The Hindu Business Line : Kerala among high-ranked States in economic freedom: Study

Mr M.R. Srinivasa Murthy, Principal Secretary, (Finance Department), Government of Karnataka (right), and Mr J. Crasta, President, Federation of Karnataka Chambers of Commerce and Industry, at a seminar in Bangalore on Friday. — G.R.N. Somashekar

Our Bureau

Bangalore July 3 Tamil Nadu offers more “economic freedom” than any other State, ranking first among 20 States in 2005, 2006 and 2007. These are the findings of a study by the Rajiv Gandhi Foundation (RGF), which constructs a “composite economic freedom index of States”. Gujarat has remained in second place over this period.

A meeting to discuss the release of the latest index, titled ‘The Role of Economic Freedom in the Development of Karnataka’, was organised by the Press Institute of India, Friedrich-Naumann-Stiftung fur die Freiheit (FNF) and RGF here on Friday. The index examines the ease of doing business, the freedom to compete and the security of private property, with a focus on the size of government, legal structure and security of property rights and regulation of credit, labour and business.

Karnataka slips

The meet focused on economic freedom in Karnataka, which slipped from seventh place in 2006 to 15th position in 2007. Mr P.D. Kaushik of RGF said that businesses in Karnataka required 147 Central and State approvals to start operations, while property lost had only a 20 per cent chance of recovery.

Andhra Pradesh, Kerala, Rajasthan, Himachal Pradesh and Uttar Pradesh were among the high-ranked States in 2007, having moved up in the rankings over the years.

Mr D.H. Shankaramurthy, Deputy Chairman of the Karnataka State Planning Board, said on the sidelines of the meet that the State is hopeful of more transfers from the Centre to tide over the current situation of economic slowdown. “The situation will (be) clearer in a couple of weeks,” he said.

Mr M.R. Sreenivasa Murthy, Principal Secretary (Finance Department), said on the sidelines that the State budget for 2009-10 remains valid. Talks to increase transfers through Central schemes are in progress, he said.

Hailing RBI

On the subject of economic freedom, Mr Murthy said in his inaugural address that the benefits of regulation are being appreciated in the wake of the financial crisis. He said that although the Canada-based Fraser Institute recently ranked India at 77 for its economic freedom, the role of the Reserve Bank in the wake of the market meltdown has been hailed. “Economic freedom needs to be defined in the context in which we are living,” Mr Murthy said.

Taking exception to identifying the size of government as a criterion that negates economic freedom, Mr Murthy said that the Government spends not only on the salaries of its staff, but also on teachers, doctors, nurses and nutrition to anganwadis. “The ratio of salaries to government expenditure in Karnataka is among the lowest incurred by any State,” he said. “It is important for the government to set up a school where there is no school. Only later does the question of choice arise,” Mr Murthy said.

He said that for economic freedom to increase in Karnataka, the rural population must be provided with the choice to shift out of agriculture, through better rural education. The educated unemployed should be able to improve skill sets, he said.