How competitive is Sikkim?

source: iSikkim 

In Business World’s State Competitiveness Survey Sikkim ranks 21. With the overall score of 43.06, Sikkim is third most competitive state among the northeaster states. The two northeastern states more competitive than Sikkim are Meghalaya (45.40) and Assam (46.41). The top rank goes to the state of Maharashtra at 58.38.

The per capita GDP of Sikkim at Rs. 34821 is better than all other northeastern states. The nearest northeastern state in this regard is Mizoram (Rs 29165). But the demand conditions in Sikkim is worst in the country and so is its competitiveness in terms of strategic context.

What gives Sikkim a relative edge, at least among northeastern states, are the supporting conditions. Sikkim ranks 10th in this particular regard. Only Manipur among the NE states fares better than Sikkim in supporting conditions. Manipur ranks 6th in supporting conditions. Sikkim has the lowest population among all Indian states. The Himalayan Kingdom is the fourth best state in factor conditions.

State Competitiveness Index

State Competitiveness Index

But what after all is competitiveness? Honorary Chairman of the Institute for Competitiveness, Amit Kapoor wrote in an article in Business World, “Competitiveness is the productivity (value per unit of input) with which a nation or a region utilises its various resources.” Again productivity depends on the value of products and services as well as the efficiency with which they are produced.

The underlying principle is that each state has to look at growth by understanding its present state of economic development. Factor-driven economies focus on low-cost basic factor conditions (low-skilled labour, natural resources, geographic location); investment-driven economies would produce standard products and services of high quality using efficient methods but at lower wages than advanced economies; and innovation-driven economies would focus on innovative products and services at the global technology frontier.

Gujarat’s high-growth model continues to set an example for other states to follow. With 5 per cent of India’s population and 6 per cent of geographical area, Gujarat accounts for 17 per cent of the country’s fixed capital investment; 22 per cent of exports, 42 per cent of pharmaceuticals; 62 per cent of petrochemicals; 65 per cent of plastic industry; and 80 per cent of diamond processing.

Rajasthan, which topped the rankings among low-income states, has emerged winner on the basis of the highest income and consumption capability. It has also scored the highest in communication infrastructure and human capacity.

An interesting conclusion has been that on human capacity, Assam, Nagaland and Manipur top the list of low-income states with high human capacity.

Way ahead for Sikkim

High GDP per capita is a good thing for Sikkim. GDP is the best measure to assess the standards of living. The measure for competitiveness is supported by four pillars or dimensions that assess the competitive potential of a state: factor conditions, demand conditions, supporting conditions and strategic context. These factors in turn are quantified on the basis of sub-indices, which are based on basic sets of indicators. Each of the sub indices is dependent on basic factors such as literacy rates and density of population; something in which Sikkim already has some advantage.If the state can innovate, it will soon be able to address the sub indices that improve competitiveness.

(With inputs from Business World)

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