Two important business climate reports have recently been released. The first was the World Bank’s global report on ease of doing business in which India scored a lackluster 130th rank, an improvement of just one rank from last year’s score. Though Prime Minister Modi wants to see India among the top 50 nations in World Bank’s business climate report, the progress appears to be slow.
The Union Government has also requested the World Bank to change its methodology of assessing India on the basis of reforms undertaken across the country at sub-national levels , instead of measuring the business climate in Mumbai and Delhi ,as is being followed currently by the bank. Once assessment is done at the State level and States are well reformed, the ranking of India shall surely go up to Singapore level.
Just after the World Bank’s global report came out, the Department of Industrial Policy and Promotion (DIPP), Union Ministry of Commerce and Industry has brought out its report on the performance of States and UTs in providing hassle free business climate to the entrepreneurs.
Assessing the States and UTs in 10 areas and 340 aspects, in implementing business reform action plan for ease of doing business climate, during the period July 2015 to June 30, 2016, the DIPP has ranked States and UTs into four categories. The 10 assessment areas are starting a business ,dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. The States which score 90-100 per cent are termed as “leaders” whereas 70-90 per cent scoring States are considered as “Aspiring leader States”. Similarly, States scoring between 40 and 70 per cent are termed as “States Where Acceleration Required” and the States having less than 40 per cent scores are treated as category needing “Jump Start”.
Twelve States emerged as “leader States” in the DIPP survey. Andhra Pradesh and Telengana together topped the list with 98.78 per cent score, followed sequentially by Gujarat (98.21 per cent), Chhattisgarh (97.32 per cent), Madhya Pradesh (97.01 per cent), Haryana (96.95 per cent), Jharkhand (96.57 per cent), Rajasthan (96.43 per cent), Uttarakhanda (96.13 per cent), Maharashtra (92.86 per cent), Odisha (92.73 per cent) and Punjab (91.07 per cent). In the aspiring leader category, Karnataka topped the list with 88.39 per cent score, followed by UP (84.52 per cent), West Bengal (84.23 per cent) and Bihar (75.82 per cent). In States needing acceleration category, Himachal Pradesh (65.48 per cent), Tamil Nadu ( 62.80 per cent), Delhi (47.62 per cent) are placed. In the last category of jumpstart States, Kerala ( 26.97 per cent), Goa(18.15 per cent) , Assam(14.29 per cent)and rest other States and UTs are included. The reason for poor score of NE States and JK is understandable but not that of the so called advanced States like Delhi, Kerala and Goa. It is interesting to find most of the leader States are BJP ruled ones. Surprisingly, WB and Tamil Nadu have stayed behind whereas the so called poor States like Odisha, Chhattisgarh,MP,Bihar and Jharkhand have scored well. Neighbour Chhattisgarh and Jharkhand have gone ahead of Odisha this year while last-year’s topper Gujarat slipped to the third rank.
The DIPP has assessed the States in implementation of various Business Reform Plans. In the construction permit enabler aspect, the leading five States are Haryana, Andhra Pradesh, Rajasthan, Odisha and Chhatisgarh. Similarly, in the environmental registration reform aspect, Punjab, HP, Haryana, Uttarakhand and Rajasthan become the lead States. labour regulation lead enablers are Haryana, Uttarakhand, Punjab, Rajasthan and Jharkhand. Uttarakhand, Rajasthan, Jharkhand, Odisha and Chhatisgarh have become the lead electricity connection enablers. Single window clearance reform has moved faster in Haryana, Uttarakhand, Punjab, Rajasthan, and Jharkhand. In availability of land to business organisations, Gujarat, AP, Telengana, Harayana, and Uttarakhand tops the States. Inspection reform lead enablers are Uttarakhand, Rajasthan, Jharkhand, Odisha and Chhatisgarh. lead commercial dispute resolution enablers are Telengana, Gujarat, Maharashtra, AP and Rajasthan. Online tax filing reform was well done in Harayana, Uttarakhand Rajasthan, UP and WB.
