHOTO

ARIJIT SEN/HINDUSTAN TIMES

WASEEM ANDRABI/ HINDUSTAN TIMES

AFP

REUTERS

14 SPECIAL REPORT WEDNESDAY, SEPTEMBER 30, 2015, DELHI

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Andhra Pradesh REUTERS

T

he state performs well on all the pillars of competitiveness, namely factor conditions, demands conditions, context for strategy and related and supporting industries. The NSDP of the state has grown at close to 11% for the period between 2004-05 and 2014-15.

The state has a large coastline and a good number of ports that enable marine exports. It has industries around agriculture, biotechnology, bulk drugs and pharmaceuticals, IT and ITeS, textile and leather, tourism, automotive and auto components and gems and jewellery.

Andhra Pradesh is the first state in the country to have pioneered and enacted the concept of industrial single-window clearance. The Act made it compulsory for new industries to register with the single-window to obtain clearances quickly. It also simplified procedures for getting industrial clearances. Most of the power projects are near the ports with a total installed capacity of 11,562MW.

Microeconomic competitiveness Institutional support Supplier sophistication

Factor conditions

68.12

63.37

78.86 Related and supporting industries

LITERACY RATE*

84,580,777

67%

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS*

GSDP AT CURRENT PRICE FOR 2014-15

41

R5,20,030 cr

62.34 61.57

73.49

Business incentives

POPULATION*

Financial

Competitive intensity and diversity of firms

Physical

55.31

57.79

20

57.67

Administrative 40

56.35

Context for strategy

Communication

60.14

55.03

61.84

57.58

60

Human capacity

60.74 61.29

81.67

80

Income distribution and spending pattern Demographics

100

Innovation Demand conditions

*For undivided Andhra Pradesh

Rajasthan AFP

T

he state performs well on physical infrastructure, communications and human capacity.

Rajasthan is the largest state in India (area wise). The state has good resource endowments such as limestone, silver, gold, copper, marble, sandstone, rock phosphate and lignite. Rajasthan is the largest producer of rapeseed, bajra and mustard. It is the second-largest producer of oilseeds and spices and the third-largest producer of soybean and coarse cereals in India. The state is the largest producer of cement and wool and the secondlargest producer of milk in India. The roads and railways are well developed.

The economy also shows good performance in the tourism sector. The state has a considerable pool of skilled and technically qualified human resources with more than 200,000 students enrolled in technical institutions.

Microeconomic competitiveness Institutional support

Factor conditions Financial

Supplier sophistication

54.86 Related and supporting industries

Business incentives

56.42

57.63 58.16

55.73 55.3

56.24

56.01

20

54.16

Context for strategy

Communication

60.17

51.76 56.55

CI and diversity of firms

Physical

Administrative

58.27

40

59.43

57.72

60

80

Income distribution and spending pattern Demographics

100

58.58

56.95

Human capacity Innovation

Demand conditions

POPULATION

LITERACY RATE

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE FOR 2014-15

68,548,437 49

66.1%

R5,74,549 cr

SPECIAL REPORT 15

mint

WEDNESDAY, SEPTEMBER 30, 2015, DELHI

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N. CHANDRABABU NAIDU/ANDHRA PRADESH

Next year, Andhra will be No. 1

SIPRA DAS/INDIA TODAY GROUP/GETTY IMAGES

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A

ndhra Pradesh chief minister N. Chandrababu Naidu says water, mineral wealth, the sea coast, and a dynamic demography are the inherent strengths of the state, which was bifurcated last year when the region of Telangana became the 29th state of India.

Andhra Pradesh has been deprived of the revenue from Hyderabad, the industrial hub which has become a part of Telangana, although it will serve as the joint capital until 2024.

Naidu is trying to build industries from scratch in residuary Andhra Pradesh, which he called a 15-month-old baby.

Edited excerpts from an interview: What are the key development issues that your government is focusing on?

Andhra Pradesh is a new state; we have so many problems. It is only a 15-month-old baby and we have to nurture it carefully.

There is no capital, there are no industries, and there are no educational institutions. At the same time, there are inherent strengths in Andhra Pradesh— water, mineral wealth, sea coast, and also very dynamic people.

These are our strength.

So, we are working to convert a crisis into an opportunity.

We have prepared a vision (document). The vision 2022 is to make Andhra Pradesh one among the top three states.

By 2029, we want to make Andhra Pradesh the number one state, and by 2050, it will be the best destination in the world.

This is our main goal.

We have a focused approach on how to achieve it.

We have taken it up as a mission approach with a clear-cut directional focus: how to tap resources, how to work most efficiently with clear-cut targets.

Recently, the World Bank has evaluated Andhra Pradesh second in its report on ease of doing business, just after Gujarat. The difference between Gujarat and Andhra Pradesh is only 1.02%.

