Workshop on The NCAER 2018 State Investment Potential Index N-SIPI 2018 The NCAER Study Team August 3, 2018 1
Structure of Presentation 1. Background and scope of project 2. The six pillars of N-SIPI 3. Introduction to pillars 4. Overall ranking under N-SIPI 2018 and trends 5. Perceptions pillar
Background and Scope 3
The global context: growth and competitiveness Global Trends in the Economic Policy 1200.0 Uncertainty Index (EPU) GST was introduced in April last year. The India is the third 1000.0 average GST revenue in largest market in 2017 – 18 has been the world impressive, at Rs. 800.0 89,885 crore 600.0 India the fastest The Global growing economy Competitiveness 400.0 in the world in Index ranks India at 40 th place 2018 at 7.3 percent 200.0 The World Bank’s 0.0 Jan'14 Jan'15 Jan'16 Jan'17 Jan'18 June'18 Ease of Doing Business ranks India at 100 th place India EPU Global EPU China EPU 4
N-SIPI and the World Bank/ DIPP Index N-SIPI focuses on the The World Bank/DIPP N-SIPI therefore policy and structural Index assesses complements the work backdrop that procedures to of the World Bank and determines business facilitate ease of doing DIPP environment in a business and state. transactions . Both induce state level Ranks states on Ranks states based on competitiveness and comprehensive score the progress on a 405- performance based on six pillars point action plan on business reforms 5
N-SIPI-The journey • There is a rising spirit of ‘competitive cooperative federalism’ entailing healthy competition among states in all spheres of business, including in the sphere of attracting investment • As a result, states are now vying with one other in their effort to make it easier to do business and attract investment • NCAER’s initiative in this direction – N-SIPI 2016 : NCAER formulated and presented the first State Investment Potential Index – N-SIPI 2017 : NCAER modified and presented the second State Investment Potential Index – N-SIPI 2018 : NCAER conducted a panel survey Reliable, Consistent and Annual “Go - to” Index for policy- makers and business
What’s new in N -SIPI 2018 Building on the success of N-SIPI 2016 and 2017, this third edition improves its methodology in ranking states – A unique feature of N-SIPI 2018 is the inclusion of questions on GST and e-way bill in the perceptions survey to examine the impact of the new tax policy on businesses and its implications for investment in different sectors of the economy. – Makes survey methodology more robust.
Six pillars of N-SIPI
Introduction to the six pillars
Pillar 1: Land Availability of Land for Industrial Purposes and Industrial GSVA 100 VA l GSVA 90 80 Total 70 o Tot 60 % to 50 s % VA as 40 GSVA 30 l GS 20 ial Industria 10 Ease of Land Acquisition and Stalled Industrial Projects 0 0 20 40 60 80 100 100 esser ojects AVAILABILITY Y OF LAND FOR OR INDUSTRIAL PU PURPOSES lies less 80 lled proj lled prpjects) 60 alue impli tall 40 Number of Sta higher valu 20 tall sta 0 (hig Nu 0 20 40 60 80 100 Ease se of Lan and Acq cquis isition 10
Rankings: Pillar 1 (land) 2018 Trend Telangana Up (+1) Madhya Pradesh Up (-2) Top 6 states Tamil Nadu - Kerala Up (+ 6) Andhra Pradesh Up (+1 ) Maharashtra Up (+1)
Pillar 2: Labour Educated Workforce and per capita GSDP 100 80 DP GSDP apita GS 60 Per cap 40 Pe 20 0 0 20 40 60 80 100 Population wit Pop ith seco condary leve evel ed educ ucation or high igher Number of Man-days Lost due to Strikes and Labour Laws 100 80 abour 60 sy lab easy 40 Perception on ea laws 20 0 0.0 20.0 40.0 60.0 80.0 100.0 Nu Number of man man-days los ost t due ue to o str trikes s (a a high igher valu lue implie ies Pe less sser num number of f man man-days los ost due ue to o stri trikes) 12
Rankings: Pillar 2 (labour) 2018 Trend Tamil Nadu - Andhra Pradesh - Top 6 states Karnataka Up (+ 2) Uttar Pradesh Up (+3 ) Kerala Up (+1) Maharashtra Down (-2) 13
Pillar 3: Infrastructure Road Density and Industrial GSVA 100 l tal Tota 80 of To % of 60 as % GSVA as GSVA 40 GS l GS 20 ial ndustria 0 Ind 0 20 40 60 80 100 -20 Road Den Ro ensity Power Shortage and Availability of Power Supply 100 adequate 80 ly upply 60 f ad ower sup 40 Perception of 20 pow 0 0 20 40 60 80 100 Pe Pow Power sho hortage (hig higher valu alue impli lies less esser sho hortage) 14
