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Bangalore, June 21

KARNATAKA has got some bouquets for its friendly investment climate but has to shake off the labels of corruption, regulation, and poor infrastructure as listed by a large number of constrained investors, according to a World Bank assessment.

Although it fares better than most other States, Karnataka needs to polish up its performance to meet international benchmarks, according to the findings of the bank's `Doing Business Report 2005 - Focus on Karnataka'.

The assessment covered mostly SMEs across all sectors in Bangalore, Mangalore, Mysore, and Hubli-Dharwad.

It identified the time taken to start business and time spent by the management on regulation in these places as the main parameters.

Mr Niraj Verma and Mr Inderbir Singh Dhingra from the World Bank, who presented the findings at a CII-sponsored workshop, said that Bangalore along with Chandigarh took just 57 days to register a company - compared to 89 days in Mumbai - and was ranked at the top of other 48 cities surveyed.

Karnataka also topped in the regulatory criterion, bettering the all-India average of 14.2 per cent.

"It still has a way to go if it must catch up with the best cities in China, Brazil, or the West," they said.

High energy cost, access to infrastructure and finance, and labour were the other parameters.

On the plus side, Karnataka industry reported 5-6 inspections a year compared to 11 in 2000 and was well ahead of the best cities in China or Brazil.

However, it lagged in enforcing contracts, requiring 709 days to Maharashtra's 425 days.

On access to finance, Karnataka was just a tad behind Andhra Pradesh, the State with the best overdraft facilities for industries.

On an India scale, there are intrinsic advantages and huge potential that remains untapped, yet regulations continue to bog down private sector performance, which the bank sees as a priority area, according to the bank's Country Director, Mr Michael Carter.

The Chief Secretary, Mr K.K. Mishra, admitted that Bangalore had seen imbalanced growth and investors need to offset it by going to other centres such as Mysore and Hassan.

(This article was published in the Business Line print edition dated June 22, 2005)
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