Business-friendly India

Pushed to the backfoot by low economic growth figures, the NDA government at the Centre has got a shot in the arm with the latest World Bank report on ease of doing business. It takes particular note of India leapfrogging by 30 ranks to break into the top 100 bracket for the first time ever. Last year itself the NDA regime was expecting a better ranking than the 131st in 2015, but ended up only fractiolly better with 130th rank and much heartburn. Mindful of the need to assure investors that reforms are being pushed through fast to create a better business environment in the country, Prime Minister rendra Modi had tasked key ministers and NITI Aayog to deliver on this front. As per the World Bank’s Ease of Doing Business global rankings, India at exactly 100th rank has adopted as many as 37 reforms since 2003, implementing nearly half of these reforms in last four years. Noting India’s vastly improved ranking on the back of ‘sustained business reforms over the last four years’, the report makes special mention of payment of taxes being made easier. Covering Delhi and Mumbai, the report gives high marks in the areas of protecting minority investors, getting credit support and electricity, as well as advanced corporate law and securities regulations. While lauding India’s “steady shift towards best practice in business regulation”, the World Bank flags the areas where the country needs to improve, mely starting a business, enforcing contracts and dealing with construction permits. It takes 30 days to start a business in Mumbai, down by over one-fourth from 127 days 15 years back; however, the entrepreneur still has to go through 12 procedures, so there is scope to cut the red tape here. It takes 53 days to register a property in the country, requiring 8 procedures; 144 days to secure permission for construction; 46 days to get electricity connection; 1,445 days to enforce a contract; and 4.3 years to resolve a business gone insolvent.

In his first reaction, Prime Minister Modi has said his government is determined to push ahead and improve rankings further through multi-sectoral reforms and faster growth, “guided by the mantra of Reform, Perform & Transform”. On earlier occasions, he has made no secret of his ambition that India should be among the top 50 performing tions when it comes to ease of doing business. After all, this is a country hitherto considered unfriendly, if not downright hostile, to domestic and foreign investors alike, tying them down with endless regulations and red tape. It requires herculean effort across several fronts to cut through this jungle, with the results showing up only years after. Fince Minister Arun Jaitley has professed confidence that a top 50 ranking for India is “eminently doable”, while pointing out that the 10 parameters used by World Bank are so tough that a country doesn’t get credit for reforms introduced till results are actually seen on the ground. In this context, he has asserted that the newly introduced Goods and Services Tax (GST has not been factored in this World Bank report) is “likely to impact India’s ease of doing business in the coming year”. Expectedly, the opposition Congress is picking holes in the NDA regime’s performance, with Rahul Gandhi decrying “crony capitalism” while challenging the government to find out whether it is at all easy for small businesses to open shop in this country. But leaving aside this rush to score political brownie points, it is instructive to take note of some dissenting expert opinions. The most pertinent question being asked is what is the country doing to ensure lesser corruption and better transparency. India ranks a lowly 79th in Transparency Intertiol’s Corruption Perceptions Index. Taking the case of Assam, the BJP-led government was quickly off the mark in June last year by getting ‘Assam Ease of Doing Business Bill, 2016’ passed by the Assembly. Single-window provision to fast-track clearance of business projects in the State and other incentives were the stated attractions of this bill. One year later, a NITI Aayog-IDFC Institute joint survey found that Assam was the slowest State in the country in terms of getting environment clearance, land permits and labour permits — requiring on average 248 days for a business to be started in the State. Other statistics were dismal too — it takes 270 days to secure construction permit and 103 days to get labour approval for a start-up in Assam. This apart, the average duration of power shortage per month in the State was 156 hours, surely a big disincentive for setting up manufacturing units here. For those in the know of things here, official corruption and extortion culture in the State too are huge turn-offs for entrepreneurs thinking of starting a business or industry here. While the Centre needs to push harder in the coming days to cut the hassles in starting a business, the Assam government needs to respond effectively to make these efforts a reality on the ground. With private investment in the country far below expectations, ease of doing business is a must if governments are to deal with jobless growth and poverty removal in meaningful way.