Economic Freedom of the States of India 2011 - Cato Institute

2.4 Regulation of Labour and Business: State Ratings and Rankings . . . . . . 34 .... states registered large increases in economic freedom: Andhra Pradesh and ...... technology—it ranks fourth among all Indian states in software exports—.
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Contents

List of Tables and Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Foreword by I AN V ÁSQUEZ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Message by S IEGFRIED H ERZOG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

1. The State of Economic Freedom in India Bibek Debroy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2. Calculating Economic Freedom Laveesh Bhandari. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3. Andhra Pradesh: Fastest Improver in Economic Freedom Swaminathan S. Anklesaria Aiyar. . . . . . . . . . . . . . . . . . . . . . . . 41 Appendices I: Variables and Methodology . . . . . . . . . . . . . . . . . . . . 65 II: Detailed Methodology . . . . . . . . . . . . . . . . . . . . . . . . . 68 III: Mapping of Variables with Economic Freedom of the World . . . . . . . . . . . . . . . . 70 IV: Data and Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

List of Tables and Figures

TABLES 1.1

India’s Scores in Economic Freedom of the World . . . . . . . . . . . . . . . . . 17

2.1

Areas under Central and State Government Control . . . . . . . . . . . . . . . . 24

2.2

Size of Government: State Ratings and Rankings . . . . . . . . . . . . . . . . . 28

2.3

Legal Structure and Security: State Ratings and Rankings . . . . . . . . . . . 31

2.4

Regulation of Labour and Business: State Ratings and Rankings . . . . . . 34

2.5

Overall Economic Freedom Ratings: 2009 . . . . . . . . . . . . . . . . . . . . . . . 36

2.6

Economic Growth and Economic Freedom in Indian States . . . . . . . . . . . 37

3.1

Ranking of States on Economic Freedom Index . . . . . . . . . . . . . . . . . . 42

3.2

GDP Growth in Andhra Pradesh and All-India . . . . . . . . . . . . . . . . . . . . 43

3.3

Andhra Pradesh: Indicators of Economic Freedom—2005 and 2009 . . . . 44

3.4

Gross Fixed Capital Formation as Per cent of GDP/GSDP . . . . . . . . . . . . 47

3.5

GDP Growth in Four Northern Maoist-Affected Districts . . . . . . . . . . . . . 49

3.6

Sectoral Growth Rates at Constant (1999-2000) Prices: India vs. Andhra Pradesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

3.7

The Top 10 Global Reformers and South Asia . . . . . . . . . . . . . . . . . . . . 54

3.8

Doing Business Rankings of Countries in South Asia . . . . . . . . . . . . . . . 55

3.9

Doing Business in India: Where is it Easiest? . . . . . . . . . . . . . . . . . . . . 55

3.10

Ease of Starting Businesses and Construction Permits . . . . . . . . . . . . . . 57

3.11

Property Registration and Ease of Export/Import . . . . . . . . . . . . . . . . . 58

3.12

Contract Enforcement and Tax Payments . . . . . . . . . . . . . . . . . . . . . . . 59

3.13

Ease of Closing Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

3.14

Economic Competitiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

3.15

Ranking of States by Labour Ecosystem . . . . . . . . . . . . . . . . . . . . . . . . 63

8

Economic Freedom of the States of India

FIGURES 2.1

Change in EF Index and Economic Growth of the States (2005 to 2009) . . . . . . .