Report on Governance Performance of Indian States

The recent study on the performance of state governments in the delivery of core public services under “Governance Performance of Indian States” by the NIPFP states the rise of Regional disparity.

NIPFP is an independent think tank which specializes in public financing and policy. It also evaluates the performance of Governance across all the states in India. 

The study covers 19 States which account for 96 per cent of the population, for which requisite data was available from 2001-02 to 2011-12. 

What are the criteria for assessing Governance Performance in the Report?

The exercise of ranking Indian states is based on five sets of criteria —

1. Infrastructure

2. Social services

3. Fiscal performance

4. Justice, Law and order

5. Quality of the legislature

What is the purpose of the Report?

The Indian Constitution has laid down the jurisdiction of different tiers of government in the Seventh Schedule under Article 246. There is some overlap, especially for subjects in the concurrent list, and in recent years, a few subjects of the union government have fallen into the jurisdiction of the states. Nevertheless, the constitutional demarcation of subjects that are the responsibility of the union and those that are the responsibility of the states is very clear. 

The 1991 liberalization reforms largely covered subjects in the union list. The focus of second-generation reforms has subsequently shifted to state subjects. 

The awards of successive finance commissions, especially the most recent, Fourteenth Finance Commission, have also considerably enhanced the fiscal autonomy of the states, better enabling them to make their own choices in public action. 

These are welcome developments. They have helped to promote performance competition among states. Such competition works best when consumers, in this case voting citizens in states, are well informed and have the necessary data to objectively assess the performance of state governments. 

However the recent report has highlighted on the performance of state governments in the delivery of core public services and concluded on the increment in regional disparity among states.

Concept of Governance according to the Report

Governance has been defined as service delivery, closely correlated with economic development. 

The choice of governance indicators is derived from the three pillars of the state, that is, the executive, the judiciary, and the legislature. However, given the context of a developmental state, the emphasis is on the executive branch of government that is responsible for delivering most public services either directly or indirectly. 

Fourteen indicators have been selected that capture delivery of five broad classes of outputs, namely, infrastructure, social services, fiscal performance, justice, law and order, and quality of the legislature. 

 Governance Performance of States

Report survey covers 19 major states which account for 96% of the population. 

Key highlights of the report: 

● Five of the six best-performing States in 2001 — Gujarat, Tamil Nadu, Andhra Pradesh, Kerala and Punjab — continue to be the top performers in 2011. 

● Four of the six worst-performing States in 2001 — Odisha, Jharkhand, Uttar Pradesh and Bihar — remained at the bottom in 2011. 

● This led to the conclusion that “development clusters” — combinations of quality service delivery and high per capita income — are emerging among the more developed States in the south and west of the country, leaving behind the less-developed States, especially in the eastern region.

● A consequence of such stickiness of rankings at the top and the bottom is growing regional disparity between the more and less-developed states.

● There is a vast difference among the States in infrastructure. For instance, road density in Karnataka in 2011, at 10.8 km per 100 sq-km, was five times that of Odisha, at 1.95 km. Similarly, in education, the gross enrolment rate in Himachal Pradesh during 2011-12 had already reached 100 per cent, whereas it was only 63.7 per cent in Assam.

● The study shows that development legacy seems to have a strong impact on the quality of governance (when measured as service delivery). Hence, another set of rankings was devised factoring in the impact of development on governance outputs.

● Some of the less developed States like Bihar and Madhya Pradesh moved up significantly in the modified ranking. Bihar jumped eight positions from the 18th in standard ranking to the 10th in development-adjusted ranking. Madhya Pradesh jumped from the 13th to second position. Chhattisgarh, placed at the eighth position, was the top performer in the modified ranking.

● Governments in these States are attempting to offset their negative legacy of relative backwardness, delivering a much better quality of services than would be expected at the relatively low level of development of these States.

Quality of governance

The scores for individual service delivery outputs have been pulled together to yield the overall Governance Performance Index(GPI) and Development Adjusted Governance (DAG). The two main features that stand out from composite  GPI and DAGI ranks is the relative stability  of the composition of best- and   worst-performing states, and the  sharp changes that appear when  the rankings are adjusted to control for the impact of development. Thus, Gujarat, followed by 

Tamil Nadu, were the two best-  performing states in 2001 as well as 2011. Also, five of the six best performing states in 2001 remained the best-performing in 2011: Gujarat, Tamil Nadu, Andhra  Pradesh, Kerala, and Punjab. 

At the other end, four of the six worst-performing states in 2001 remained the worst-performing in 2011: Odisha, Jharkhand, Uttar Pradesh, and Bihar. West Bengal and Assam slipped down to the bottom category in 2011, while Rajasthan and Uttarakhand moved out of this category. 

In fact these were the two states that gained the most in their relative ranking, with Uttarakhand moving up seven ranks and Rajasthan by four ranks. 

The maximum declines in relative rankings were noted in Haryana and West Bengal, both of which dropped four ranks each.


Such rating of state government performance acquires a special significance in the context of India’s maturing democracy where the performance of governments is increasingly playing a role alongside traditional identity politics in determining election outcomes. Significantly empowered by the devolution and grant awards of successive finance commissions, the states are increasingly competing with one another in terms of performance. 

Interestingly, after adjusting for the level of development, some of the less-developed states like Bihar and Chhattisgarh moved up quite significantly in the service delivery ranking.  Evidently, governments in these states are attempting to offset their negative legacy of relative backwardness, delivering a much better quality of services than would be expected at the relatively low level of development of these states. This has led to the emergence of two quite distinct paths of development in the more and less developed states. In the former state governments mainly play an enabling role, providing good infrastructure, efficient administrative processes, etc, for private enterprise-led development. In some of these advanced states like Tamil Nadu such an enabling role is combined with a high level of social service delivery. But in others, like Gujarat, the challenge is their deficit in social development. Thus, Gujarat tops the list for overall governance and also for infrastructure, but comes lower down the list for social service delivery. It drops down even further when the ratings are adjusted for its level of development.

In the other path, seen in less developed states like Bihar, governments play the dominant role in development since private enterprise is quite weak governments need to drive both public investment-led growth as well as social development.