India moved 23 places up in the World Bank’s ease of doing business (EODB) 2019 rankings that were announced on Wednesday. Ramesh Abhishek, Secretary, Department of Industrial Policy and Promotion (DIPP), in an interview with Deepak Patel, said that India would like to move to top of these rankings and the full impact of GST and other reforms would be felt next year. Edited excerpts:
Last year, India was at 100th position. This year, we moved to 77th position. What were the main challenges that you faced while moving to this position?
The most important thing is that whatever reforms we carry out have to be felt by the people. And initially the reforms that were done in 2016 and 2017 are getting reflected now. And some of them were done in 2015 also.
We started this process of two-way communication, where we — DIPP and other departments and agencies concerned — communicate the reforms to the stakeholders and then get the feedback from them whether it is working or not. If it is not working, what is the problem? Then we again corrected our reforms, online systems, rules or anything else. So, this continuous work is being done.
And, we have come out with some innovative concepts, as I said, deemed approval, deemed NOC (no-objection certificates) and a robust risk management system. Our challenge is to see that whatever reforms we do, are felt by people. That has been possible so far because of very strong communication between government, government agencies and stakeholders.
On trading across borders, we were hoping some improvement…
On trading across borders, we were confident last year also, and we were confident year before also. But the point is that the World Bank did not receive a good feedback (from the stakeholders) at that time. It was a bit frustrating, frankly speaking, on both construction permits and trading across borders.
Has this year’s ranking into account the complete impact of GST (goods and services tax) as well as demonetisation?
See, demonetisation does not have any impact directly on these rankings. That is different thing.
On GST, they have only looked at six months because they only see a calendar year, which is January to December. Since GST reform was done in July, they saw from July to December. So, the full impact of GST has not been captured here. Actually, we have improved our rank in paying taxes. But what I have been told is that last year’s data has been corrected, so that is why the rank has fallen. It has improved because of GST and other changes, but overall, there has been a fall. (India was at 119th position last year in ‘paying taxes’ category. This year, India is at 121st position. )
If you see the ranking of states (which was released earlier this year) on the ease of doing business, the improvement in their business environment is much more dramatic. There are actually 15 states that have got more than 90 per cent score in our ranking of states. So, the reforms in the states have been more dramatic.
Delhi and Mumbai, as the finance minister said today, are very large cities. They are not small places. So, in Mumbai, for example, the construction permit is the most difficult in the whole country. So, if you have made improvement in Mumbai, other states or municipal corporations are like one-tenth of that.
What is your ranking target for next year?
We don’t have a target. We would like to be on top. You can’t move that fast. All these changes are reflected gradually. So, how much we would be able to reach to next year, nobody knows.
India has been quite behind this year when it comes to “registering the property” and “enforcing contracts”. Are there any particular steps that you are working on?
See, earlier, commercial courts could not be set up in Delhi and Mumbai. Now, 250 commercial courts have been set up in other states. So, if they had seen the impact in other states, we would have got much more credit actually. But because of illegal provision, the commercial courts could not be set up in those places where the high courts have original jurisdiction. So, the law was amended this year, and now it is possible to set up commercial courts in Delhi and Mumbai. These commercial courts are now being set up and they are operational. If these are able to dispose of cases faster, then we will see the improvement next year.
Registering property means you have to buy a property and it should be easy. Now, it will be easy only when property records are online, the maps are online, the property tax payment is online, all the ownership and the title is online, the registry records are online. So, all these have to be online.
MSMEs (micro, small and medium enterprises) have been facing difficulty in getting credit, recently because of the NBFC (non-banking financial company) crisis. We have actually improved our ranking in “getting credit” category. So, how is there a dichotomy?
World Bank rankings are based on some technical criteria. So, once you fulfil your criteria, you improve your ranking. In getting credit, you need to have good legal framework, system of security registration and all that, so that those who are giving credit feel assured. So, once you do that, you get credit. But what happens in real life, what are the issues in giving credit to MSMEs and all that, they are not directly covered by the rankings. How easy is it to get the credit – this is what they are covering.