#5 Key Areas India Needs to Focus On to Climb the Ranks on the Ease of Doing Business List
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The Minister of State, Consumer Affairs, Food and Public Distribution System, C.R. Chaudhary, in a conference on Ease of Doing Business by Assocham said, “India is attracting massive FDIs this year and I am getting calls from foreign delegates every now and then.” As India aspires to attain the 50th position from 100th, the minister also accepted that it’s a herculean task to jump 50 ranks by the next year or even sustain the current position where demonetization and GST took a toll on the local businesses and SMEs.
It’s a historic moment as India skipped 30 ranks to be on the 100th position on the Ease of Doing Business list of 2017 by the World Bank.
Even with a general perception of businesses slowing down, the country has upped its game in the Global arena by a huge margin. Not a very appropriate report though (effects of demonetization and Goods and Services Tax (GST) were not included in the report), India still managed to do well in several parametres it was tested on.
However, talking of the future, what got us here won’t take us beyond 100. Now as a new emerging name in the global lens, India requires to build on the parametres that led it down. The need of the hour is to work on the criteria which held us back.
First Things First, Starting a Business
New Zealand has topped the charts for Ease of Doing Business. And the best thing it offers to entrepreneurs is a simple way to begin their business. This includes procedures, time, cost and optimum capital to open a new business. As we talked to entrepreneurs in India, it was clear that one needs not less than INR 1 lakh to begin with a consolidated idea. Plus, complicated taxes and time-taking paperwork that demoralize entrepreneurs to start something on their own.
Revamping GST Should be the Priority
Talking about complicated taxes, GST has been the golden act passed by the government to sideline all other hidden taxes levied on commodities and services. Even with the hasty implementation, it did have some good impacts on the economy. For example, there are less check posts and tax polls for the trucks as they only have to imply with GST. However, the main impact had to be on Government’s pet project: Digital India. Of course, one cannot expect small business owners to understand GST lings and format within three-four months of its roll out, with mere 10 to 15 per cent of internet penetration country-wide. A strict penalty for not filing the returns in time is another hassle the businessmen are going through. D.S. Rawat, Secretary General, Assocham, says “At least a full year should be given to the businessmen to get used to the process of GST ling instead of levying extreme penalties on them.”
Electricity is not just the requirement of a business but the entire country. A very basic facility in countries like Singapore and Hong Kong, it is yet not available to 25 per cent of Indian households. Even today, it seems to be a far-fetched idea for India to think of inviting start-ups and entrepreneurs, promising them perfect electricity supply. This important parameter, if recti ed, could de nitely push India up in the list next year. Smaller countries like Uzbekistan and Costa Rica are above us in both, Ease of Doing Business as well as providing electricity.
Reforms in Labour Laws and Regulation of The Informal Sector
Every economy in India, from agriculture to manufacture to service economy, majority of the employment lies in the informal sector. In waste management business, more than half of the sector is informal. Debartha Banerjee, Founder, Sampurn(e)arth, also suggests that the government should bring the whole economy under one larger umbrella of regulation and make policies according to the same.
Various sectors and industries have been demanding to regulate the archaic labour laws; archaic because the rst and the only act passed was the Trade Unions Act, 1926. Since it was a colonial law, it has been unsuccessful in providing freedom of getting the trade union registered without bias and any other bene ts provided to the workers. Not just bringing the informal sector together but the government has a bigger issue of labour laws to be revamped for a better and more pro table structure for the trade unions and its members.
Reducing Bureaucratic Layers
More than anything, India is catching people’s eyeballs because of its initiatives such as Startup India, Make in India, and providing a platform/server to both of them is Digital India. In a conference of Ease of Doing Business, the Additional Secretary of the GST council, Shri Arun Goyal, clearly stated “GST is made to minimize the interaction between the taxpayer and the government bodies. That’s why it’s all digital in nature.”
Evidently, the Centre is moving beyond long queues and delayed implementation of its policies because of late physical paperwork. However, India’s Internet penetration is mere 15-20 per cent as of now. It’s going to take more than an initiative to make India digital and thereby, reduce any bureaucratic delays.
Resolving insolvency, investment in infrastructure and ambiguity in the business ideas are also reasons why India faces hurdles at Ease of Doing Business. A developing country like India with growing economy needs massive investments in infrastructure. Not just a normal infrastructure but a sustainable one too. For the first time the Centre has also come out with an anti-bankruptcy laws, effect of which are yet to be seen.
Nevertheless, first the domestic issues have to be resolved to make India a better destination for counties to invest in. In the words of O Naresh, CEO, Symbiosys Technologies, “I am from Andhra Pradesh, the state that topped the list of Ease of Doing Business last year. However in 2017, it has slipped to 15th rank. So I understand what it takes to be there and move forward. Let’s make policies for Ease of Doing Business, not Pains of Doing Business.” It’s a collaborative e ort that will move India from 100th to 50th.
(This article was first published in the December issue of Entrepreneur Magazine. To subscribe, click here)