In pursuit of the Modi government’s new mantra that ‘Ease of Doing Business’ can bolster the Make In India initiative, NITI Aayog conducted a survey, namely “Ease of Doing Business – an enterprise survey of Indian State”, jointly with Mumbai-based IDFC Institute in 2016. The survey results showed that the states which achieved high growth had fewer regulatory policy hurdles and less bureaucratic red tape for different approvals required for starting businesses compared to the low growth states.

Prime Minister Narendra Modi is committed to taking India within the top 50 in the World Bank‘s Ease of Doing Business in three years from its rank of 130 in 2016. Morgan Stanley Vice – Chairman Tom Nides reposes confidence in Modi’s leadership.

Despite dismantling the License Raj and opening the economy to private sector in the wake of the 1991 reforms, bureaucracy continued to haunt the ease of doing business with multiple impediments. Reluctance on the part of bureaucrats to take timely decision and passing the buck have become a common practice, with the result that the Indian bureaucracy has been rated the worst among 12 Asian countries, according to a survey by Hong Kong–based Political and Economic Risk Consultancy firm.

The Modi government set a three-point formula to dismantle the present bureaucracy and enhance the Ease of Doing Business through simplified and paperless procedures. The first point was to cut down the multiple levels of human interfaces between the entrepreneurs and bureaucrats; second, to gear up on-line procedures for applications and submission of documents, replacing the manual system and third, to initiate convergence and integration of different ministries for quicker decision-making.

The formula yielded results. The number of Central government services through the e-BIZ Portal increased rapidly, providing more opportunities for single window clearances. The government also installed a portal of Government eAuction System, where auctioneers can participate in the auction online. Similarly, online submission and processing of applications for environment clearances and online payment of provident funds and Employee’s State Insurance contribution were introduced. The Ministry of Environment and Forest launched an online application system for environment clearance. Following the Centre, 19 states have set up online application system for environment clearance. The majority of the projects are cleared at the State level. In this perspective, it was a significant step for speedy clearance of the projects.

The NITI Aayog survey covered 3027 entrepreneurs and covered both high growth and low growth states and Union Territories. The parameter to gauge the states’ growth status was the annual average of GDP growth of the states during the ten years period of 2003-04 to 2013-14. The high growth states identified were Haryana, Gujarat, Rajasthan, Tamil Nadu, Goa, Telangana, Maharashtra and Uttarakhand. Besides high GDP growth, the components which rebooted the growth trajectories of these states were the significant presence of computers, electronics and pharmaceuticals, the survey said.

There were 5 major categories of approvals, required for establishing a manufacturing operation in the country. These include the setting up of business, land acquisition, construction, environment, labour, infrastructure and taxes. Land acquisition and labour approvals are considered the toughest and most time consuming procedures.

Several amendments were made to the clause relating to farmers’ consent and social impact assessment in the Land Act 2013, with a view to making land acquisition easier. But the amendments were stuck in Rajya Sabha since the NDA did not have adequate strength in the house to pass the law. This led the BJP government to initiate reforms at the state level since land is in the Concurrent List. Tamil Nadu and Gujarat have moved ahead to prepare their own State Land Bill and Rajasthan is ready with a similar legislation. Under the new Land Act 2013 during UPA, not a single land was acquired.

Factory rules were also eased by reducing the mandatory requirements of filing multiple forms. At present, a factory owner has to fill 16 forms on a regular basis. Now, after the reforms, only one form is required to be filled.

The survey revealed a wide gap between the high growth and low growth states in terms of land allotment approval. While the average time taken for land allotment in the high growth states is 115.8 days , it is much higher, with 136.5 days, in the low growth states. Similarly, wide gaps exist in between the two groups with regard to approvals for construction permits, NOCs for construction, environment and infrastructural approvals such as electricity connection, sewerage connections and water connection.

For construction permits, the average time taken for approvals is 68.7 days in case of the high growth states, as against 86.3 days for the others; for NOCs for construction it is 49.2 days against 67.5 days, for environment clearance 69.4 days against 76.2 days, for electricity connection 42.8 days against 62.3 days, for sewerage connection 45.4 days against 53.6 days and for water connections 39.8 days against 51.8 days respectively. The survey also revealed that power shortage, which is a crucial bottleneck for manufacturing operations, affected the high growth states less. (IPA Service)