Next year, I am confident that Andhra Pradesh will be number one.

We are working to compete with the best countries in the world—that is our benchmark.

We are growing at 9.72%, but we are aiming at a double-digit growth. It is going to happen this year onwards. The country is facing a serious water problem, but for the first time in history after independence, everybody is talking about river-linking...

We have been able to link the Godavari and the Krishna very successfully; it is operational. So, these are all the things we are doing for development and growth.

In less than one year, Andhra Pradesh has made an impact through its investor-friendly initiatives, as affirmed by the World Bank report on Ease of Doing Business, which has ranked the state second. What more does the government plan to do to attract more business in the state?

We are making use of the advantage of a sea coast. We are creating excellent infrastructure and connectivity. It may be road infrastructure, rail infrastructure, sea infrastructure, sea cargo, air cargo, air connectivity—everything we are working to connect.

We want to provide best utilities, either water or power, skilled labour; these are all the things we are concentrating on.

I am confident that things are going to turn around.

What steps are you taking to generate more jobs?

This is another area of our focus; whatever is possible at the

government-level, we will do.

The government alone cannot serve. We have to increase investment, we have to generate wealth, create a robust economy, then only jobs will come. That is why we are doing one side agriculture to protect rural masses; industry in a big way in 10-12 sectors, mainly in automobile, pharma, textile, agro-processing, mineral-based industries, aerospace and defence...

We have ports, so it will help us build industrial townships. Sri City is one of the best cities, even Krishnapatnam, Kakinada port, we want to build port-based industrial townships. It will help in economic activity, imports and exports.

At a time when there is a deficit monsoon, Andhra Pradesh has taken a historic step of interlinking its two major rivers—Godavari and Krishna. The project is expected to meet the irrigation and drinking water needs of drought-prone Rayalaseema and bring stabilization to the Krishna delta. What are the other steps being taken to get rid of farmer distress?

Once we give water to farmers, we will be able to focus on agriculture also. How to reduce cost of agriculture, how to increase the productivity, how to go for backward and forward integration of agriculture, coldchain link, warehousing, online trading and agro-processing— these are all the areas for value addition. So, if we are able to do all these things, then naturally we will have a tremendous advantage.

Farmers are having so many problems, but we were able to bring a loan redemption scheme for farmers; it’s a debt redemption scheme of nearly `23,000 crore...

The National Democratic Alliance government is pushing for skill development—both at the national and state levels. How critical is the push to skill development for overall growth of the economy?

Skill development is very cru-

cial, but India lacks skills. India has abundant manpower, excellent human resources; because of lack of skills, our economy is pulling down.

If we see who are the best CEOs in the world, they are Indians, be it Microsoft, Google, PepsiCo, Cognizant...there are so many companies.

If we provide skills, our people will do wonders. We have created a skill development corporation, private-public and government; we have to integrate everyone, we want to do it in a big way.

The states now have the power to formulate their own land acquisition law. How will you maintain the balance between encouraging industry and protecting farmers’ interest?

We have to encourage farmers. We have to encourage farmers and, at the same time, development has to take place.

It will help increase land value, then only children of farmers will get employment.

Some of the political parties think that farmers would remain farmers forever.

The future is very clear: economy and knowledge economy.

How to get knowledge economy?

Education is the only way, how to get employment opportunities for educated people. Everybody will not get employment in agriculture, it is just one part. People have to get good income, it can come through industry and services. We have to create more and more employment for farmers’ children and labourers’ children.

At the same time, we have to take agriculture to the logical conclusion. Without land, nothing can happen; we cannot construct factories in the sky, we should remember that. But at the same time, we have to find

ways to rehabilitate farmers.

It is a win-win situation. We have carried out an experiment.

We have decided to construct a (new) capital, we don’t have money, so we gave a call for land pooling. Farmers voluntarily came forward, they have given 33,000 acres of land. Now, after taking that land, we give back 25-30% of land to the farmers after development, after providing infrastructure; it is a win-win situation.

Now, the land prices have increased because of economic activities, there is infrastructure, now they can sell their land for more price compared to the original land; it can be three, four times and sometimes five to six times the earlier price. So, it is a win-win situation.

People are prepared to give land for pooling, but political parties are objecting. Political parties know the future, they know what is good, but they don’t want this good to happen.

This is where the country is facing problems. Those political parties that are opposing development will be eliminated totally, I’m confident of that.

Andhra Pradesh has supported the implementation of the goods and services tax (GST). How do you look at the delay in its rollout?

How significant is the bill for a state like Andhra Pradesh?

