NITI Aayog's Investment Potential Index for States
The NITI Aayog is set to launch an index that ranks Indian states based on their investment potential, focusing on two primary dimensions: opportunity and risk.
Key Initiatives
- Investor-Friendly Charter:
- Proposes modifications in laws.
- Reforms related to clearances and licensing.
- Ensuring land availability through land banks.
- Provision of electricity and water.
- Offers appropriate incentives to attract investments.
- Periodic Monitoring: The initiative includes regular monitoring and publication of state performance based on the charter's criteria.
Dimensions of the Index
- Opportunity Dimension: Includes factors like state government policies and incentives.
- Risk Dimension: Consists of:
- Natural Risk
- Regulatory Risk
- Financial Risk
- Institutional Effectiveness
- Perception-Based Indicators: Measures how investors perceive and prioritize opportunities and risks, and assesses the quality of investor experience regarding rules and regulations.
Recent Developments
- India's Foreign Direct Investment (FDI) inflows increased by 45% year-on-year, reaching $29.79 billion in the first six months of the current fiscal year, compared to $20.5 billion in the previous year.
- Aayog has initiated stakeholder consultations to finalize indicators for state investment potential.
Stakeholder Consultation Objectives
- Gather insights from diverse stakeholders to identify key parameters for choosing investment locations.
- Ensure the framework reflects ground realities and prioritizes investor concerns.
- Highlight impactful indicators for assessing state investment attractiveness.
The initiative underscores the government's commitment to assessing the opportunities states offer in terms of infrastructure, incentives, and manpower from an investor’s perspective, while understanding associated risks.
