The study has been undertaken for a period of 17 years from 1993 to 2010. The entire period has been divided into two sub periods from 1993-94 to 2000-01 and from 2001-02 to 2010-11 to see the variations happening in these sectors across the categories as a result of state sponsored incentives. It is after 1991 reforms that the concept of incentive competition came into vogue. Since then some states started offering incentives and the rest of the states started following them in the later years. Though the states started offering incentives in 1993 the impact of the same could be felt with a lag. Keeping this lag effect in view the study period has been divided into two sub periods.
In the below table an overview of the policies being pursued by major states of the country are given. . The policy indicator which has been estimated for further analysis has been calculated on the basis of these below mentioned policies.
In the following table states are ranked according to the median FDI inflow. One can see a correlation between states' policy indicator value and their ranking on the basis of median FDI flow. States like Andhra Pradesh, Karnataka, Gujarat etc., which are having high policy indicator value are also topping the list of high median flow. And states like Madhya Pradesh, Orissa, Bihar which are having low policy indicator value are in the bottom of the list of ranking of states on the basis of median FDI flow. But there are few exceptions like Delhi and Maharashtra. Though their policy indicator value is low they are the first top two regions in the list of states according to median FDI flow. We will look into the reason behind this in the later part of this paper.
Now we will look into the category wise contribution to the country's manufacturing and service sector output. As it is already mentioned the entire study period has been divided into two sub periods from 1993-94 to 2000-01 and from 2001-02 to 2010-11. The percentage category wise contribution has been given in the table. As one can see from the tables there has been rise in the coefficient of variation from 0.42 in the first period (1993-94 to 2000-01) to 0.67 in the second period (2001-02 to 2010-11) in the manufacturing sector whereas there has been a continuation of the already existing imbalance in the service sector with a marginal rise from 0.64 to 0.66 in the corresponding sub-periods. We can link this variation across the time periods to the variation in FDI inflow in the same corresponding period. The coefficient of variation for region wise FDI inflow has increased from 1.22 in 1990s to 1.61 in 2000s. As the imbalance in the FDI inflow is rising, there is also a rise in the imbalance of manufacturing and service sector across the regions.
Spearman rank correlation has also been calculated for both the time periods to see the degree to which FDI inflow and manufacturing and service sector output are correlated. The correlation coefficient for manufacturing sector has increased from 0.49 in the first period to 0.60 in the second period whereas for service sector it has increased from 0.08 to 0.21. Here an attempt has been made to link correlation coefficient with that of the category wise contribution and coefficient variation of manufacturing and service sector. For the manufacturing sector whose correlation coefficient value is higher in both the sub periods there has been a noticeable change in the category wise contribution and coefficient of variation, whereas for service sector whose correlation coefficient is too low, the category wise contribution and coefficient of variation has more or less remained same. One of the reasons for this low correlation of service sector with FDI inflow may be here that the service sector has not taken into consideration IT/ITeS which are largely influenced by the FDI and one of the principal major contributors to the service sector output of the country.(责任编辑：BUG)