Rankings: Pillar 3 (infrastructure) 2017 Trend Delhi - Punjab Up (+2) Top 6 States Maharashtra Down (-1) Haryana Up (+2) Kerala - Tamil Nadu Up (+2) 15
Pillar 4: Economic climate Ind Industrial GSVA an and d per perception of of eco economic clim limate ic economic 100 he econ 80 limate Perception on the 60 clim 40 20 Pe 0 0.0 20.0 40.0 60.0 80.0 100.0 Ind ndustria ial l GS GSVA GST and Perception on Ease of Transition to GST 100 90 olicy 80 x poli GST T 70 o GS rception on tax ion to 60 50 transitio 40 30 20 Perc 10 0 0 20 40 60 80 100 GS GST T as as a a perce centage of f non non-agric icultre GS GSVA 16
Rankings: Pillar 4 (economic climate) 2017 Trend Delhi Up (+1) Telangana Up (+4) Top 6 states Gujarat Down (-2) Maharashtra Up (+1) Karnataka Up (+2) Andhra Pradesh Up (+5) 17
Pillar 5: Governance and political stability Governance and per capita GSDP 100 90 80 GSDP DP 70 apita GS 60 50 Per cap 40 30 Pe 20 10 0 0 20 40 60 80 100 Gov Governance ce index Stalled Projects and Perceptions on Acquiring Approvals for Business 100 ing g cquirin 80 60 rception on Acq ls approvals 40 20 ap 0 Perc 0 20 40 60 80 100 Environment t rela elated sta talle lled proj ojects (Hig igher valu alue impli lies less sser sta tall lled proj oject cts) 18
Rankings: Pillar 5 (governance & political stability) 2018 Trend Tamil Nadu Up (+4) Haryana Down (-1) Top 6 states Punjab Up (+1) Gujarat Down (-2) Madhya Pradesh Up(+3) Karnataka Up (+1) 19
Pillar 6: Perceptions The Perceptions Pillar forms the sixth pillar of N-SIPI Constructed using extensive and scientifically based industry surveys across 21 states Unique component of N-SIPI 14% Percent respondents finding getting approvals for land a problem No Problem Moderate 54% 32% Severe 20
Pillar 6: Perceptions Law and order situation in the state 55.0 Corruption in the state 45.9 Difficulty in getting approvals for land 45.7 Tax policy transition to GST 44.5 Quality of skilled labour 44.4 Getting all approvals before starting business 43.6 Labour laws 37.4 Sewage facility 35.9 Access to finance 34.6 Labour relations 34.4 Availability of net connectivity 31.3 Availability of skilled labour 30.9 Availability of water 30.1 Industry related policies 29.1 Availability of unskilled labour 28.8 Road / Rail quality/ connectivity 28.7 Availability of raw material 28.3 Availability of power 21.2 0.0 20.0 40.0 60.0 Constraints Faced by Business (% Respondents) 21
Pillar 6: GST perceptions Respondents Reporting Problems Related to Tax Policy Transition to GST (%) 14.5 No problem Respondents Perceiving the Impact of Moderate GST on Their Businesses (%) 56.4 29.0 Severe 17.3 Better 39.6 Same Worse 42.6
Rankings: Pillar 6 (perceptions) 2018 Trend Gujarat - Haryana Up (+2) Top 6 states West Bengal Up (+18) Kerala Up (+3) Delhi Up (+1) Uttarakhand Up (+10)
Overall Rankings under N-SIPI 2018 and Trends
Overall rankings under N-SIPI 2018: All Six Pillars 25
Dynamic shifts: Change in rankings in 2018 as compared to 2017
Dynamic shifts: Change in rankings in 2018 as compared to 2017
Dynamic shifts: Change in rankings in 2018 as compared to 2017
Dynamic shifts: Change in rankings in 2018 as compared to 2017
Perceptions Pillar-Survey Based
Survey objectives The N-SIPI Perception Survey is aimed to have - • A better understanding of the constraints to business in the selected states at ground level The survey depicts perceptions emerging from their • experience and involvement on the various aspects of reforms as captured through specific indicators at the firm level through the responses to the structured questionnaire both from the manufacturing and services sector units
Survey pillars & sub-pillars Infrastructure Business Land Labour Economy & Environment Governance Industry policy Power Availability Skilled Prospective business Finance Procedural Quality Water condition accessibility constraints Unskilled Net Connectivity Own financial Raw materials position Sewage Relation Clearance Present Laws Road/Rail investment Corruption connectivity climate Law & Order GST Tax policy Current level of transition operation
Survey features Spatial Spread 20 major States and Delhi Sample Size 1049 units, 44 districts Survey Period May-June 2018 Survey Method Questionnaire-based interviews Responding units MSMEs, large sized manufacturing and services firms
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