This is a positive and important decision. When the government wanted to implement VAT (value-added tax), we had supported the move at that time also... we had toured five to six European countries at that time to study VAT and how they were implementing it.

Today, every company wants to have GST because of the simplification of taxes.

Andhra Pradesh is growing at 9.72%, but we are aiming at double-digit growth

We have to simplify the procedure with GST—a single tax, very easy to comply with, even state governments will get their share, but the only problem in the initial stage is that we may get a little less. The government of India is protecting states. If there is a loss, they are prepared to compensate. So, this is the best way; every state has to fall in line.

The Union government has shortlisted Visakhapatnam, Tirupati and Kakinada as smart cities. At a time when you are in the process of starting work to build a new state capital, Amravati, what are the challenges in building new cities?

There are so many problems.

The future is for cities, for urbanization, there is no doubt about it. Wherever there is urban population, growth is more as compared to the rural population because of infrastructure and a focused approach. These three cities and the new capital will be made smart.

America (the US) is working in Visakhapatnam, Japan is working with us in Kakinada; Tirupati is a pilgrimage centre, so many companies are coming forward, trying to compete with each other. Singapore is working with us for the new capital. So, experiences of different countries... we are bringing best practices here.

We have a programme for the entire state, it’s called “smart village, smart ward” concept. Eminent people, through corporate social responsibility (CSR), or through personal capacity, or because of their position, can adopt a village or ward.

They have to work and bring best practices. Management and bandwidth are important. We want to bring private sector with the government for developing smart villages, smart wards. I am confident it will happen.

You had recently met Prime Minister Narendra Modi and wanted a debate on granting special category status to Andhra Pradesh and other issues mentioned in the AP Reorganisation Act. What is the

progress on that?

We are working with them; the prime minister is interested, we are working with the NITI Aayog chairman; it is taking some time.

In the meantime, I have requested them to do something; otherwise, political parties will try to exploit these kind of issues; it is not correct.

Ultimately, there are so many issues pending with the government, but they are also doing their best to support us.

So, I had requested the government of India to give me hand-holding (support) in the initial stage. We will repay for the development of the nation and also exchequer of the country.

What are your views on the recommendations of the 14th Finance Commission? You were initially concerned that Andhra Pradesh may fall behind.

The 14th Finance Commission was state-specific, their economy and their revenue receipts.

Our state is on a different footing altogether. We never anticipated, or people of Andhra Pradesh never aspired, for a separate state. People feared that if separated, the revenue will go, employment opportunities may not come and even education will be a big problem.

But because of political reasons, the state was separated.

Now, it is the responsibility of the central government to protect the interests of Andhra Pradesh.

The 14th Finance Commission has dealt only with revenue receipts and expenditure.

We have requested the government of India to give a helping hand, hand-holding to reach up to the neighbouring states— Karnataka, Tamil Nadu and Telangana. Afterwards, we will contribute to the nation’s economy.

The 14th Finance Commission is one part; effects of bifurcation, impact of bifurcation, they didn’t deal with it. It is not their subject. So, the government of India has to compensate.

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SPECIAL REPORT 17

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WEDNESDAY, SEPTEMBER 30, 2015, DELHI

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VASUNDHARA RAJE/RAJASTHAN

Jobs creation is new normal B Y A S TA F F W R I T E R feedback@livemint.com

···························· ver since Rajasthan chief minister Vasundhara Raje took charge in her second innings at the helm, she has been pushing policy change to turn the state into an attractive investment and employmentfriendly destination.

This includes the overhaul of labour laws—something which was emulated more recently by the Union government—allowing a greater role for the private sector and, at the same time, taking care to ensure that the spoils of growth are shared equitably.

Raje led the Bharatiya Janata Party (BJP) to a spectacular win in the December 2013 assembly elections after narrowly losing power in 2008 and later, in tandem with Narendra Modi, ensured a complete sweep of the state in the 16th general election.

In an interview to Mint, the chief minister dwelled on what she described as the Rajasthan model of development and also provided a glimpse of what lies ahead for the state.

Edited excerpts:

E

Madam, you have started your new tenure at the helm with a bang. What is your vision for the state for the remainder of your term?

Our electoral mandate reflected an obvious unease with the status quo but, more importantly, it reflected impatience with being left behind as some other states accelerated the creation of shared prosperity.

During my last term, many of our initiatives took time to yield results and this time, we were clear that it was important to

start early.

The election campaign reinforced feedback during my time in the opposition that people were seeking holistic development and, consequently, we have conceived of a Rajasthan model of development anchored around three pillars: social justice, effective governance and job creation.

I believe that we don’t live in an economy but in a society; economic growth is an objective worthy of pursuit if, and only if, it benefits every citizen. However, experience suggests that delivering social justice is not always possible without the resources that economic growth generates.

