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Thursday, 31 August 2017 00:00
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Attempts to simultaneously own/disown EoDB report odd

In itself, the NITI Aayog-IDFC Institute’s Ease of Doing Business (EoDB) survey confirms what most know about the hurdles Indian businesses face. And since the survey captures units across the country, as opposed to just Delhi and Mumbai as the World Bank’s EoDB report does, it can’t be gamed as easily. In 2016, one of the major reasons for India’s ranking rising on the World Bank index was due to it becoming easier to secure an electricity connection. The rank rose from 137th to 70th, but this was relatively easy to achieve since the electricity suppliers in both cities are private firms, not inefficient state electricity boards. While NITI-IDFC results are not as flattering as the World Bank in some cases, what it important is the wide variations is shows between states. So, it takes 63 days to set up a business in Tamil Nadu and 67 days in Andhra Pradesh, this goes up to 214 days and 248 days, respectively, in Kerala and Assam—the all-India average is 118 days as compared to 26 in the case of the World Bank index. The report shows, not surprisingly, that firms have lesser problems in faster-growing states—while 66% of firms in low-growth states reported labour rules as ‘moderate’ to ‘very severe’ obstacles, this was a much lower 47% in the high-growth states; just 20% of firms in low-growth states said there was no problem in setting up a business versus 39% in the case of high-growth states; firms with more labour have greater problems getting clearances, etc.

In other words, NITI-IDFC gives specific directions in which state governments need to work on. The fact that just a fifth of manufacturing start-ups use the single-window facility, similarly, suggests wider dissemination is called for; and the fact that start-ups report less problems than older firms means some change is visible on the ground, though there is a bias based on the industries the start-ups are engaged in, and given their smaller size, they are expected to face less problems. Given this, it is odd that NITI should come out with a clarification on the survey, saying it does not represent the views of NITI, that it does not reflect any changes in EoDB after April 2016, that the survey (April 2015-April 2016) does not capture the changes made recently, that it does not include the unorganised sector, etc. Surely the fact that Indian firms are tiny compared to China’s or the fact that countries like Vietnam and Bangladesh have captured the export markets China has vacated is testimony enough to the problems India’s labour and other laws have created? The fact that the government is rushing to disown and discredit the report—in some parts where the report is favourable, it takes credit—instead of acting upon its findings is unfortunate.

 

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