# **II.** **<mark>Data</mark>**

Government records detail the timing of completion of specific segments of the 5,846 km (3,633 mi) of road connecting the major industrial, agricultural, and cultural centers of India. Work began in 2001 and 23%, 80%, 90%, 97% and 98% was completed by the end of 2002, 2004, 2005, 2007 and 2010 respectively. The distance of economic districts to the highway is calculated as the shortest straight-line distance using official highway maps and ArcMap GIS software. Measuring to district edge or centroid yields similar results.<sup>5</sup> The information on location and timing of GQ upgrades is combined with the plant-level Annual Survey of Industries (ASI), obtained from India’s Ministry of Statistics and Program Implementation, to create two new data sets that allow us to study adjustment dynamics in a more detailed fashion than was previously possible. The ASI is broadly a census of establishments with 100 workers or more, and a rotating sample of one third (or one-fifth after 2004-05) of all other formal plants, defined as those with more than 10 workers.<sup>6</sup> One third (or one-fifth after 2004-05) of the units in each strata of state and 4-digit industries are systematically covered in each annual survey subject to a minimum sample size of 6 units in each stratum. The design ensures that the universe of units is covered in five years.<sup>7</sup> Each wave, referenced by its terminal year, was sampled over a two-year period from 1999-2000 to 2008-2009 which spans the entire period of construction of the GQ allowing before and after comparisons. In any given wave there are between 20,000 and 30,000 manufacturing plants, covering all states and districts.

This allows the creation of a 283 district-level pseudo panel tabulating seven outcome measures and extensive covariates for 90% of the country’s plants, employment and output. The reduction from a total of 630 districts arises from either the limited district presence of organized manufacturing, or incomplete series across the 2000 and 2009 period. Since we follow synthetic cohorts, plants born after the GQ upgrades began in 2000 are dropped<sup>8</sup> and all economic outcome variables are winsorized at the bottom 1 percentile to limit outliers and unavailable values in plant size and labor productivity coming from zeros in establishments counts, employment or output levels. Nine districts are categorized as _nodal_ (Delhi, Mumbai, Chennai and Kolkata, and the several contiguous suburbs Gurgaon, Faridabad, Ghaziabad and

> 5 For more details on data preparation, see Ghani et al. (2016a).

> 6 The sampling frame for the ASI is based on the lists of registered factories or units maintained by the Chief Inspector of Factories (CIF) in each state.

> 7 See Annual Survey of Industries Manual (2008, p. 12-13). A supplementary frame is prepared each year for new units, while closed factories only affect the sampling weights calculated for the respondent units. At the end of the cycle, when the data on all the units in the frame become available, the frame is updated for new factories, closed factories, and the composition of census and sample schemes.

> 8 In this sense, our analysis of young plants is quite different from that presented in Ghani et al. (2016a) who also compare plants entering after the GQ upgrades.

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