Maharashtra top performing state, southern states dominate in environment and governance areas: CareEdge ratings

Over the last few years, there has been intense competition among states when it comes to the economy, infrastructure development, education, fiscal situation, social and governance pillars. Maharashtra has emerged on top of the overall composite state rankings released by credit ratings agency CareEdge. This was followed by Gujarat and Karnataka in the rankings.

As such, western and southern states dominated the top five rankings. While, fiscal, economic and financial development were the strong pillars for western states, southern states performed well across economic, financial development, environmental and governance pillars.

Separately, among the north-eastern, hilly and small states, it was Goa that excelled in the rankings with strong scores for financial development, infrastructure, social, fiscal and economic pillars.

"For a comprehensive assessment of the states' overall performance, we have looked at seven pillars namely economic, fiscal, financial development, infrastructure, social, governance and environment covering a total of 50 indicators. This is a quantitative assessment of states’ potential in terms of sustainable and equitable growth and is also a reflection of investment attractiveness of these states," said Rajani Sinha, chief economist at CareEdge Ratings.

Maharashtra, which emerged as the number one state, topped in financial development. The state also ranks strongly in economic, fiscal and social pillars. It has done well in credit disbursements by banks and non-bank finance companies, penetration of mutual funds and health insurance.

Gujarat, which followed Maharashtra, topped the economic pillar on the back of a strong performance in per capita gross state domestic product (GSDP), foreign direct investment (FDI) as a percentage of GSDP, and gross fixed capital formation for industries. Karnataka and Maharashtra followed with a higher share of industry and services in gross value added and an encouraging performance in FDI, the data from CareEdge showed.

But, notably, it was the eastern state of Odisha that led the fiscal rankings. The state has done well in terms of its revenue deficit, interest payments as a percentage of revenue, debt management, outstanding liabilities and guarantees, according to the rating agency.

Meanwhile, it was Kerala that stood out in social rankings, followed by Tamil Nadu. "Kerala and Tamil Nadu stood out in the social assessment, driven by strong scores across most indicators. However, Kerala lagged in the unemployment front," the study noted.

The southern states - Karnataka, Telangana, Andhra Pradesh and Tamil Nadu - also led in environment rankings. While Karnataka had good scores as far air quality and renewable energy were concerned, Telangana did well in terms of change in forest cover and potable water. Among the smaller states, it was Himachal Pradesh that excelled in areas like renewable energy, potable water and change in forest cover.

The southern states have also done well on the governance front, securing four of the top six positions. Andhra Pradesh topped the assessment, on the back of strengths in the areas of business environment, court conviction rate, completion of court trials and strength of judges. It was notably followed by Madhya Pradesh, aided by positive outcomes for completion of court trials and public e-service delivery.

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