A modern state is a welfare state that creates jobs; this need for balance is the new normal for Indian politics.

Our social justice initiatives have various vectors: restructuring our distribution system by converting ration shops into Annapoorna Bhandars that will offer 150 products to consumers at below market prices, being the first state to amend the Right to Education Act with the objective of converting this into the Right to Learning Act, exploring PPPs (public-private partnerships) for health delivery in rural areas, rolling out the Bhamashah platform for family choice between cash and non-cash subsidies directed by the woman of the house, and driving the largest state skill mission of any country in a demand-driven partnership with 300 employers.

The vector of effective governance started with our law reform project that has three phases: repeal, consolidation and effectiveness. The cabinet has cleared the repealing of 248 laws. This will be followed by consolida-

tion. Example: We propose to collapse the number of higher education laws that currently stand at 75.

The third phase of effectiveness will re-evaluate the role of each law from a citizen’s perspective. Job creation is a complex phenomenon that depends on many a complex cocktail of infrastructure, ease of doing business, labour regulation, skills and much else.

Rajasthan was the first state to obtain presidential assent under Article 254 (2) to amend various labour laws.

These have been complemented by various procedural changes like the online singlewindow for industries, labour and our pollution control board.

The recent ranking of state governments puts Rajasthan at six; this is a far cry from our BIMARU (Bihar, Ma h a ra s h t ra, Rajasthan, Uttar Pradesh) status, but we have much distance to cover.

Rajasthan is also India’s largest state, and this means we have put together a large land bank for potential investors.

The last two years were about synthesizing the model; the next three years will be about executing it.

Your state has taken the lead in pushing second-generation reforms. Since they are politically very difficult decisions, how are you handling their implementation?

Reform in a vibrant democ-

racy is not the solving of a sum but the painting of a picture.

Most business people and economists underestimate the complexities and difficulties of reform arising from the political economy now that low-hanging fruit has been picked.

I sense our task has been easier because our citizens recognize that some tough decisions are required for Rajasthan to catch up with the other states.

In that sense, all our actions are largely in response to what citizens want; jobs, better government interface, more effective schools, less laws but better enforcement, and much else.

However, every decision has multiple perspectives and all our actions have involved a deep consultative process, but it is important for every government to act on its convictions.

It is my good fortune that citizens, government employees and investors are responding with energy to R a j a s t h a n ’s renewed sense of destination and destiny.

You have more recently embarked on a plan to overhaul the Public Distribution System in your state.

Again, you have approached it differently by making the private sector stakeholders. How is it working out?

A modern state is a welfare state. But it is an important responsibility for state governments to ensure that government spending is targeted, effective and efficient. Our traditional

We are No. 1 in the country in solar generation capacity and our physical landscape means this area offers a huge energy solution

vehicles for cash and non-cash subsidies have not only been wasted but been poor if not humiliating experiences for citizens. We view the overhaul of our ration shops as complement to the capabilities of the Bhamashah platform. We also view this particular partnership with the private sector for ration shops as part of an experiment in working with the private sector to harness its human capital, competencies and efficiencies for effective public service delivery. Based on results, we will explore expanding this to other areas like education and healthcare. This does not mean state withdrawal, but I think alternate service delivery models co-existing will enable benchmarking and create the competition so important for higher levels of innovation and performance.

What is your administration’s view on the goods and services tax (GST)? Do you think it will benefit the state?

GST is a very important reform not only for making Indian manufacturing competitive but also improving the easeof-doing business. Rajasthan has been a consistent supporter of GST and all our concerns have been addressed by the centre. It is very important that this important legislative infrastructure for prosperity goes live soon.

The 14th Finance Commission has reordered the fiscal relations between the centre and the states.

How do you perceive it? How have you dealt with this fiscal empowerment?

We don’t view the Finance Commission’s recommendations in isolation; they are part of a broader theme of co-operative federalism that involves transferring funds, functions and func-

tionaries to state governments.

India is too big and complex for single templates and the new space created for state governments makes us responsible for our own destinies. Of course, we endorse the recommendations of the Commission as we await more details around execution.

One of the biggest challenges facing your administration is the outstanding power sector dues. What is your plan to address this?

Power is a complex national challenge; energy subsidies are needed for many people but they must be sustainable. The current `80,000 crore debt of our state electricity distribution companies is on account of the opening balance that our government inherited and is largely a child of ineffective distribution.

We are pursuing an integrated framework for power reforms focused on the viability of distribution companies that envisages a role for the private sector under a distribution franchise model in the areas identified.

We are also looking at partial or full divestment of some of our generation assets to raise resources and improve operational efficiencies of our genco (power generation company), besides working on debt restructuring.

