Comparing the investment climates of Bangalore with cities of Uttar Pradesh and recommending policy and governance measures to attract I.T. sector investments in U.P

Abstract

India has been witnessing high growth rates in the Information technology sector. Realizing its multiplier effect on the economy, the Central Government has facilitated this growth by establishing software technology parks at various potential growth centres in the country. We have also entered an era of "competitive federalism" wherein each state is coming up with polices and incentive packages to attract IT sector investments. While a few destinations like Bangalore have been undertaken a high growth path, Uttar Pradesh, despite its advantages in terms of proximity with capital and availability of qualified manpower, has been lagging behind. These regional imbalances will widen if appropriate state level policy and Governance interventions are not put into place that can leverage the advantage of these regions. The poor performance of the state on critical factors will lead to post-investment dissonance, which will have an overriding impact on future investments.The present study is an effort to scientifically analyse the reasons for poor growth in U.P. and to provide policy and Governance prescriptions that can remove existing obstacles. The present research has used the methodology of identifying factors perceived important by investors in deciding the investment destinations and the performance of these factors in U. P. and Bangalore. Once these High importance and low performing factors are identified, remedial actions are suggested in terms of changes in polices and Governance measures so that they are oriented towards investor needs. The study has given separate treatment to Noida and rest of UP since they are governed differently and have region specific features.It was revealed that for Uttar Pradesh, factors related to Government support, Law and Order, over regulation by the government/development authorities and technical infrastructure fell into High importance-Low performance category and discriminated the most with Bangalore. This low performance is a result of gap between Investor needs, announced policies and actual implementation, which the study has made an effort toidentify.It is hoped that the specific measures recommended will go a long way inimproving investment climate and reversing the trend of declining Investments in u.pand make it a competitive destination for IT investment.