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Logistics Performance Index 2021 – Gujarat retains number 1 spot again

Logistics Performance Index 2021 – Gujarat retains number 1 spot again

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  • GS 3 || Economy || Infrastructure || Transportation

Why in the news?

  • Recently, the Ministry of Commerce and Industry has released the Logistics Ease Across Different States (LEADS) Report (Index) 2021.
  • The LEADS report is aimed at gauging the logistics performance of states and Union Territories (UT) and identifying areas where they can improve logistics performance.

Details

  • On the national logistics index 2021 chart, Gujarat was ranked first out of 21 states for its well-developed infrastructure and services driven by a responsive government. This is the third year in a row that Gujarat remained on top of the rankings.
  • Haryana and Punjab have emerged as the top performers in the LEADS 2021 index respectively following Gujarat.
  • Delhi stands at the top rank among Other UTs.
  • The North Eastern States and Himalayan Region: Jammu and Kashmiris the top-ranked followed by Sikkim and Meghalaya.
  • West Bengal, Rajasthan, Madhya Pradesh, Goa, Bihar, Himachal Pradesh, and Assam were ranked 15th, 16th, 17th, 18th, 19th, 20th, and 21st

About Logistics Ease Across Different States (LEADS)

  • It is a composite indicator to assess international trade logistics across states and Union territories.
  • LEADS is an attempt to bring Longevity, Efficiency, Accuracy, Durability, and  Smartness to the Logistics sector.
  • The LEADS index was launched in 2018 by the Commerce and Industry Ministry and Deloitte.
  • It ranks states on the score of their logistics services and efficiency that are indicative of economic growth.
  • It is a perception-based survey. 
  • It is based on a stakeholders’ survey for the Ministry of Commerce and Industry.
  • LEADS is influenced by the World Bank’s biannual Logistics Performance Index (LPI).
  • LEADS is based on eight parameters
    • Infrastructure,
    • Services,
    • Timeliness,
    • Track and trace,
    • Competitiveness of pricing,
    • Safety of cargo,
    • Operating environment and
    • Regulatory process.

Need for better Logistics

  • India’s logistics costs account for 13-14 percent of the country’s GDP, compared to 7-8 percent in developed countries.
  • Over the next five years, the government hoped to reduce logistics costs by 5%.
  • India’s estimated logistics costs are currently around 14%, which is quite high when compared to the global average of 8-10%.
  • Efficient logistics were essential for businesses and citizens to feel at ease and empowered.
  • During the second wave, logistics made a significant contribution to our fight against Covid-19 by transporting critical supplies, including liquid Medical Oxygen, across the country.
  • NITI Ayog’s report on India’s Logistics Sector- NITI Aayog and Rocky Mountain Institute(RMI) has released a report titled “Fast Tracking Freight in India: A Roadmap for Clean and Cost-Effective Goods Transport”.
    • Currently, India’s logistics sector represents 5% of India’s Gross Domestic Product (GDP). The sector employs around 2.2 crore people.
    • India handles 6 billion tonnes of goods each year, amounting to a total annual cost of INR 9.5 lakh crore.
    • These goods represent a variety of domestic industries and products-
      • 22% are agricultural goods,39% are mining products and 39% are manufacturing-related commodities.
    • Trucks and other vehicles handle most of the movement of these goods. Railways, coastal and inland waterways, pipelines, and airways account for the rest.
    • India’s freight activity will grow five-fold by 2050 and about 400 million citizens move to cities. So, a whole system transformation can help uplift the freight sector.

A way forward for better logistics infrastructure and Government’s Efforts

  • Ease of Doing Business and Ease of Living
    • Improved ranking will fetch more investment and a cycle of economic growth will be fueled.
    • During the COVID period, the government was able to manage critical requirements due to efficient infrastructure.
  • Bring down costs
    • India must lead the way to bring down logistics costs by 5 percent over the next 5 years.
  • PM GatiShakti Master Plan
    • It would revolutionize the next generation of multimodal infrastructure development in the country.
    • Better logistics would help India in its commitment to build modern infrastructure for the 21st century, at a pace never seen before. ‘
  • Jal Marg Vikas
    • Aims to contribute to bringing down the logistics cost in the country and will provide an alternative mode of transport that will be environment friendly and cost-effective. 
    • The project envisages fairway development through a performance-based contract for the least assured depth of 2.2 metres to 3 metres and bottom channel width of 45 metres, bank protection works, and provisions of navigation aids.
  • The Bibek Debroy committee recommended that the rail industry needs to be liberalized by allowing the entry of private operators to provide services in the railway sector. For long privatization of railways has been projected as a possible solution to these issues. It also recommended Improved Infrastructure, Normalization of prices due to the competition Improved Security:  Better Technological Innovation via privatization of Railways.

Mains model Question

  • The Logistics Ease Across Different States (LEADS) report is aimed at gauging the logistics performance of states and Union Territories (UT) and identifying areas where they can improve logistics performance. Discuss

References