But despite these headlines, we provide industry (as also domestic and other consumers other than agricultural consumers) with 24x7 power and have embarked on a massive solar and renewable energy programme.

We are already No. 1 in the country in solar generation capacity and our physical landscape means that this area offers us a huge energy solution that is scalable, sustainable and desirable.

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Bihar PRADEEP GAUR/MINT

T

he state provides good incentives for businesses and has an exceptional human capacity.

Bihar is one of the fastest growing states in India. At current prices, per capita net state domestic product of Bihar grew at a compound annual growth rate of 12.9% between 2004-05 and 2014-15. Bihar is one of the strongest agricultural states. The percentage of its population employed in agricultural production is around 80%. It has a massive population base and is the largest producer of vegetables and the second largest producer of fruits in India. Food processing, dairy, sugar, manufacturing and healthcare are some of the fast growing industries.

The state has a large base of cost-effective industrial labour, making it an ideal destination for a wide range of industries. The Bihar government is also preparing a 20-year master plan for the promotion and development of tourism.

Microeconomic competitiveness Institutional support

Factor conditions Financial

Supplier sophistication

51.84

46.58

Related and supporting industries

52.21

45.45

44.74 Business incentives

LITERACY RATE

104,099,452

61.8%

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE FOR 2014-15

43

R4,02,283 cr

CI and diversity of firms

Communication

58.25

58.64 45.28

POPULATION

Physical

51.52

42.9

53.04 20

Administrative

51.96

Context for strategy

40

58.95

57.94

60

46.29

Demographics

Human capacity

58.44

80

Income distribution and spending pattern

58.69

100

Innovation Demand conditions

Sikkim IS TOCKPHOTO

T

he state does well on parameters such as factor conditions, the context for strategy and related and supporting industries.

The state is richly endowed with exotic flora and fauna. Sikkim has several snow-capped peaks, including the Kanchenjunga, the world’s thirdhighest peak that attracts a large number of tourists from across the world.

It is also developing its adventure tourism potential.

The state’s gross state domestic product expanded at a compound annual growth rate of 18.3% between 2004-05 and 2014-15. Sikkim has also done well on the sanitation front. It has a suitable climate for agricultural and horticultural products. It supports multiple crops such as rice, wheat, maize, millet, barley, urad, pea, soybean, mustard and black cardamom. Sikkim is the top producer of black cardamoms, contributing more than 80% of India’s total production. It has also performed well on the electricity front and has huge potential to develop hydroelectricity.

Microeconomic competitiveness Institutional support

Factor conditions Financial

Supplier sophistication

57.3 58.33

Related and supporting industries

56.92 59.78 59.79

52.71 Business incentives

Physical

47.08

74.02 56.78

CI and diversity of firms

Communication

49.3

65.4

Context for strategy

58.71

20

40

52.6 55.78

60

80

Income distribution and spending pattern Demographics

100

Administrative

57 54.19

56.93

Human capacity Innovation

Demand conditions

POPULATION

LITERACY RATE

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE

610,577 24

81.4%

R12,377cr (2013-14)

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Haryana PRADEEP GAUR/MINT

T

he state does well owing to its performance in administration, innovation and diversity of firms.

Haryana has one of India’s largest automobile hubs and accounts for two-thirds of passenger cars, 50% of tractors and 60% of motorcycles made in the country. The state has also emerged as a base for the knowledge industry, including IT and biotechnology. Haryana is the third-largest exporter of software among Indian states and is a preferred destination for technology companies. The state also has taken steps for development of some industrial estates, industrial model townships and specialized parks for cluster development.

Microeconomic competitiveness Institutional support

Factor conditions Financial

Supplier sophistication

58.68

62.11 Related and supporting industries

59.23

65.52

55.38

63.81 Business incentives

60.58 POPULATION

LITERACY RATE

25,351,462

75.6%

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE FOR 2014-15

42

R4,35,310 cr

61.69

20

55.46

Administrative

57.65

40

Context for strategy

Communication

53.54

50.34

CI and diversity of firms

Physical

55.6

55.82 56.61

60

56.21

80

Income distribution and spending pattern Demographics

100

Human capacity

71.55

Innovation Demand conditions

Maharashtra IS TOCKPHOTO

T

he state displays exceptional performance on factor conditions, demand conditions and related and supporting industries pillars, which reflects in its great overall microeconomic competitiveness score.

Maharashtra has a good presence of industrial cluster, especially automobile, petrochemicals, chemical and textile sectors. The state also has strong IT and education hubs developing in Pune. Mumbai is India’s financial hub. The state also has a strong exports sector (with more than $70 billion of exports in 2014-15), owing to its strategic location and the presence of a large number (more than 50) of minor ports and two major ports. Mumbai accounted for the greatest amount of foreign direct investment (FDI) in the April 2000-May 2015 period. It is also well connected through airports located in various parts of the state. The state also had an installed power capacity of 38,521.72MW as on 31 August.

