Why India ranks low in Ease of Doing business? – NITI Aayog’s Survey


What is the need for the survey?

  • Last year, after the World Bank’s Ease of Doing Business Ranking placed India at a lowly 130 out of 150 countries.
  • Prime Minister Narendra Modi asked bureaucrats to explain the reasons for the country’s poor performance and directed them to work on improving the ranking.

Who has taken the survey?

  • The survey is taken by the Niti Aayog and the Mumbai-based think tank, IDFC Institute, for about 10 months.
  • It reveals that the efforts of the Centre and state governments to ease the system of permits and clearances notwithstanding, most entrepreneurs still feel hobbled (shuffled) by the country’s regulatory environment.

How much is the sample size and what industry is chosen to take data?

  • The survey of more than 3,000 manufacturing enterprises across the country shows that most firms do not use the single-window systems for business and regulatory clearances.

Which state has topped the ease of doing business survey?

  • The survey shows that even in the best performing state, Tamil Nadu, the process takes more than 60 days — on average it takes nearly four months to set up a business in India.
  • But the Centre repeatedly claiming that a firm can be incorporated in less than a week.

Does the reality and claims match about starting of a business?

  • The gap between claims and ground realities suggests that the government’s outreach system requires sprucing up.
  • But the gap is also a sign of a persistent problem with governance in India: The difficulty of cutting the red tape of the lower bureaucracy. This explains why on an average, entrepreneurs need more than 100 days to get a construction permit.

What are the remarks by World Bank?

  • The World Bank’s report, last year, had also highlighted that delays in issuing construction permits affected the ease of doing business in India.
  • The Bank’s report came in for criticism — some of it justified — by Commerce Minister Nirmala Sitharaman and Minister of Law and Justice and Electronics and IT, Ravi Shankar Prasad, who released the Niti Aayog-IDFC report.
  • But the government cannot ignore the similarities in the two reports when the economy is slowing down and generating new jobs looks even more of a challenge.

What are the major sectors surveyed?

  • The textiles, food processing and non-metallic minerals sectors account for almost two-thirds of the firms surveyed by the Niti Aayog and IDFC.
  • Entrepreneurs in these employment-intensive sectors are more likely to face problems and securing construction and other permits, compared to the capital-intensive ones.

How the survey should impact the governance?

  • The survey should serve as a wake-up call to government and a reminder that over two decades after economic reforms the Indian state is still flailing when it comes to easing the path for entrepreneurs.

Source : The New Indian Express

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