Maharashtra tops the overall ranking list prepared by credit rating agency CARE Ratings scoring high on social, financial inclusion, and fiscal categories.
It is followed by Gujarat with second rank faring well in economic and fiscal categories, while Tamil Nadu ranks third with an edge in social and governance categories, CARE Ratings said.
According to CARE Ratings, the rankings are based on seven pillars — economic, fiscal, social, infrastructure, financial inclusion, environment, and governance — and covers 46 indicators to rank the major states in the country.
The ranking report attempts to provide a comprehensive quantitative evaluation of states’ performance.
“The State Ranking study is aimed at capturing the comprehensive performance of the states. This study highlights the areas in which the various states have shown healthy performance and the areas which need further attention of the policymakers. Maharashtra, the financial capital of the country, tops the ranking with a favourable score not just in financial inclusion but also for the state government finances and social indicators. In this comparative study, the leading states could offer the others a model to follow,” said Mehul Pandya, Managing Director and CEO, CARE Ratings.
While the Union Territories were excluded from the study, CARE Ratings had the states into two categories — Group A (large states) and Group B (Northeast, hilly and small states).
The ranking covers not just the state’s economic, infrastructure and fiscal performance, but also aspects of sustainability and inclusive growth.
The comprehensive coverage is consistent with shifting viewpoints around the world, where reducing income disparity, governance, environmental protection, and sustainability are becoming increasingly important, CARE Ratings said.
“We have looked at the performance of the states not just in terms of economic growth, physical infrastructure and investment, but also given due importance to social indicators, environmental aspects, governance and financial inclusion. This is with the recognition that inclusive and sustainable growth is the need of the hour.
“As expected the top few ranks have been taken by the Western and Southern states. Western states have scored high on the fiscal and economic category, while southern states have outperformed in the social and environmental category,” said Rajani Sinha, Chief Economist, CARE Ratings.
As regards the states under Group B, Goa tops in the overall ranking and was a front-runner in social, infrastructure, financial inclusion and fiscal categories.
Among the northeastern states, Sikkim leads due to better scores in economic, social, infrastructure and environment categories.
In terms of economic category, Gujarat tops the ranking in the economic category with healthy data on per capita gross state domestic product (GSDP), GSDP growth, foreign direct investment (FDI) flows and high share of industry and services in GSVA (Gross state value added). Karnataka and Maharashtra follow the topper.
Better score on revenue and fiscal deficit and healthy debt management indicators (Consolidated Sinking Fund & Guarantee Redemption Fund) translated into Odisha topping the ranking in the fiscal category.
In the fiscal category, Punjab ranks the lowest in Group A as the state performs poorly in debt sustainability as well as debt management, the study states.
In the social category, Kerala emerged as the clear winner with the highest score in all the social indicators considered, covering education, health and income distribution.
Punjab and Haryana topped on infrastructure ranking, mainly due to high power availability, railway density and greater irrigated area.
However, both the states lagged in terms of social infrastructure indicators like hospital beds in the government hospitals and number of schools as percentage of population.
As expected, Maharashtra topped in financial inclusion with best performance in credit/GSDP ratio, NBFC sanctions and health insurance penetration. It also fared well in mutual fund penetration.
The two southern states — Andhra Pradesh and Telangana — topped in governance due to high Ease of Doing Business (EoDB) rank and better score in the court conviction rate.
According to the study, the Southern states topped in environment due to relatively favourable performance in terms of air quality, solid waste management, forest cover and renewable installed capacity.