India, as a business destination, was ranked poorly by the World Bank recently, but a national report now suggests promise in a few states, most notably the newly-formed duo, Andhra Pradesh and Telangana.
The State Implementation of Business Reforms, 2016, based on the ranking by Department of Industrial Policy and Promotion (DIPP) recognized Andhra Pradesh and Telangana as the joint-best states for doing business in the country. Gujarat, last year’s toppers, came a close third, followed by Chhattisgarh and Madhya Pradesh.
The index is based on the extent to which states have implemented the DIPP’s 340-point Business Reform Action Plan between July 2015 and June 2016. The plan includes recommendations for reforms on 58 regulatory processes, policies and practices spread across 10 areas spanning the lifecycle of a typical business. The states had submitted evidence of implementation of 7,124 reforms. These submissions were reviewed by the World Bank team and validated by DIPP to study whether they met the objectives of the plan. A total of 6,069 reforms were approved as having been implemented, according to a release by DIPP.
The rainmakers and the naysayers
Last year’s index had Gujarat topping the list, followed by Andhra Pradesh, while Telangana was placed at 13th. Telangana Chief Minister, K Chandrashekar Rao, has launched industrial policies whereby self-certification of businesses would be made possible, ensuring that running around for approvals is kept to bare minimum.
“You can come and start your enterprise as long as you obey the law of the land. The state government takes a maximum of 15 days, as per law, to revert with an approval. If not, on the 16th day, it is deemed approved. In Telangana, if we don’t deliver, we are liable for penal action,” Telangana IT minister KT Rama Rao said to an Indian daily.
Andhra Pradesh Chief Minister, N Chandrababu Naidu, has implemented a similar system that assures clearances within 21 days through a single desk clearance system after which it is deemed approved based on self-certification.
M Venkaiah Naidu, Union Minister for Urban Development, Housing & Urban Poverty Alleviation and Information & Broadcasting took to twitter to congratulate the table toppers:
Compliments to Andhra Pradesh & Telangana for being ranked no.1 in ease of doing business with 98.78% marks. 1/
— M Venkaiah Naidu (@MVenkaiahNaidu) November 1, 2016
A healthy competition among Indian states
“States are really competing with each other. Healthy competition is happening among all the states. Everybody is monitoring everybody’s performance,” said Indian Commerce and Industry minister Nirmala Sitharaman. It is echoed by the performances of some of the smaller states that have not been traditional front runners.
Haryana, Jharkhand, Rajasthan, Uttarakhand and Maharashtra bring up the bottom half of the list of top ten business destinations of the country. The north-eastern states as well as Jammu & Kashmir have again come up at the wrong end of the index, showing the need for a greater attention from the central and state governments. Manipur, Mizoram, Sikkim and J&K are placed at 28th, 29th, 30th and 31st positions respectively.
However, not all is bleak, according to DIPP. “The results of the assessment demonstrate that states have increasingly risen to addressing the challenge of making it easier to do business. The national implementation average stands at 48.93 pc, significantly higher than last year’s national average of 32 pc,” a DIPP statement said.
Though India ranked a lowly 130 among 190 economies in the Ease of Doing Business index by the World Bank, one has to note that the ranking system only takes into account the situation in New Delhi and Mumbai while tabulating the country’s progress. With this national report now showing signs of growth and development across various states, India’s global endeavour for foreign investments and be deemed a key business destination will certainly get a push. Another interesting footnote to this index is that eight of the top 10 states are ruled by the BJP-led NDA. While Telangana is ruled by the TRS, Uttarakhand has a Congress government.