State rankings: A matter of judgement

Subjective weightings result in curious outcomes in states' performance rankings

- M GOVINDA RAO

The report on the performance ranking of states for 2025, prepared by Care Edge Ratings—a subsidiary of Care Ratings—has received wide media coverage since its recent release. Although the report was produced by a private rating agency, it was accorded a measure of official status through a foreword by the CEO of NITI Aayog.

The report ranks the performance of states in terms of seven pillars—namely, economic, fiscal, financial, infrastructural, social, governance, and environment—and works out a composite index to rank the states. This is the second edition of the report by the agency, the first having been released in 2023, though the report states that the two are not comparable.

It is well known that development performance is multifaceted and no single variable can capture it in its entirety. Therefore, the performance measurement in terms of the seven pillars has a wider canvas. The exercise employs 50 indicators to represent them. It uses the standard method of normalization and assigns different weights to the variables used in each of the seven pillars, based on judgments about their relative importance, and estimates indexes of the seven pillars. The composite index is prepared again by aggregating the indexes of the seven pillars, by assigning different weights based on judgments about their relative importance.

The exercise is carried out separately for the large states (Group A) and the northeastern, hilly, and small states (Group B). Thus, we can observe the relative rankings of the states across each of the seven pillars, as well the overall performance. The composite ranking of the states shows Maharashtra, Gujarat and Karnataka occupying the top three positions in Group A, while Goa, Sikkim, and Himachal Pradesh lead in Group B. Madhya Pradesh, Jharkhand and Bihar are the worst three in Group A, while Arunachal Pradesh, Manipur and Nagaland are at the bottom in Group B.