While seven States had implemented over 50 per cent of the total reform points last year, this year witnessed 17 States crossing the 50 per cent mark and 16 States have an implementation percentage of over 75. After achieving the top place in ease of doing business (EODB), the Telangana Government now wants to focus on bringing down the “cost of doing business.”
Odisha though slipped from last year’s 5th rank to 11th rank, it has reasons to be happy to find its place among the leader category States. The State Government should find reasons for its low performance and take remedial measures. The first requirement of business organization is land. In the past, Odisha has a bad reputation of land allotment to corporate organizations. In Tata Steel case of land acquisition at Kalinganagar, 14 resisting tribals died due to police firing. Posco land acquisition at Jagatsinghpur was not possible due to public resistance and environmental cases. land could not be acquired even after compensation was paid to some land losers. In case of Vedanta University at Puri, land acquisition went to trouble zone due to legal obstructions. Now the Government of Odisha says that it has allotted land in each district for industrial purpose. In absence of a revised Central land Acquisition Act, the State Government should make necessary policy to avail land to business Organisations. It should ensure that gram sabha is conducted in PESA areas to avoid Supreme Court direction like that happened in case of Vedanta, lanjigarh.
Though sarkari land is available in each district, usually they are under encroachment. There is a need for making the sarkari land encumbrance free before allotting it to the business organizations. Besides, fertile agriculture land should not be given to industry to avoid public resistance. Recently, a member of NITI Ayoga observed that Odisha needs agricultural development to fight poverty. Such a theoretical position restricts land allotment to industries and business organizations in fertile zones in different districts. There is also a need for rational allocation of land to business organizations in prime locations. In the past some corporates have acquired massive land though that much land was not required for them. Some organisations have acquired land and are still keeping it without using it for the purpose for which it was acquired. The State Governments should get back the unused land in the light of the SC judgment on Singur.
The third aspect is compensation to land losers. People are happy to give land to NH authorities as the payments are in tune with their expectation. But this is not happening in case of land acquisition by private organizations who pay less .land Bank is a good step by Odisha but the option of direct purchase from farmers by corporate should also be also kept open. Jharkhand has a GIS system providing details about the land earmarked for industrial use which helps land buyers. Past learning from land acquisition issues should be used to develop future procedures.
While the State Government should update itself to the needs of business organizations, the latter should take up certain steps to become people- friendly. The recent judgment of SC quashing Singur land acquisition showed that even the “public purpose” of Nano Plant was questioned. Companies are operating with profit motive. Their existence cannot be for public purpose unless they generate good taxation to the Government or provide local employment. Many companies do not have rehabilitation and resettlement polices or local employment policies. Such attitude of companies creates resentment among public. Odisha should ensure during the signing of MOUs that the companies agree to State’s R&R Policy and local employment policies and publish their policies on their websites. Companies are not seen adhering to Odisha Government’s R&R Policy and local employment policy and the State Government is not seen taking action against them. Such careless attitude of first generation and second generation corporate organizations has created hurdles for the next generation business organisations in the State.
Besides the land problem, the business organisations need continuous support from the 3 major sources viz State Secretariat, district administration and Panchayati Raj Institutions. There is a need for change in attitude of the Government employees, public representatives and PRIs. Training and orientation programmes should be organized by the State Government for various stakeholders to build a pro-business environment. But the Government should allocate certain sectors and districts for liberalization process in a phase wise manner. It should be remembered by the State Government that liberalization might lead to corruption and collapse of democratic institutions if it is done recklessly. In the past, the NBFC liberalisation era by the Union and the State Governments led to victimization of small investors by chit fund companies. Similarly, liberalization of technical education leads to drop in quality of education. Recently a rumour about certain MlAs asking for bribes from coprorates is being investigated by the Vigilance department. Finally, Odisha Government has to move ahead setting its own priorities in business reforms along with protection of the marginal class and not work to get some ranks by World Bank or to please the Union Government.