India exhibits great regional variations in the level and impact of corruption. India is a union of 28 states (plus 6 union territories and the capital, New Delhi). Each of the local governments holds wide legislative powers, including areas such as public procurement (see the Corruption Levels and Public Anti-Corruption Initiatives for more information) and anti-corruption bureaus. The CMI’s India Corruption Study 2010 covers four key public sectors in 12 different states. The covered sectors are the public distribution system (PDS, one of the largest distribution networks providing food grains at lower than market price), school education, water supply and hospital services. The illustrative findings of the study are as follows:

• Bihar and Chhattisgarh were the two states where they had the most household respondents perceiving corruption in public services as having increased in 2008 (66% respectively), while Tripura (19%) had the least respondents perceiving corruption in public services as having increased.
• Bihar (62%), Chhattisgarh (58%), and Uttar Pradesh (50%) had the most rural household respondents who believed that there was an increase in the level of the corruption in the public distribution system (PDS).
• Andhra Pradesh (55%), Bihar (43%) and Uttar Pradesh (49%) had the most rural households that believed that the level of corruption had increased in school education services, while Kerala (15%) had the least respondents who perceived that corruption in school education services had increased.
• Bihar (73%), Uttar Pradesh (54%) and Haryana (46%) had the most rural households that believed that the level of corruption in water supply services had increased in 2008, while states with the least households that perceived the level of corruption had increased in water supply services were Karnataka (21.8%) and Himachal Pradesh (21.3%).
• The states where a high percentage of rural households reported an increase in the level of corruption in hospital services in 2008 were Bihar (67.2%), Chhattisgarh (47.8%) and Uttar Pradesh (46%), while the states with the least households that perceived the level of corruption had increased were Himachal Pradesh (21%) and Tripura (23.8%). 

Overall, 45% of the rural household respondents in the 2010 study perceived corruption in public services to have increased, a decline from 70% in the 2005 study. It is important to note that the study ranks the states on petty corruption using information from a household survey rather than from a business survey, which would indicate how companies are affected by corruption in different states. Transparency International India & CMS 2007 indicate that households below the poverty line are disproportionately affected by corruption both in urban and rural areas.

Similarly, companies will find great sub-national variations in the regulatory environment. India has a decentralised federal system of government, where state governments hold broad regulatory powers. This means that important regulatory issues such as land-use and environmental regulations may vary from one state to another. A study by the World Bank & IFC, Doing Business in India 2011, includes a comparative study of the business environment in 17 major Indian cities. Some of the findings of the study are presented below:

• Starting a company takes longest in Kochi (41 days) and in Bengaluru (40 days), whereas the same procedure in Noida is considerably less time-consuming (30 days). However, it is also pointed out that starting a company in Patna is less costly than in Bengaluru (38.5% of income per capita, versus 64.7%).
• Hyderabad requires the lowest number of days to fulfil all regulatory requirements to build a warehouse (80 days) compared to Kolkata (258 days), which performs worst in this category among the cities studied. The cost of obtaining licences for building a warehouse is lowest in Patna (204.4% of income per capita) and highest in Mumbai (2,717.7% of income per capita).
• Registering property is faster in Jaipur (24 days) than in Kolkata (107 days) and Bhubaneswar (126 days). However, the cost of property registration is lowest in Ranchi (5.4% of property value) and highest in Noida (25.4% of property value).
• Trading across borders in India is characterised by a cumbersome bureaucracy, but again, regional differences are substantial. Importing and exporting operations run most smoothly from Bhubabeswar's port (16 days to import, 17 days to export) closely followed by Ahmedabad (18 days to import, 17 days to export). Import-export operations take longest time in Ranchi (36 days to import, 21 days to export).
• Commercial disputes before courts in India are among the lengthiest in South Asia. Again, Indian cities perform differently in the area of contract enforcement, with the shortest durations found in Guwahati (600 days) and Kochi (705 days) and the longest in Ahmedabad (1,295 days) and in Mumbai (1,420 days).

Another 2011 study jointly conducted by Indicus Analytics, Cato Institut & Friedrich Naumann Stiftung compared the 20 Indian states’ relative levels of economic freedom and opportunity in 2009. The study is based on three parameters that are: the size of the state government, legal structure and security of property rights, and regulations of business and labour.

• With regards to legal structure and security of property rights, Tamil Nadu, Madhya Pradesh and Andhra Pradesh rank the highest in this regard, while Bihar, West Bengal and Assam are ranked as the bottom three states.
• Regarding business and labour regulation, Gujarat, Andhra Pradesh and Tamil Nadu are ranked as the top three states while Chhattisgarh, Bihar and Punjab are ranked as the bottom three.
• Overall, Andhra Pradesh and Gujarat illustrate the biggest improvement in economic freedom between 2005 and 2009, while Madhya Pradesh, Orissa, Uttarakhand, Punjab and Himachal Pradesh show large declines in economic freedom in the same period.
• Furthermore, the report also lists some positive developments carried out by Andhra Pradesh’s state government during the observed timeframe, amongst others, the reduction of waste and corruption.