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India up in Ease of Doing Business rankings: good but could be better

Some of India's rise has to do with the push by the government and states to cut red tape and the number of approvals required to open a factory or other units.

Written by Shaji Vikraman | Mumbai |
Updated: October 28, 2015 4:31:20 pm
india africa summit, africa summit, africa summit news, narendra modi, india news, modi news, latest news, narendra modi mann ki baat, mann ki baat Prime Minister Narendra Modi addressing at the inauguration of the 10th Annual Convention of Central Information Commission, in New Delhi on Friday. (PTI Photo)

In a season in which there hasn’t been much cheer on the economic front or on governance and execution, the Modi-led government may have some brownie points to score with the latest rankings of the World Bank on Ease of Doing Business showing that India has moved up four notches higher compared to a year ago.

Some of it has to do with the push by the government and states to cut red tape and the number of approvals required to open a factory or other units, and to make it easier for scores of businessmen and young entrepreneurs to start their ventures.

It is easy to be cynical of attempts to change mindsets and a governance paradigm after decades and attempts in the past by policy-makers. However, the momentum for this change will come from states which are competing hard to attract investors – both local and foreign. And that is showing already: Maharashtra, one of India’s top investment destinations has slashed the number of permits needed for the power and construction sectors from 67 to 7 and 162 to 60, respectively, Other states such as Rajasthan, Karnataka, Chhattisgarh and Uttar Pradesh too are adopting a similar course making the inter-face easier and simpler with the administration.

Yet, if some of these efforts do not succeed fully, it will not be be because of a cussed middle and lower bureaucracy or netas standing in the way. Hobbling India’s entrepreneurs or lakhs of small businessmen is the poor quality of infrastructure. Most states report several hours of power cuts daily. Add to that clogging at ports, issues with tax administrators and civic bodies, hordes of inspectors and a range of approvals needed and India will have to settle for such incremental improvements in global rankings.

It is illustrative that in two segments where growth has been rapid — information technology earlier and for start ups in e-commerce — the going has been much better given the limited interface with the bureaucracy or inspectors in keeping with their nature of business. There is a cost to doing business in India and factoring that into the overall business plan isn’t a good reflection on the business environment in the country. For, it is those small and medium units which can generate the number of jobs which a country with a young population needs.

And if India – which figures among the top ten economies in the world– still ranks at above 100 in terms of ease of doing business and celebrates moving up just a few notches higher, it will be unfair to Indian entrepreneurs.

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