Every three months, the CSIS Wadhwani Chair in US-India Policy prepares an overview of key state-level reforms from thirteen of India’s largest states and union territories. In the most recent quarter, 1 October, 2016-31 December, 2016, the total number of positive state-level reforms rose to 14, as against nine in the previous quarter.
Haryana led the way with six positive policy reforms. Gujarat, perhaps spurred by its impending “Vibrant Gujarat” business summit, had three significant reforms. Maharashtra also had three. Delhi and West Bengal also made the list. Karnataka and Maharashtra both had policy changes that we view as harmful to their respective business environments.
Apart from state policy reforms, there are a few important efforts underway that are shifting the balance of power between the Central government and the states. Of note:
• Ujwal DISCOM Assurance Yojana (UDAY): The electricity utility bailout program signed on four more states, bringing the total number of participating states to 21. (In the first quarter of 2017, Sikkim signed on, bringing the total to 22.)
• Goods and Services Tax: Parliament has not been able to move forward with implementing legislation related to the tax administration functions under the goods and services tax. An April 1, 2017 rollout looks increasingly difficult.
• NITI Aayog—Digital Payments: On 30 November, NITI Aayog announced the creation of a ‘Committee of Chief Ministers’ to offer ideas on expanding the use of digital payments. This will include state administrative reforms to help this process.
• NITI Aayog—Health: On 21 December, NITI Aayog released an outline of its forthcoming Performance on Health Outcomes index. This survey will be carried out in early 2017, and is meant to provide more concrete information on state performance across a range of health outcomes.
Below, we capture key regulatory developments across 12 key states (plus Delhi) we cover in our States Weekly Update. The areas covered are: Andhra Pradesh, Bihar, Delhi, Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal.
• Delhi: The Delhi government’s revenue department has digitized land records of 206 revenue villages and 22 subdivisions in rural areas and has begun the process of putting these records online.
• Gujarat: Gujarat governor OP Kohli approved an ordinance regularizing nearly 75,000 residential encroachments on urban land owned by the state government under the provisions of the Urban Land Ceiling and Regulation Act, 1976.
• Gujarat: Gujarat became the first state to notify regulations under the new national Real Estate (Regulation and Development) Act. Contrary to the language of the bill, which includes any and all residential construction currently underway, Gujarat’s rules exempt all projects launched before the act was passed.
• Gujarat: Central environment minister Anil Dave announced the lifting of the moratorium on expansion of industrial units and opening of new plants in the industrial clusters of Ankleshwar, Vapi, and Vatva in Gujarat.
•Haryana: Haryana has decided to adopt the Swiss Challenge method for selecting a development plan for 3,000 acres of land for a $10 billion industrial park. Using this selection method, anyone wishing to present a proposal must make it public, after which other bidders are free to improve on it.
•Haryana: Faced with a shortage of industrial land, Haryana will offer private companies village council land on a 33-year lease. Proponents of the move say that villages will benefit from increased employment and revenue generation while retaining ownership rights over the land.
•Maharashtra: The Maharashtra government has released draft rules under the Real Estate (Regulation & Development) Act (RERA). The rules require real estate developers to furnish additional information regarding ongoing projects and to deposit 70% of the deposits received from buyers in an escrow account, where it may only be used for project completion.
•West Bengal: The state assembly passed the West Bengal School Service Commission (Amendment) Bill which removes regional restrictions on the hiring and placement of teaching staff.
Water, power, sanitation
•Haryana: The Haryana government has amended the Haryana Building Code to make installation of a decentralized solid waste management plant mandatory in group housing societies, hostels, and hotels. Buildings that contain such facilities will be able to take advantage of a higher floor area ratio
Other pro-business regulations
•Haryana: Chief Minister Manohar Lal Khattar has scrapped a decades old policy giving the state’s chief minister final say in the grant of licenses to developers. Khattar will return control over licensing decisions to the director, town and country planning.
•Haryana: Haryana has introduced a public procurement policy directed at supporting micro, small, and medium enterprises, which includes exempting such businesses from the tender fee and earnest money deposit.
•Haryana: Haryana’s cabinet approved a draft notification amending the Haryana Motor Vehicles Rules to allow private companies to offer road transport in the state.
•Maharashtra: Maharashtra cut the number of permissions required for project approval in the hospitality sector from 70 to 41.
•Maharashtra: Maharashtra released new procurement rules that give registered start-ups a better chance to win public contracts. Per the revised policy measures, government agencies can waive criteria specifying a minimum annual turnover and experience if a registered start-up bids for a contract for public supplies.
•Karnataka: Proposed a 100% reservation for native workers in blue-collar jobs.
•Maharashtra: The Maharashtra Electricity Regulatory Commission has rejected the Maharashtra electricity distribution company’s proposal for an average 5.5% increase in the electricity tariff for 2016-17 but has allowed a moderate hike of 1 to 1.3% for residential consumers for the current year and also for every fiscal year up to 2020. is
Richard M. Rossow is the senior adviser and Wadhwani Chair in US-India Policy Studies, The Center for Strategic and International Studies
For the full States Quarterly Update, see livemint.com/statecompetition