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This report explores the impact of infrastructure and business regulation on India's economy, focusing on the manufacturing industry. It highlights the potential for faster growth and the disparities in regional performance. The report also examines productivity gaps, wages, and the investment climate in various cities.
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Investment Climate Assessment of India 2004 Why does infrastructure and business regulation matter?: Findings from World Bank ICA 2004 Priya Basu & Taye Mengistae, World Bank Mumbai, November 24, 2004
Figure 1.2. Values of exports: 1990-2001 (1991=100) Figure 1.3. Gross foreign direct investment (percent of GDP) BGD CHN IND MAL
Figure 1.6. Per Capita GSDP 2001 Figure 1.7. GSDP growth rate (%):1991-99
Objective of the report: Assess the costs of deficiencies in business environment to Indian industry. Context: Consensus that although India’s GDP has grown at an impressive rate over the past 12 years it needs to and can grow significantly faster over the coming decade. The need arises from the poverty reduction imperative
Evidence of potential for faster growth: (a) India’s natural comparator, China, has grown at an average rate of 10 percent against India’s 6 percent over the same period in spite of similarities in initial conditions; (b) There are huge disparities in the growth performance of India’s own regions. (c) Performance gaps at both levels (national and sub national) have a great deal to do with differences in investment climate.
The focus of the report Limited to manufacturing industry primarily for reasons of availability of data. Do nonetheless believe that many of policy conclusions drawn here might apply to other sectors. In any case, manufacturing industry is a major contributor to GDP and employment. Improvement in its international competitiveness should therefore be an important source of potential for faster growth of the overall economy.
Manufacturing value added per worker per annum (US $, 1999 prices) Manufacturing wages per worker per annum (US $, 1999 prices)
Cities covered by the investment climate survey of 2003 Metropolitan cities Large cities Smaller cities Delhi Pune Chandigarh Gwalior Mumbai Surat Cochin Mangalore Kolkata Lucknow Mysore Nashik Chennai Kanpur Vijayawanda Nagpur Bangalore Bhopal Guntur Thane Ahmedabad Ludhiana Gurgaon Jalandhar Hyderabad Indore Panipat Coimbatore Vadodara Hubli - Dharwad Hosur Faridabad Calicut Madurai Palakkad Ghaziabad Noida Howrah Shahjahan pur - Lakimpur
13.6 13.6 13.0 13.0 10.8 10.8 9.3 9.3 7.6 7.6 6.8 6.8 5.6 5.6 5.5 5.5 5.4 5.4 5.0 5.0 3.9 3.9 1.9 1.9 Delhi Delhi Punjab Punjab Gujarat Gujarat Kerala Kerala Haryana Haryana Karnataka Karnataka Tamil Nadu Tamil Nadu West Bengal West Bengal Maharashtra Maharashtra Uttar Pradesh Uttar Pradesh Andhra Pradesh Andra Pradesh Madhya Pradesh Madhya Pradesh government officials Num Number of inspections by
24.3 24.3 21.0 21.0 17.8 17.8 15.7 15.7 13.4 13.4 12.8 12.8 12.7 12.7 11.2 11.2 10.7 10.7 9.9 9.9 7.9 7.9 7.0 7.0 Delhi Delhi Punjab Punjab Kerala Kerala Gujarat Gujarat Haryana Haryana Karnataka Karnataka Tamil Nadu Tamil Nadu Maharashtra Maharashtra West Bengal West Bengal Uttar Pradesh Uttar Pradesh Andhra Pradesh Andhra Pradesh Madhya Pradesh Madhya Pradesh Senior management time spent dealing with regulations (%)
10.8 10.8 10.1 10.1 9.6 9.6 9.6 9.6 8.8 8.8 8.1 8.1 7.6 7.6 7.1 7.1 7.1 7.1 5.7 5.7 3.0 3.0 2.6 2.6 Delhi Delhi Punjab Punjab Gujarat Gujarat Kerala Kerala Karnataka Karnataka Haryana Haryana West Bengal West Bengal Uttar Pradesh Uttar Pradesh Tamil Nadu Tamil Nadu Madhya Pradesh Madhya Pradesh Maharashtra Maharashtra Andhra Pradesh Andhra Pradesh Days to clear customs (imports)
