NITI Aayog has launched ‘Investment Friendliness Index’. Its objective is to make states more attractive for private investment. Instead of ranking the states, this index will help in strengthening their investment ecosystem and achieving the goal of ‘Developed India’.
New Delhi [भारत]July 18 (ANI): States will increasingly play a key role in attracting private investment and driving India’s long-term economic growth, according to reports. NITI Aayog’s new ‘Investment Friendliness Index’ will serve as a reform tool to strengthen the state-level investment ecosystem, rather than merely ranking the performance of states.
Investment is necessary for developed India
Achieving the vision of a ‘Developed India’ by 2047 will require a sustained increase in productive investment, the report said. In this, state governments are expected to play a bigger role in improving ease of doing business, infrastructure, policy stability and regulatory efficiency to attract domestic and global investors.
Why was Investment Friendliness Index created?
“The Investment Friendliness Index has been developed to understand how well placed Indian states are to attract investment,” the report said. It also says it evaluates what makes a state attractive to investors and what challenges it faces.
According to the report, investment has accounted for more than half of India’s economic growth since the early 1990s, while the country will need strong investment-led growth to achieve high economic expansion in the long term.
It says private investors ultimately make location-specific decisions based on state-level factors such as quality of infrastructure, regulatory certainty and institutional effectiveness.
How will the states get help?
The report said the Investment Friendliness Index is designed to help states compare their performance, identify policy gaps and adopt best practices to continuously improve their investment climate. It also said that the index aims to encourage healthy competition among states, as well as promote cooperative federalism and enable policymakers to monitor reforms over time.
According to the report, states that have strengthened investor facilitation through measures such as single-window clearance systems, dedicated grievance redressal mechanisms for investors and plug-and-play industrial infrastructure have reported higher capital commitments and faster project execution, highlighting the importance of industrial capacity as well as institutional accountability.
Role of private investment and basis of index
The report also said that while capital formation has been driven by government and domestic investment after the pandemic, private corporate investment is expected to play a bigger role going forward. It said equal participation of states will be necessary to improve the investment climate, as the government continues infrastructure development and seeks to maintain investment-led growth.
NITI Aayog said the index combines public data with investor perception surveys to provide states a roadmap to improve investment competitiveness. Apart from benchmarking performance, it is expected to help governments formulate policies, reduce barriers to investment and strengthen their ability to attract capital, thereby supporting India’s long-term development goals. (ANI)
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