Giant effort needed to ease doing business

The World Bank’s Ease of Doing Business Index has year after year shown that India is among the most difficult countries to do business in.

This year’s report says its position has worsened, and it has slipped by two rungs from the 140th to the 142nd in the ranking of 189 countries. The country’s rating is below those of little known  ones like Tonga and  Lesotho and a strife-torn Pakistan. The low position is not an indicator of India’s business and development potential but of the obstacles in starting and doing business here.  Unless these obstacles are eased and removed the potential cannot be realised. It takes 105 days to get a power connection, 47 days to register a property and 4.5 years to solve an insolvency issue or settle a legal dispute. There is often the need for some luck, influence or resorting to illegal means too to get the required work done in so many days. The index was prepared on the basis of some essential parameters like the number of procedures involved, the time taken for obtaining permits and connections, enforcing contracts. In enforcing contracts, the country is virtually at the bottom at the 184th position.

The report makes it clear how far India has to go to make itself business-friendly. A whole lot of procedures have to be changed and laws amended. A business chamber recently listed 105 such laws which need review.  It is not just a matter of changing or easing rules. It involves changing work culture, habits and a whole system of actions and attitudes. Linked with these are the problems of corruption, mismanagement, inefficiency and red tape in the bureaucracy. The multiplication of agencies involved in clearances and implementation is another problem. Acquisition of land to set up an industry is very difficult under the amended law, which may need more changes. Taxation laws need changes, and it is necessary to expedite the GST proposal and improve tax administration. Major reforms have to be made in labour laws and practices where only a beginning is being made now. Investment rules and policies have to be further liberalised. The need to increase FDI limit in the insurance sector is an example. Lack of and inadequacy of infrastructure is another hurdle in starting and running businesses and industry.

The NDA government has set a target of reaching a rank above 50 in the next two years. Programmes like Make in India will not make an impact and progress unless the environment to do business is improved in the country. The onus is on the states because many rules and regulations are made and their implementation done at their level.