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Maharashtra is leading in overall competitiveness, closely followed by Goa, Tamil Nadu, Delhi and Gujarat (see ‘India’s Most Competitive States’). Jammu and Kashmir languishes at the bottom of the heap, though it is ranked last on only one parameter — pointing to mutual internecine linkages of negative factors at play. The south Indian states are at a cusp where the next wave of enhanced competitiveness is in the offing, the detailed profile of Tamil Nadu — ranked No. 3 — illustrates this.
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Of the three new states, chhattisgarh and Jharkhand are yet to find their legs. Madhya Pradesh, to pick another case, is third on human capacity, yet overall it is a mid-ranked state (12th). In the same vein, West Bengal, a strong player of yore, is an average 13th ranked state though its demographics fetch it a third position. All Northeast powers lag the pool, again inviting criticism of policies prevailing, central as well state ones. This is despite Arunachal Pradesh ranked high (No. 3) on business incentives and Mizoram, ranked No. 2 on innovation capacity. Maharashtra has no significant ranking in the constituent parameters yet tops the chart on competitiveness, and Goa emerges the second best with the same dichotomy. This accentuates a valuable lesson for policymakers: the need to enable overall synergies and boost ranking on all parameters simultaneously.
The report captures the essence of productivity by studying the indicators at each of the levels of the Diamond framework. The levels of measurement range across financial and logistical infrastructure under the factor conditions, business incentives and diversity of firms and competition intensity under the context for rivalry, supplier sophistication under related industries and basic demographics and income distribution patterns under the demand conditions. The focus is to study the availability of the high-quality, efficient and specialised factors, customer quality and purchasing power, the effectiveness with which the factor and demand situation can be matched and the clusters for support in terms of human resource and skills.
This report has a two-fold perspective. It provides policymakers with a better view of the shortcomings of states. It is imperative to view a large economy as a series of smaller economies and concentrate over a range of industries in each of the states. Regional economic specialisation drives the productivity growth. The decision makers need to centre their efforts at the more pressing issues at the micro and macro-economic level. The second prerogative of the report is to aid the firms in gauging the states as potential investment avenues and provide an encompassing perspective on the expected returns.
The rankings are at variance from the commonly held impressions, primarily because the subjective bias as used by other studies has no role here; all data employed is hard data with no surveys. An objective lesson from the report is that empowering people with prosperity is the key, not size inherited due to linguistic or cultural partitioning of the country into states.
The hard data is translated into cold reality in the interest of the nation and the hope that it would be the driving force for a better, more competitive economy.
The author is honorary chairman of Institute for Competitiveness at Gurgaon, Haryana
(Businessworld Issue 17-23 Feb 2009)
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