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: (1991=100) Figure 1.3. Gross foreign direct investment (percent of GDP) BGDBGD CH N IN D MA L

Figure 1.6. Per Capita GSDP 2001 Figure 1.7. GSDP growth rate (%):

Improving the competitiveness of manufacturing industry

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 )

Productivity gaps within India

Number of inspections by government officials Madhya Pradesh Delhi Haryana Maharashtra Uttar Pradesh Karnataka Punjab Gujarat Andra Pradesh Tamil Nadu West Bengal Kerala Num Madhya Pradesh Delhi Haryana Maharashtra Uttar Pradesh Karnataka Punjab Gujarat Andhra Pradesh Tamil Nadu West Bengal Kerala

Senior management time spent dealing with regulations (%) Madhya Pradesh Uttar Pradesh Haryana Andhra Pradesh Karnataka Punjab Delhi Tamil Nadu Maharashtra West Bengal Kerala Gujarat Madhya Pradesh Uttar Pradesh Haryana Andhra Pradesh Karnataka Punjab Delhi Tamil Nadu Maharashtra West Bengal Kerala Gujarat

Days to clear customs (imports) Madhya Pradesh Uttar Pradesh Kerala Karnataka Andhra Pradesh Tamil Nadu Maharashtra Gujarat Delhi Haryana West Bengal Punjab Madhya Pradesh Uttar Pradesh Kerala Karnataka Andhra Pradesh Tamil Nadu Maharashtra Gujarat Delhi Haryana West Bengal Punjab