NITI Aayog on July 17 launched the Investment Friendliness Index (IFI) to assess how well Indian states and Union Territories are positioned to attract investments. The index evaluates all 28 states and eight Union Territories, measuring both the factors that make a region attractive for investors and the challenges businesses face.
The index evaluates states across eight pillars—infrastructure, business climate, resources, government policy, regulatory ease, institutional environment, financial health and environmental resilience.
NITI Aayog said the index is intended to become a national benchmark that supports evidence-based policymaking, encourages healthy competition among states, promotes collaborative learning, attracts quality investments and strengthens India’s position as a preferred global investment destination…
Lahiri said that investments will play a critical role in making India ‘Viksit’ by 2047. “Investment is defined as addition to capital. No matter what you want to do in agriculture, you need pumps, you need tractors, unique harvesters… for industry, you need machines. So, capital is very important.” He adds, China’s incremental capital output ratio is much higher than what we are maintaining.
What is ICOR?
The Incremental Capital Output Ratio (ICOR) is a macroeconomic metric that measures the efficiency with which capital or investment is used in an economy to generate growth. It quantifies the amount of additional capital investment required to produce one additional unit of economic output (GDP).
A lower number indicates that the economy is highly productive, generating more growth with fewer capital resources. China’s ICOR in the past six years has averaged 8.5 on an annualised …
What does the Niti’s new index say?
The index uses a 100-point scale and serves as a benchmark for states to improve their investment environment. Each state has scored on different aspects using a mix of primary surveys and publicly available data. Major participants in the survey spanned across key sectors in India. Based on the scores, states have been grouped into four categories: Top performers, frontrunners, emerging performers and aspiring states.
According to the IFI report, five states were identified as top performers: Gujarat, Maharashtra, Tamil Nadu, Goa and Odisha. Fifteen states were classified as frontrunners, including Delhi, Uttar Pradesh and Andhra Pradesh. Eight states/UTs fell into the emerging performers category, while an equal number fell into the aspiring states category.
