The retail and wholesale sector in India is among the biggest in the country, yet it receives little attention from policy makers and researchers. The sector accounts for about 14% of India’s GDP and over a quarter of the value added in all services sectors. It is the second largest employer (after agriculture), providing over 10% of all formal jobs in the country. The sector has also shown strong growth in recent years, with an average annual growth rate of 7.3% over the 1990s (and with some predicting continued strong growth over the next few years). These numbers tell the story in the formal sector. But an estimated 95% of the sector’s activity takes place in the informal sector that is not accounted for in the official figures.
Lack of reliable data is a major problem for studying retailing in developing countries such as India. In 2005, the Enterprise Surveys conducted a survey of 1,948 stores in 41 large cities of India. The survey provides information on various store characteristics and the obstacles they face in doing business. The picture below provides a sense of what policy makers should worry about the most. As experienced by retailers, inadequate power supply and access to finance, high tax rates and corruption and land related problems are the five most serious obstacles. I plan to elaborate on the nature and magnitude of these problems in future posts.
Source: Enterprise Surveys. The figure contains the full list of obstacles from which the respondents could choose.
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