Microeconomic competitiveness Institutional support

Factor conditions

77.89

Supplier sophistication

70.79 64.32

87.01

71.5 Physical

Related and supporting industries

Business incentives

Financial

82.45

66.33

69.38

Communication

61.79 77.5

CI and diversity of firms Context for strategy

59.25

20

73.44 66.2 59.71

60

80

Income distribution and spending pattern

62.96

POPULATION

LITERACY RATE

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE FOR 2014-15

112,374,333

70.51

82.3%

Human capacity Innovation

100

Demographics

Administrative

56.54 40

Demand conditions

25

R16,86,695 cr

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HASEEB DRABU/JAMMU AND KASHMIR

Being inclusive is our aim RAMESH PATHANIA/MINT

B Y A S TA F F W R I T E R feedback@livemint.com

¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ n 1 March, the People’s Democratic Party (PDP) and the Bharatiya Janata Party (BJP) created history in Jammu and Kashmir by coming together to form a grand alliance, despite being at the opposite ends of the ideological scale.

It is what the state’s new chief minister, Mufti Mohammad Sayeed, candidly described as “bringing together of the North Pole and the South Pole�.

It has all the potential to rewrite the troubled politics of the state, something particularly relevant in managing India’s rocky relations with Pakistan.

In an interview, finance minister Haseeb Drabu—a technocrat-turned-politician—dwelled on the experience of the grand alliance and the initiatives undertaken by the new government to rework the governance paradigm in the state.

Edited excerpts:

O

It is a little over six months since the PDP joined hands with the BJP to form the government in Jammu and Kashmir, described by some as a daring political experiment.

What has been the experience so far?

The PDP-BJP alliance is a governance alliance meant to provide a representative government in the state. It may be a difficult alliance but it is a durable one; an alliance that has legitimacy across the state.

Notwithstanding the obvious ideological differences, the relationship has worked well. Even as there has been some stress off and on, there are no differences in the development agenda.

The two parties are getting to learn and respect each other’s sensitivities and trying to accommodate each other. This alliance has the potential to change not only the politics of the state but of the sub-continent.

What has been the big shift in policy focus since your government took charge?

To bring governance back on top of the agenda has been the big change.

The focus has been on reviving the institutions of governance that have been decimated and improving their capacity to deliver public services.

At a political level, it is of reaching out and trying to be

inclusive, across the ideological spectrum and across regions.

Presenting your first budget, you said that the government’s effort was to spread the “constituency of peace in the state�. Has your government been able to deliver on this?

Our basic premise and understanding is that sustainable peace is only possible if everyone in the state has a stake in peace. It is not only about governments; the stakeholders must have a stake in peace. And this can be ensured through a good quality of economic development, a transparent system of governance and progressive policy regime.

This will take time, even as a beginning has been made.

You say the state is seeing the return of peace. Has this resulted in a revival of investor interest, particularly in hospitality, in the

state?

It will be a long haul. We are in a hugely competitive world as far as investments are concerned. It will take us some time to make Jammu and Kashmir an attractive investment destination that it ought to be.

However, we have been able to ensure that there is a greater interest and participation between the regional and national business.

In a short span of eight months, we have been able to get a few joint ventures off the ground in the hospitality sector.

You also presented a separate power sector budget—something like the railway budget. Can you

set out the rationale?

The core of our fiscal imbalance lies in the power sector.

There is a difference of around `5,000 crore between our purchase and sale of power, and if this were to be excluded, Jammu and Kashmir has a revenue surplus budget.

As such, the idea of the power budget was to identify the source of the fiscal gap and lay out a road map of power reforms for achieving fiscal balance.

Further, it is a route to leverage the power potential of the state without getting constrained by the FRBM (Fiscal Responsibility and Budget Management

Our basic premise is sustainable peace is only possible if everyone in the state has a stake in peace

Act) and the ceiling on borrowing that the state faces.

A separate power budget also ensures the desired end use of borrowings as these are separate from the general borrowings.

The 14th Finance Commission has reset centre-state fiscal relations.

How has this impacted Jammu and Kashmir?

The biggest benefit of the 14th Finance Commission has been to give certainty to the transfers from the centre. For states such as Jammu and Kashmir, which have had a large non-plan gap grant component, this is a big relief. It was a big issue getting the Planning Commission to meet the negative BCR (balance from current revenue) and then fund the plan.

In most years, the plan would not get finalized till August or September. This would make the whole process ad hoc and

impossible to do good expenditure management.

