Economic Freedom of the States of India 2013

by Swaminathan S. Anklesaria Aiyar, Laveesh Bhandari, Bibek Debroy

This report seeks to measure economic freedom in different Indian states to show how this improves economic outcomes. Economic freedom is a concept first used by the Fraser Institute to measure the extent to which governments constrain efficient decision making and distort resource allocation. It has been used in cross-country literature to show that countries with higher levels of freedom have better development indicators. However, attempts to capture economic freedom at the subnational level of state governments are rare, although very pertinent in a federal country like India. Many areas of economic decision making in India fall under the jurisdiction of state governments and are listed in the Seventh Schedule of the Indian Constitution. This pioneering work modifies the Fraser Institute’s methodology of measuring economic freedom across countries, creating a new way of measuring economic freedom across Indian states. This shows which states are getting freer or less free and demonstrates how economic freedom at the state level impacts economic development.

96 pages, Paperback

First published July 1, 2014