by Bibek Debroy, Laveesh Bhandari, Swaminathan S. Anklesaria Aiyar
March 20, 2014
Economists since the time of Adam Smith have pointed to the strong relationship between prosperity and open markets. At a time when India has benefited from sustained high growth as a result of liberal reforms, we considered it important to measure economic freedom within this vast country and to highlight the diverse levels of freedom from state to state. The uneven spread of economic freedom in India is a reminder to state-level policymakers that there is much they too can do to improve the welfare of their citizens. India’s economic freedom rating has improved notably since the early 1990s, but it is still low and it ranks poorly on a global scale (111th place out of 144 countries). Numerous states have shown significant increases and declines in their economic freedom rankings. Yet, greater economic freedom in general is positively associated with growth at the state level.