The Modi Government’s focus on
promoting in ‘Ease of Doing Business’ is driven by the philosophy of ‘Minimum
Government, Maximum Governance’
The Doing Business 2019 Report of the World Bank has ranked India at 77th position in terms of ‘Ease of Doing Business’ (EoDB), an improvement of 23 ranks over the last year. In the last two years, India has improved its rank by a massive 53 positions and looks set to storm into Top 50 by next year, a target the Modi Government set, when it came to power in 2014. This improvement is being made possible because the Government believes that Indian youth are full of entrepreneurial energy, which the economy and the country were failing to harness and something had to be done about it and therefore it invested its political capital and energy in it.
Top 10 Most Reforming Economies
It is not only the improvement in
ranking of EoDB, but India is amongst the top 10 most reforming economies. In
fact, Djibouti and India are the only economies to make to the list of 10 top
improvers for the second consecutive year. We have made significant achievement
in ‘dealing with construction permits’ (184 to 52), ‘getting electricity’ (137
to 24), ‘trading across borders’ (126 to 80) and ‘resolving insolvency’ (137 to
108) from the year 2014 to 2018 respectively in these catagories. In fact, if
we compare India’s ranking on the 10 parameters of EoDB for the year 2014 and
2018, we see we have improved on all the parameters except for ‘registering
property’.
Concerted efforts have been made to eliminate the ‘Inspector Raj’ and simplify compliances further. Under the latest changes made by PM Narendra Modi for Micro Small & Medium Enterprises (MSMEs) under PSB-59 initiatives, factory inspections will be done only through a computerised random allotment and inspectors must upload their reports on the portal within 48 hours, giving reasons. MSMEs now are required to file one annual return for compliance for eight labour laws and 10 central rules. An Ordinance has also been promulgated to simplify levy of penalties for minor offences under the Companies Act, 2013 and in the coming session of the Parliament, the necessary amendment Act would be passed.
Reaching the Unreached
There are a number of areas where
India can still improve its ranking to join top 50 nations. The work is already
under progress in these areas and the results would be visible in due course of
time. At present, we are at 137 rank in ‘starting a business’, at 166 in
‘registering property’, 163 in ‘enforcing contracts’ and so on. Proactive
measures are being taken in these areas. For example, with an objective to have
a faster resolution of matters relating to commercial disputes and to create a
positive image about the independent and responsive Indian legal system, the
Commercial Courts, Commercial Division and Commercial Appellate Division of
High Courts Act was enacted in 2015 and commercial courts are being established.
Even Insolvency and Bankruptcy Code whose effect is captured in ‘Resolving
insolvency’ and GST whose effect is captured under paying of taxes etc, are in
progress and will affect the ranking positively in the coming years. Some of
reform measures like registration of property can only be addressed at the
State level and the states are being encouraged by the Centre to do the same.
A concern has been expressed that the rankings capture only the improvements made in the cities of Delhi and Mumbai and ignores the rest of the country; this is a limitation of this ranking. But the Government’s focus is not limited to improving the headline grabbing EoDB ranking.
Effective Delivery of Services
Department of Industrial Policy
and Promotion (DIPP) in collaboration with the World Bank launched an annual
reform exercise for all States and UTs under the Business Reform Action Plan
(BRAP). The aim of this exercise is to improve delivery of various Central
Government regulatory functions and services in an efficient and transparent
manner. The reform plan under BRAP expanded from 285 to 372 action points in
2017 and further to 405 points in 2018. States and UTs have conducted reforms
to ease their regulations and systems in areas such as labour, environmental
clearances, single window system, construction permits, contract enforcement,
registering property and inspections. The focus on ‘EoDB’ has spawned off a
culture where the states are competing with one another in the ease of doing
business to attract investment to their states.
Improving Ease of Living
The reforms being undertaken also
feeds into the manufacturing sector focus of the Government and is therefore
not limited to the parameters that go into determining the EoDB ranking. For
example, compliance with labour laws do not figure in the EoDB parameters but
the Government has still initiated a number of reforms to encourage the
manufacturing sector. Under Ease of Compliance, Government has pruned the
number of registers mandatory for all establishments to maintain under 9
Central Acts to just 5 from 56, and the relevant data fields to 144 from 933.
Prime Minister has repeatedly said that he is focused on improving the ‘Ease of
Living’ of Indian citizens and EoDB forms a small part of it. The larger goal
is to create an ecosystem of transparent level playing field so that
entrepreneurs have peace of mind and focus on business development instead of
managing government department. Such an environment will also promote entrepreneurship.
