Bank lauds India's reforms process

Investment climate needs improvement: Report

The persistence of India's economic reforms process has yielded enormous benefits, according to the World Bank. However, a lot still needs to be done to improve the investment climate in the country.

"The key is to address important constraints in ways that give firms confidence to invest and to follow initial reforms with ongoing improvements. India's reforms increased growth from an average of 2.9 per cent a year in the 1970s to 6.7 per cent by the mid-1990s, and the share of its population living on less than $1 a day fell from 54 per cent in 1980 to 35 per cent in 2000," says the World Development Report, 2005.

Accelerating growth and poverty reduction requires governments to reduce the policy risks, costs, and barriers to competition facing firms of all types ""from farmers and micro-entrepreneurs to local manufacturing companies and multinationals.

The World Bank's investment climate surveys show that corruption is the number one constraint firms face in South Asia. Unreliable electricity supply is next as losses from electricity outages average over 10 per cent of sales in India and over 6.5 per cent in Pakistan, the report points out.

Resolving bankruptcy takes an average of 3.2 years on an average across all regions. South Asia's average is 4.8 years, with procedures taking 10 years in India.

Registering a business takes 24 days in Pakistan, 35 in Bangladesh, 50 in Sri Lanka and 89 in India.