Unease about rankings

Context: Uttar Pradesh’s star performance in the 2019 edition of ranking under Business Reform Action Plan started by Centre in 2015, raises questions about the credibility of the rankings.

Factors behind UP’s performance: UP climbed 10 points to secure second place and outperformed states like Gujarat and Delhi. Implementation of the following reforms suggests this performance.

• Implemented suggestions by Department of Promotion of Industry and Internal Trade (DPIIT): The state says it has implemented 186 out of 187 reforms.

• For, E.g.  its “Nivesh Mitra” single-window portal, which is monitored by the chief minister’s office, has cleared 94% of the no-objection certificate applications.

• Rough and Ready approach towards criminals: through “encounter” killings of alleged criminals.
• Attempt to abolish labour laws for three years: to revive post-lockdown economic activity.
• Attracting big-ticket investments: such as those from PepsiCo and Microsoft.
• Infrastructure Development: in the form of expressways, defence corridors and 12 new airports.

Concerns with ranking:

• Changed methodologies: The current raking gives undue preference to the user feedback, a methodology that increases subjectivity and based on self-declaration of states’ reforms.

• While the earlier ranking was based on combined metrics for business process reform with user feedback and mostly reflected general perceptions.

• Non-inclusive: States such as Odisha, which slipped 15 places in the rankings, have complained that they were unable to complete surveys in time for the report
• UP’s performance despite its debilitating situation

• Instability in terms of law and order despite high-profile encounters.
• Abysmal social metrics:

• Illiteracy is high.
• Lack of skilled workers.

• Ailing Micro, Small and Medium Enterprises (MSMEs).
• Skewed development concentrated towards the National Capital Region (NCR)

• Concerns over the top-down approach: whether the top-down approach can substitute for root-and-branch reform of the state’s bureaucratic and judicial apparatus, which is not known for probity or efficiency.
• Rankings don’t reflect investors intentions: 

• In 2019, according to the data from the Secretariat of Industrial Approvals, UP attracted 147 investment proposals worth Rs 16,799 crore.
• While, Gujarat (433 proposals worth about Rs 3.44 trillion), or Maharashtra (410, more than Rs 1.15 trillion) are ranked lower in the list.

Conclusion:  There is a need for a more robust methodology.