Now, in the new system, we know how much will flow to the state for the next five years. And, in fact, we can now make and present the state budget before the Union budget. In terms of revenue, there has been a marginal increase, if any at all.

Do you believe that there is a spirit of cooperative federalism in the country, or is it a case of competitive federalism?

Over the years, there is no doubt that there has been a move towards greater federalization of the country.

In the arena of governance and policy, it is more of cooperative federalism, while in business and economy, it is veering towards competitive federalism.

In some aspects, though, there continues to be a mindset of coercive federalism.

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Tamil Nadu IS TOCKPHOTO

T

he state displays strong performance in related and supporting industries and in innovation. It also has good demand and factor conditions.

Tamil Nadu has a diversified manufacturing sector and features among the leaders in several industries such as automobiles and auto components, engineering, pharmaceuticals, garments and textile products, leather products, chemicals, plastics, etc. The state has an excellent road and rail network with three major ports and 23 minor ports and also has seven airports across the state providing good connectivity. Tamil Nadu has an installed power capacity of 23,104MW as on 31 August. The automotive belt near Chennai is home to well-known brands, and Tirupur and Coimbatore are known as textile centres.

Microeconomic competitiveness Institutional support

Factor conditions

78.94

Supplier sophistication

67.77

Financial

63.74

88.95 Related and supporting industries

83.94

Business incentives

POPULATION

LITERACY RATE

72,147,030

80.10%

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE FOR 2014-15

21

R9,76,703 cr

CI and diversity of firms

65

Physical

61.93

57.18 69.82

58.59

20

63.5

Context for strategy

Communication

61.21

40

61.26

58.55

60

59.91

80

Income distribution and spending pattern Demographics

Administrative

56.45

100

Human capacity

79.24 Innovation

Demand conditions

Gujarat PRADEEP GAUR/MINT

T

he state has an exceptional diversity of firms resulting in an exceptional context for strategy and providing for strong institutional support.

The state is one of the fastest growing in the country despite its high base effect. Its overall growth was above 12% between 2004-05 and 2014-15. Gujarat is one of the most industrially developed states in the country. It is a leader in several sectors such as petrochemicals, chemicals, dairy, drugs and pharmaceuticals, cement and ceramics, gems and jewellery, textiles and engineering. The industrial sector comprises more than 800 large industries and over 453,339 micro, small and medium industries. Gujarat is the world’s largest producer of processed diamonds, accounting for 72% of the world’s processed diamonds share and 80% of India’s diamond exports. Gujarat accounts for 65-70% of India’s denim production—it is the largest manufacturer of the fabric in the country and the third largest in the world. The state has very good infrastructure, and part of it has to do with the involvement of the private sector in development. The state has shown remarkable achievement in the exports sector due to the strong performance of its minor ports sector.

Microeconomic competitiveness Institutional support

Factor conditions

Supplier sophistication

63.68

58.62

80.37

Related and supporting industries

Business incentives

Financial

65.99

72.02

59.98

45.41

54.95

94.23

Context for strategy

Communication

61.57 20

CI and diversity of firms

Physical

60.14

Administrative

74.82 58.89

40

58.49 58.09

60

80

Income distribution and spending pattern Demographics

100

57.78 57.32

Human capacity Innovation

Demand conditions

POPULATION

LITERACY RATE

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

GSDP AT CURRENT PRICE

60,439,692 38

78%

R7,65,638cr (2013-14)

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Meghalaya IS TOCKPHOTO

POPULATION

LITERACY RATE

2,966,889

INFANT MORTALITY RATE PER 1,000 LIVE BIRTHS

74.4%

GSDP AT CURRENT PRICE FOR 2014-15

49

R25,333 cr

T

he state has good human capacity and has shown good performance in the context for strategy.

At current prices, Meghalaya’s gross state domestic product (GSDP) was $4.2 billion in 2014-15. The state’s GSDP has expanded at a compound annual growth rate of 10.8% between 2004-05 and 2014-15. In 2014-15, there were 112 higher secondary schools, with the East Khasi Hills district accounting for 44 higher secondary schools. Shillong also has a National Institute of Fashion Technology and an Indian Institute of Management. The state has rich forest resources—about 14% (3,108 sq. km) of Meghalaya is covered by bamboo forests. Meghalaya’s turmeric is considered to be among the best in the world as it contains 7.5% of curcumin. Meghalaya is one of the leading states in the North-East in terms of production and supply of flowers to the main markets. It also has a vast potential for hydroelectricity, which is not well utilized but presents a vast scope for the future.

