One of the key policy endeavours over the last few years has been to address the convoluted and time-consuming administrative processes that have long been the bane of business. Ease of doing business (EODB) refers to the overall environment for routine functioning of a business enterprise, including simple, transparent and time-bound procedures and compliances. A facilitative regime lowers transaction costs for businesses and imparts certainty and stability to routine operations such as paying taxes, obtaining permits and so on.
The series of reforms undertaken by the government to improve the business climate have delivered beyond expectations. The World Bank ranks countries on 10 parameters through a stringent process of surveys and grassroots interactions. Its latest report in 2017 recorded a significant increase in rank for India in paying taxes, resolving insolvency and protecting minority investors. Overall, the country jumped 30 places to enter the ranks of top 100 countries.
Through wider use of digital platforms, simplification of processes, weeding out of outdated laws and regulations, etc, India has managed to tackle a significant volume of red tape that constricted businesses. Measures like single applications, introduction of Simplified Proforma for Incorporating Company Electronically (SPICe) forms and use of technology have made business processes much simpler and faster. We see visible changes on the ground that facilitate administrative clearances and procedures.
The government has worked proactively on identifying issues of the industry members by holding stakeholder meetings on a regular basis. These have helped develop solutions to address industry concerns. Operationalisation of Debt Recovery Tribunals (DRT) and National Company Law Tribunal (NCLT) have contributed in reducing the accumulation of files in courts. Cases of insolvency are being resolved in a time-bound manner.
Reduction in paperwork, eliminating the need for physical submission of documents, introduction of single window system and time-bound approval of licenses are some of the measures that have been undertaken to expedite processes.
While electronic payment of tax and easing compliance with corporate income-tax have been reflected in the latest rankings, it is expected that the GST will push up India’s position in the upcoming report. The GST truly represents a game-changing tax by placing all taxpayers and tax authorities on a single online platform.
Measures like Single Window Interface for Facilitating Trade (Swift), introduction of integrated risk management system and reduction in documents have also been implemented for facilitating trading across borders. Bringing together various agencies such as customs, port authorities, and relevant ministries and departments, systems such as direct port delivery and port community system have been established. All these have helped in reducing transaction costs and time at the ground level, making Indian exports more competitive.
While this exceptional performance is an outcome of the rigorous legislative, administrative and infrastructural reforms from the Central government, it is noteworthy that the state governments too have actively addressed their business climates. The Business Reform Action Plan was shared with state governments in 2014, identifying specific measures for states to action. In the first year, 98 reforms were taken up, and no state could achieve more than 72 per cent of these. The next two years had almost 800 action points, and it is gratifying to note that 12 states actioned over 90 per cent of the procedures in the first year and as many as 18 states reached this high figure in the subsequent year.
The top states for 2016 were Andhra Pradesh and Telangana, tied at first place, followed by Gujarat, Chhattisgarh and Madhya Pradesh. In the 2017 list as of now, seven states, namely Haryana, Chhattisgarh, Madhya Pradesh, Andhra Pradesh, West Bengal, Jharkhand and Telangana have achieved 100 per cent success, while many more are right behind. The 2017 ranking has not yet been closed and it is expected that more states will figure in the above-90 per cent grade.
There remains some distance before complex procedures and investment issues are facilitative for Indian businesses. Digitisation of land records across the country, deploying GIS technology, would help in transferring ownership and registering property. The single window system needs to encompass more procedures and these need to be integrated across relevant departments so that firms do not have to file the same information with different government agencies. A key area to be addressed is tackling commercial disputes. The National Judicial Data Grid to reduce backlog of cases and e-courts with electronic facilities for filing and payments have helped and cases need to be fast-tracked as adjudication processes raise costs and delay projects.
At the ports, it is important to have the presence of testing and certification institutes that can accelerate the process of obtaining permits. The port community system too should be instituted in major ports. Customs procedures can be speeded up and made uniform across all ports to avoid complexities.
Industry looks forward to working with the Central and state governments to ensure that India leapfrogs to the top 50 economies in the coming years.
The writer is the director-general of the Confederation of Indian Industry
