Indian States by Economic Freedom

Source Cato Institute
Last Updated25 Jan 2015

This is a list of 20 major States of India ranked according to economic freedom. This Index is based on the three parameters: size of the government, legal structure and security of property rights, and regulation of business and labour. The Index is based on the Fraser Institute’s Economic Freedom of the World (EFW) report.

Gujarat is India's most economically free state, with an index score of 0.65 (on a scale from 0 to 1.0). Nadu remains in second position, but some distance behind, with a score of 0.54. Andhra Pradesh (0.50), and Haryana (0.49) are at third and fourth place, respectively. Next in line come Himachal Pradesh (0.47), Madhya Pradesh (0.47) and Rajasthan (0.46). The bottom three states, are Bihar (0.31), Assam (0.32) and Jharkhand (0.33).

Gujarat registered the fastest rate of improvement from 0.46 in 2005 to 0.65 in 2013. Gujarat was at fifth position in 2005. Index score of Chhattisgarh and Andhra Pradesh is improved by 0.11 and 0.10,respectively. Out of 20 states, Index score of 6 states has declined in 2013 from 2005. These six states are: Jharkhand (-0.07), Tamil Nadu (-0.03), Madhya Pradesh (-0.02), Himachal Pradesh (-0.01), Punjab(-0.01), and Odisha (-0.01). Bihar is at last position among the 20 states. But, Bihar’s freedom index score has improved significantly from 0.25 in 2005 to 0.31 in 2013.

The biggest improvement in rank has been recorded by Chhattisgarh, which has moved up from 16th to 8th position. Rajasthan moved up by 5 position. Rank of Jharkhand has slipped from 8th position to 18th. Punjab was 6th in 2005, now 13th in 2013.

States2013 2005change
OverallRankOverallRank OverallRank
Tamil Nadu0.5420.571-0.03-1
Andhra Pradesh0.5030.4070.10+4
Himachal Pradesh0.4750.483-0.01-2
Madhya Pradesh0.4760.492-0.02-4
Jammu & Kashmir0.41120.34150.07+3
Uttar Pradesh0.36160.35140.01-2
West Bengal0.35170.31180.04+1
Economic Freedom of the Statesof India