Microeconomic competitiveness Institutional support

Factor conditions Financial

Supplier sophistication

52.52

55.17 Related and supporting industries

53.47 60.31

49.49 Business incentives

60.45

Communication

49.51

48.11 CI and diversity of firms

Physical

49.52

43.81

53.88 20

54.28

40

50.07

51.19 Context for strategy

Administrative

57.55

54.51

60

80

Income distribution and spending pattern Demographics

100

52.85

Human capacity Innovation

Demand conditions

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YES WE CAN

A look at some of the success stories of various reform initiatives undertaken across states enumerated in a report by the department of industrial policy and promotion in coordination with the World Bank. If emulated by other states, it could lead to a substantial improvement in the business environment.

INSPECTION UNDER VARIOUS ACTS

MAKING IT EASIER TO SET UP BUSINESSES

In order to ease the burden on businesses stemming from undue legal and government requirements, a number of initiatives have been introduced in Gujarat and Jharkhand. A unified inspection has been provisioned by the state with regards with a number of labour department-related Acts. This helps businesses in complying with inspection requirements, saving time and resources in individual inspections. To bring in transparency, the states have published comprehensive procedures and checklists for various inspections. The states have also implemented online systems for allocation of inspectors to increase the efficiency and effectiveness of inspections.

The Punjab Bureau of Investment Promotion has created a one-stop system for various state-level regulatory and fiscal incentive approvals. The bureau is headed by a chief executive officer entrusted with the power to grant approvals. Officers from various regulatory departments are vested with the powers of their respective departments and work together as bureau member-officers. The bureau processes applications received through the Invest Punjab website and keeps the investor in the loop on various project-initiation stages. Andhra Pradesh has also implemented an effective online single-window system with provision for filing, payment, status tracking, online scrutiny and approval of applications.

COMPLIANCE WITH LABOUR LAWS

FACILITATING LAND ACQUISITION AND OBTAINING CONSTRUCTION PERMITS Madhya Pradesh and Gujarat have published details on the available land banks in the state. The availability is supplemented with detailed land-allotment procedures.

Gujarat has also implemented a robust geographical information system (GIS) providing details on land earmarked for industrial use. In Rajasthan, no separate construction permission is required in RIICO (Rajasthan State Industrial Development and Investment Corporation) industrial area for plot sizes 40,000 square metres.

RAJASTHAN

JHARKHAND GUJARAT

FASTER ENVIRONMENTAL CLEARANCES The Gujarat Pollution Control Board (GPCB) has adopted a web-based application called eXtended Green Node (XGN) to provide an information technology (IT) solution for effective implementation of various pollution control board clearances and procedures. XGN provides hassle-free, 24x7 anywhere e-access to businesses to apply online, track application approvals, file returns and statements and getting online permissions under various Acts and rules. The functionality is available on the mobile platform as well. The system also provides e-payment facilities through real-time gross settlement systems (RTGS).

PROVIDING INFRASTRUCTURE UTILITIES TO INDUSTRIES Maharashtra offers investor-friendly services for obtaining infrastructurerelated utilities such as electricity, water and sewage in a time-bound manner.

Detailed procedures and all-inclusive checklists have been placed on the relevant websites to keep investors informed. The procedures detail the workflow from filing an application to issuance of registration and no-objection certificate. The state has also implemented online systems to apply for utilities, thereby allowing an investor to apply from anywhere anytime. The state provides a fixed-cost estimate as part of the application for obtaining electricity connection to allow investors to apply once and pay once.

Graphic: Sarvesh Sharma/Mint

PUNJAB

The department of labour in Jharkhand has implemented a comprehensive online workflow-based portal facilitating speedy approvals and clearances for entrepreneurs. The portal offers several functionalities, including online registration, licensing and renewal under the various labour Acts and also has a provision of computerized allocation of inspectors for expediting the process. The department has also introduced the provision of self-certification for renewal and returns and mandated a single joint inspection in five years for compliance with the 14 labour laws.

MADHYA PRADESH

MAHARASHTRA

KARNATAKA

CONTRACT ENFORCEMENT The Bombay high court has constituted and prescribed seven commercial benches exclusively for the purpose of resolving commercial disputes in Maharashtra. To address the concern of time and costs associated with various legal processes, district courts in the state have been equipped with the provision for making online payments. Most vacancies for judges have been filled up in district courts and the appointment of judges is undertaken as and when vacancies are created to ensure the availability of adequate capacity for dealing with various cases.

TAX COMPLIANCE Karnataka has undertaken comprehensive automation and process re-engineering in taxation. All services, including registration for various taxes, filing returns, paying taxes through payment gateway, receiving registration certificates (which are downloadable and verifiable), e-waybill registrations, are provided through electronic mode, thereby eliminating the need for any physical touch point. The portal provides clear information on procedures. A helpline has also been established to assist dealers with e-filing of returns.

Source: DIPP-World Bank report on Assessment of State Implementation of Business Reforms released in September 2015