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Vinod Rai
Vinod Rai

CANDID TALK

Making elephant dance

The World Bank’s Doing Business 2018: Reforming to Create Jobs report indicates that India has climbed 30 positions, among 190 countries, on the ease of doing business index. Currently ranked 100, India seems to have improved in six of the ten parameters. They are: paying taxes, resolving insolvency, getting credit, protecting minority investors, enforcing contracts and dealing with construction permits. This will certainly boost investor sentiment.

Persuading a large and monolithic bureaucracy, or, in effect, making the elephant dance, is not the easiest of reform measures. It is also a slow and reluctant process, as irrespective of the larger commercial benefits at the macro level, no inspector would like to see the power of regulation or control slip out of his hands. The very thought of not being in control is repugnant to the bureaucracy! So the entire process is one of persuading the field staff and drawing up regulations which remove the element of discretion from his hands.

One very important factor in the report is that the all-important ease of starting a business factor has not shown improvement. India is at rank 155 on this aspect from the earlier 156. Another aspect which touches the common man, that of registering property, has also seen only marginal improvement—138 from 154. There is very little progress in digitising land records. Property documents remain complicated and applicants are still running from pillar to post.

The resolute steps taken by the government need to be appreciated. The department of industrial policy and promotion commenced its attempt to make India come within the first 50 ranks by initiating changes within the legal framework of each of the agencies involved. The municipal corporation and other such utilities are invariably the most difficult to handle and to persuade them to do an online process for applying for connections and bill payment, is an onerous task. In fact, the process of online payment of tax for municipal corporations has been a large contributor to the ease of payment of taxes. The fact that WhatsApp groups have been created by municipal bodies to remedy user grievances is remarkable.

Departments within the government require the maximum amount of cajoling to have their processes simplified. Reducing the number of forms to be filled up, online application for refunds and bringing down the time limit within which these refunds are to be released in agencies such as customs and other tax collecting departments were some of the major successes. A significant initiative undertaken was communicating the steps taken by government departments to businesses, entrepreneurs and other commercial agencies. A new set of much simpler online applications, which combine the permanent account number with the tax account number, has been a major achievement.

18-Making-elephant-dance Illustration: Bhaskaran

The Insolvency and Bankruptcy Act has also infused confidence among the lenders in the resolution of the stressed assets being undertaken within a time limit. It has introduced a reorganisation procedure for corporate debtors, facilitated continuation of the debtor’s businesses during insolvency proceedings and makes it easier for companies to exit businesses and free up capital.

This time the government has achieved the fastest upward progression in a single year. It is also for the first time that the World Bank was persuaded to undertake the perception of business survey not only in Mumbai, as in the past, but also in Delhi. Thus while the government does deserve kudos for its work, it must recognise that it has a long way to go and hence needs to tenaciously continue on the path undertaken by it in persuading key departments to bring about a mindset change. That will be the ultimate step in achieving ease of doing business.

Former comptroller and auditor general, Rai is the head of the Supreme Court-appointed BCCI’s Committee of Administrators.

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