The central government started ranking states based on the implementation of Business Reform Action Plan in 2015. In the fourth edition of the annual exercise, which indicates progress in digitization, transparency and investor confidence in the country, Madhya Pradesh and Jharkhand came in at fourth and fifth position respectively.
The single biggest jump in 'State Business Reform Assessment 2018-19' was witnessed by Lakshadweep, which came up by 19 places to the 15th position. Industrially advanced states such as Gujarat, Maharashtra and Tamil Nadu, which have traditionally topped the list, slipped further down the charts to tenth, 13th and 14th positions. The government says this trend was anticipated and is expected to strengthen further as states lower down the list come up and replace the frontrunners.
However, many states also lost their ranking due to lax implementation of reforms. Poll bound Bihar went down 8 positions after making significant gains in the previous years, while West Bengal came up one position to the 9th place.
Odisha, Sikkim and Tripura remained the three states with the worst performance on the list. Odisha went down 15 positions in the latest report: the worst decline among all states.
The Department for Promotion of Industry and Internal Trade (DPIIT) created 181 reform points covering 45 business regulatory areas which were used to assess the state of ease of doing business in states and the efficacy and energy of their reforms. These included single window system, inspection enablers, paying taxes, utility permits, and environment, among others.
However, the biggest were access to information & transparency enablers, labour regulation-enablers and construction permit enablers.
The final ranking is based on two separate scoring systems with the majority of the assessment conducted on the basis of states providing evidence of reforms in policies and procedures undertaken by them.
Keen to take the reforms to the grass-root level, DPIIT has prepared now a District Reforms Action Plan, which is spread across 8 areas: Starting a business, urban local body services, paying taxes, land reform enabler, land administration and property registration enablers, obtaining approval, miscellaneous and grievance redressal. The final 213-point action plan for 2020-21 was shared with states on 17 August for implementation, the DPIIT said on Saturday.
The Action Plan covers 43 No-objection certificates, permissions and registrations expected to boost business in sectors like retail, education, health, food and beverages, real estate, and gems and jewellery.
For the first time, the Centre has linked implementation of reforms at district level to the 2 per cent borrowing of Gross State Domestic Product to motivate states to undertake reforms. However, many states have objected to this move.
In 2017, India had for the first time broken into the club of the 100 nations for ease of conducting business according to the World Bank's Doing Business reports. India jumped 30 places to the 100th spot in 2018 compared to 130 in the previous year. Similarly, it jumped to the 63rd place in 2020 against 77th in the previous year among 190 nations. The Modi government has aspired to put India in the first 5oth position, a task yet to be achieved.
But last month, the World Bank paused the publication of its much-talked about Doing Business Reports due to alleged irregularities in its 2018 and 2019 reports. These two reports relate to the Ease of Doing Business rankings in 2018 and 2020. Since India improved its rankings significantly in these two years, there is speculation that India's rankings might get affected due to the decision.