By Pradeep S Mehta
It’s not easy at all to do
business. However, the Government is serious about revamping
norms and instilling discipline
In spite of improving on some
parameters, India has slipped down two notches in ‘Ease of
Doing Business’ from 140 to 142 out of 189 countries in the
last World Bank 2014 rankings report. The slide in position
is also due to the fact that other countries have improved
considerably since 2013.
This wake-up call has provoked
the Government to respond that our rankings will improve
next year as massive efforts are on to take us to the 50th
position in the not so distant future. This is conflated
with the ambitious programme of maximising ‘Make in India’.
The secretary in the department
of industrial promotion and policy, Amitabh Kant, along with
the World Bank, is leading the ‘Make in India’ campaign
under the leadership of Nirmala Sitharaman, the dynamic
minister. Kant is a hardworking visionary and can make some
changes, at least at the Central level. He is also goading
the States to carry out reforms.
Structural changes in labour
laws, land acquisition laws and environmental laws are on
the anvil and moving ahead as fast as they can in our
governance system.
Many of the arduous procedures
draw their ‘strength’ from the laws and hopefully they will
be simplified or rationalised. The devil lies in the
details.
In terms of starting business,
Single Window Clearance has been adopted by various States.
But is it functioning as well as it should? Other ministries
hate to surrender their turf. An comparative assessment will
help States better their performance.
Similarly, getting an
electricity connection or registering properties and so on
are State issues. They require a cooperative federalism type
of approach to create incentives for States to attract
investment. A crucial ingredient is finding the right
officer to lead this exercise in each State, otherwise all
good intentions will remain on paper. Of course, one needs
dynamic chief ministers to goad the babus to change.
Two major issues
That leaves us mainly with two major problems. The first
one is getting construction permits from city authorities,
which are notorious for their uncooperative, rent-seeking
ways. For this, we have among the lowest rankings in the
World Bank scale. Changing laws and procedures are not
sufficient to deal with the delays. We need a bonus-malus
(the return of performance-related compensation upon the
discovery of deficient performance) system.
The bonus will help cover the
lost rents, while malus will help in fixing responsibility
at the right levels. Of course, this is easier said than
done, but making an effort in this direction will result in
incremental changes and, hopefully, a sustaining impact.
The other major problem is in
the judicial system (delay in contract enforcement), which
lies beyond the executive’s domain. However, the executive
could install ombudsmen to deal with investor grievances or
encourage the use of an alternative dispute settlement
system so that our choked up courts do not hold up the
resolution of disputes.
There is a Central mission to
cut down delays in the judicial system but bureaucrats are
shy of hurting the sensibilities of judges.
What the Government could do is
get senior lawyer-ministers such as Arun Jaitley or Ravi
Shankar Prasad to engage our judges to try and improve the
system. This is also critical for the common man who has to
wait forever to get decisions from the courts. Quite often
one sees that engaging in dialogue helps resolve even
contentious issues as opposed to sending letters, organising
seminars and the like. This again need not be restricted to
the Central level but can be mirrored at the State and local
levels, too.
Push from the Prime Minister
All these measures need a push from Prime Minister
Narendra Modi himself. It also fits in well with his
doctrine that India is governed by the Prime Minister and
chief ministers of States.
It has to be tackled as part of
the rejuvenated cooperative federalism agenda, and there are
signs of reviving and restructuring the low profile
Inter-State Council. This can address systemic issues, but
nuts and bolts will require a radical approach rather than
just one champion leading them. Even though the Government
is averse to establishing new bodies, it would do well to
establish regulatory reform task forces at all levels to be
headed by a Cabinet minister. Such a task force can devote
its time exclusively to this.
Right now, Amitabh Kant or other
bureaucrats have to run their departments with a thousand
routine and expedient tasks to attend to, apart from taking
on these crucial larger responsibilities. The way forward
for such task forces is to undertake regulatory impact
analysis and share the results with the public. An
enlightened public is often the best change driver.
The writer is the
secretary-general of CUTS International
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