Conference on “The Economic Freedom Index 2011”

The Conference on “Fastest Growth in Andhra Pradesh: The Economic Freedom Index 2011” started off at ITC Kakatiya Hotel, Hyderabad. The Conference was inaugurated by Dr. Jayaprakash Narayan, MLA, President, Lok Satta Party.

Mr Swaminathan A. Aiyar, Consulting Editor, The Economic Times, Mr Devendra Surana, Senior Vice president, FAPCCI, Padma Bhushan Ch. Hanumantha Rao, Economist Former Member, Planning Commission, Mr Siegfried Herzog, Regional Director South Asia, FNF , Mr Srinivas Ayyadevara , Vice President, FAPCCI, Mr M. V. Rajeshwara Rao, Secretary General, FAPCCI are the other speakers st the conference.

The Summery of the program

The Economic Freedom of the States of India 2009 ranks economic freedom in the 20 biggest Indian states, using a methodology adapted from the Fraser Institute’s Economic Freedom of the World annual reports. The main highlights of this study are as follows. The top three states in economic freedom in 2009 were Tamil Nadu, Gujarat and Andhra Pradesh, in that order. This is significantly different from 2005, when Tamil Nadu was still on top but Madhya Pradesh came 2nd, Himachal Pradesh 3rd, Haryana 4th, and Gujarat 5th. The bottom three states in 2009, in reverse order, were Bihar, Uttarakhand and Assam. Back in 2005, Bihar was still last (20th), Assam was 19th and West Bengal was 18th.

The state with the fastest improvement in economic freedom was Andhra Pradesh, moving up from 7th position in 2005 to 3rd position in 2009. Its index score went up from 0.40 to 0.51 on a scale from 0 (no freedom) to 1 (high freedom), an improvement of 27.25 per cent. The second fastest improver was Gujarat, moving up from 5th to 2nd position.

Even as some states improved in economic freedom, others worsened, showing that there is no uniform all-India trend. Only two states registered large increases in economic freedom: Andhra Pradesh and Gujarat. Haryana, Tamil Nadu, West Bengal, Rajasthan and Jammu & Kashmir registered moderate increases in economic freedom. The states with the largest decreases in economic freedom were Madhya Pradesh, Orissa, Uttarakhand, Punjab and Himachal Pradesh. Punjab, once among the best performers, slipped from 6th position in 2005 to 12th position in 2009. It has been riding too long on its earlier successes, and its present track record on governance, broadly defined, is anything but satisfactory.

States with higher levels of economic freedom tended to perform better across a range of economic variables. They also had higher levels of in-migration, while states with the least economic freedom had higher levels of out-migration.

Andhra Pradesh reduced waste and corruption and implemented innovative reforms such as contract teachers to supplement regular teachers, social audit of employment schemes, and private sector participation in infrastructure projects which had earlier been government monopolies.

Three factors—buoyant agriculture, rural infrastructure, and the elimination of Maoism—boosted employment and attracted in-migration from other states.

A number of independent studies and indicators support our analysis of Andhra Pradesh. The World Bank/IFC report Doing Business 2010 ranks India a lowly 133rd out of 183. Some Indian cities have worse business conditions than others. Doing Business in India 2009 ranks Hyderabad as the second easiest place to do business among 17 top cities.