Economic Freedom Index: Its relevance for Economic Development

After having worked on the Economic Freedom Index for the states of India, it was but logical to widen the scope of debate by expanding the target group. The Index no longer is confined to be an academic exercise. In this particular programme, in addition to the representation from the Industry and the private sector, representation from academic circles, media, bureaucracy and like-minded entities was also ensured. Earlier, in September this year, a similar programme was organized in Chandigarh for the northern states of India.

The decision to hold this panel discussion in Hyderabad was an easy one. Hyderabad has seen tremendous economic growth in the recent years and is also to be seen as a Hi-tech City inviting IT companies from around the world to establish shop there. Economic Freedom has both relevance and application in India today, especially in the city of Hyderabad which is booming with business activity. The Economic Freedom Index for the states of India emphasizes that Economic freedom, broadly speaking, is the freedom of the citizens from undue interference by the government. Specifically, the concept encompasses the following four dimensions (i) personal choice rather than collective choice, (ii) voluntary exchange coordinated by markets rather than allocation via the political process, (iii) Freedom to enter and compete in markets, and (iv) protection of persons and their property from aggression by others. The result shows that there is a positive correlation between economic freedom and economic prosperity. In other words, the more the economic freedom that states enjoy, the citizens of those states are better off economically.

Speaking in the inaugural session, Subodh Kumar welcomed the Chief Guest and the participants and highlighted the concept of Economic Freedom and pointed out that Freedom does not end where the economy starts. Dr. Kaushik remarked that freedom of choice is a human right. When government acts as a coercive force or constraints business, it actually impinges on economic freedom of an entity or individual.

Lead researcher, Prof. Simrit Kaur, pointed out that the state of Andhra Pradesh has slid down two places in the latest Index (2006) as compared to the previous year (2005). This is a clear indication that the state is not growing economically as much as it was growing in the last year. The potential of the state is much more than it is able to exploit.

The audience participated eagerly in the discussion and even commented on the parameters used in the Index. After the programme, a Press briefing was organised by the local TV Channel “Enadu” which aired the interviews of the experts.