JOIN US“There is a vast gap between what enterprises know and what government officials say they have done to improve procedures relating to various permits and clearances,” Niti Aayog said on Monday, suggesting the government to inform companies about ease of doing business.
In an enterprise survey of Indian States on Ease of Doing Business, the government also needed to enhance flexibility of labour laws and facilitate easier entry and exit of firms.
“We must reduce sclerosis in the structure of industry by encouraging the entry of new enterprises and expediting the timely and least costly exit for sick enterprises, which wish to exit,” the report said.
It observed that the high-growth states have higher ease of doing business as they have removed delays in grant of permits and clearances and are also implementing environment and labour laws.
It said India needed reforms in labour laws. The fact that enterprises in labour-intensive sectors experience greater difficulty than those in capital-intensive sectors points to the need for further reform in this area,” the report said, adding more flexible labour laws will allow enterprises to grow larger and reap economies of scale, generating productivity improvements, job creation and higher growth.
Of the 3,500 firms surveyed by the Aayog along with IDFC, it was found that half of them do not borrow from financial institutions. A third of them consider access to finance a major obstacle for business in the country.
It suggested the government to enhance access to low cost capital for firms to improve business environment.