IIM-A faculty slams govt’s business-friendly image

Was speaking at a panel discussion on “Make in India-Make in Gujarat: Transforming Business, Enhancing Growth".

A senior Indian Institute of Management-Ahmedabad (IIM-A) faculty, who is also on the Technical Advisory Committee of RBI’s Monetary Policy and works closely with the Finance Ministry, slammed Gujarat’s “business-friendly” image on Tuesday by citing data that shows the state’s “worst tax administration regime” and in perception of corruption by the industry sector, it is just in a little better position than Bihar. He said that it fared badly on time taken to enforce contracts and solvency processes.

Speaking at a panel discussion on “Make in India-Make in Gujarat: Transforming Business, Enhancing Growth” at the CII Gujarat Annual Day-2015 held at a city-based hotel, Errol D’Souza, senior Economics faculty at the IIM-A cited the 2010 business reports done nationwide and said, “There used to be these lovely surveys on doing business nationwide, for some reason in the last few years they have not taken off. But they are pointers to what’s been happening. If you look at the survey then and the institutional constraints that businesses report, it is quite striking that in Gujarat two sorts of variables stand out. One is the perception on tax administration, quotes the worst tax administration than does Bihar. The survey which is actually pretty robust , the sample sizes are very good and the data survey is done worldwide, so there is no reason not to believe what the survey is saying. In perception of corruption, Gujarat is the 10th worst state, high levels of corruption, tax administration is not good. In fact, Gujarat is just one step ahead of Bihar. This is based on data… We tend to think of things in a certain way when you have large mass of data. It gives you a little check on reality.”

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He added, “If you look at the time and cost of starting a business in Gujarat, then you find that it basically takes 34 days, costs about 46 per cent of the per capita income, which is not too bad. In terms of ease of enforcing contracts and time it needs to enforce a contract, the time you take to go through a court etc., it is 1,295 days, this is two thirds longer than in Bihar. Contract enforcement cost in terms of attorney fees is also very high, you pay about 30.9 per cent of value of the claims. Finally, in solvency processes and debt enforcement now the bankruptcy code is being thought about, even this is not very good in Gujarat according to the data.”

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Other panelists at the session included MD of KHS Machinery Pvt Ltd Yatindra Sharma, MD of GIFT City Ramakant Jha.

Tanmoy Chakrabarty vice-president and head of Government Industry Solutions Unit (ISU), TCS, said, “We run tax in 14 states of India, Gujarat was one of the pioneers, therefore their systems right now are definitely jaded and many more states have implemented several efficient techniques, including end-to-end e-filing, e-payments, mobile apps, some of which have to come into Gujarat… The state is also pioneer in finance management. There are many more developments that have taken place and can be incorporated in the (Gujarat) 2.0 platform.”

Citing examples of e-filing platform and investor facilitation portal which Gujarat pioneered, Chakrabarty said that the state’s opportunity to become a benchmark for other states to follow lay in becoming the truly digital state in India.

Apart from local business heads and corporate professionals, the conference saw eminent speakers and industry bigwigs including MD of Voltamp Transformers Ltd Kunjal Patel, CMD of Kirloskar Brothers Ltd Sanjay Kirloskar, CMD of Steelcast Ltd Chetan Tamboli, Chief Economist at Aditya Birla Group Ajit Ranade, Australian Consul General Mark Pierce, among others.

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