Karnataka raises objection against ease of doing business ranking, ask for re-evaluation

In a letter addressed to Union minister Piyush Goyal, state minister for large and medium scale industries Jagadish Shettar contested the assessments and methodology of ranking and made a strong pitch to revise the ranking after re-evaluating the ...

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BENGALURU: The BS Yediyurappa government has raised objections before the Centre on the ease of doing business (EODB) rankings, miffed over the state being pushed to the 17th position.

The BJP-ruled state has lost nine places from the eighth rank last year in the EODB index published by the Department for Promotion of Industry and Internal Trade (DPIIT) earlier this month.

In a letter addressed to Union minister Piyush Goyal, state minister for large and medium scale industries Jagadish Shettar contested the assessments and methodology of ranking and made a strong pitch to revise the ranking after re-evaluating the performance of states. ET has seen the copy of the letter.


The state has questioned why it had been ranked 17th, despite being one of the top six states to have successfully implemented all business reforms (187 out of 187). The ranking suggests that some provinces which haven’t implemented any of the reforms or have implemented fewer (like Lakshadweep - 0, Delhi – 83) have secured a better rank than Karnataka, the minister said in the letter.

The state government also said the DPIIT had deviated from its practice of not declaring the ranking in public domain. “In the State Business Reforms Action Plan methodology, it was communicated by DPIIT that there would not be any ranking published in the public domain but it will share grades and categories,” the letter read.

Another objection is about the feedback process itself, which according to the state government, was filed by consultants, architects and others and not by the actual users. To fix this issue, the state has suggested the DPIIT to adopt the World Bank Feedback Assessment methodology and make the ranking “robust.”
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The letter appraised the Centre about the various reform measures taken up by the state to promote investment and the data to prove how Karnataka already has an investment-friendly ecosystem.

The Karnataka government said the EODB ranking had sent a “negative message” to the investors community across the globe which would harm the state’s image and the investment promotion efforts.

The state requested that the performance be re-evaluated to address Karnataka’s concerns. “We also need to rethink the evaluation system by including both qualitative and quantitative parameters and take states into confidence while taking up the evaluation,” the minister said in the letter.

Karnataka is not the only state to object to the rankings. Gujarat, Odisha and Kerala too have sought clarifications on certain parameters. The Odisha government has said that there seemed to be “incongruence” in the results.
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As for Karnataka, while the government admits that a slight fall in the performance was expected due to political instability in the state that lasted for over a year, the drop to the 17th position was unfathomable. A section of industry stakeholders, however, said they were not totally surprised with the ranking because of the problems that medium and small-scale industries go through in Karnataka.

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