In recent years, the Government has taken strong action to improve the climate for business operations with a view to bring in competitiveness in the system.
Department for Promotion of Industry and Internal Trade (DPIIT) initiated the Business Reform Action Plan (BRAP) exercise of ranking all Indian states/UTs in 2014 based on the reforms undertaken by the states, across a set of designated parameters. DPIIT undertakes this exercise with the aim of providing a conducive business environment by simplifying regulations and ranking the states in terms of various Ease of Doing Business (EoDB) measures.
Very recently, DPIIT released the fourth and the latest edition of the EoDB state rankings during September 2020, where Andhra Pradesh ranked as the top performer, followed by Uttar Pradesh and Telangana.
This year’s reforms focussed on user feedback to improve the state rankings. The industry feedback system helps in capturing business perspectives in a credible manner, thereby increasing the transparency of the process and improving accuracy of the rankings. As the rankings this time are entirely based on industry response, this also greatly helps in addressing the needs of the entrepreneurs.
The state rankings provide comprehensive state level information on various aspects of business procedures such as efficiency of business licensing, inspections and regulatory practises, and policies of various states/UTs.
Further, the rankings provide detailed analysis of the business performance of firms across several lead indicators of business environment such as single window system, environmental clearances, digitization and compliances pertaining to laws related to labour, contract enforcement, construction permits, registering property and inspection, among others.
The availability of such objective information that focusses on investment climate of various states helps potential investors in assessing and making their investment decisions with regards to specific states. This in turn will help India in its endeavour to become one of the most attractive investment destinations for investors across the globe.
The BRAP exercise has successfully helped states reduce transaction costs progressively while enhancing speed and transparency of the administrative processes.
Measures aimed at eliminating physical interface with government officials, reducing discretionary processes, simplifying and digitization of regulatory processes, encouraging time-bound processes and other procedures that have been implemented as part of BRAP recommendations will significantly reduce compliance costs and time involved for industry. The use of information technology for making approval process quicker, cost effective and time bound will go a long way in improving business facilitation.
The BRAP survey results over the years have also revealed that the states have achieved substantial progress in improving their business environment as a result of enhanced implementation of reform measures.
The latest BRAP survey results, relying on the responses of entrepreneurs were based on 180 reform points covering various business regulatory areas including single window system, labour, and environment, among others. The results indicated that the average implementation of reforms has picked up rapidly over the years, reflected in the increase in average score from 32% in 2015 to 62% in 2019.
India over the years has achieved substantial progress in creating a conducive business environment with the help of a favourable policy regime, proving its worth as a major investment destination for global investors. This is evident in the recent surge in foreign direct investments (FDI) that India has received during 2020 so far.
India’s FDI equity inflows stood at US$ 2.77 billion in April 2020 and US$ 2.24 billion in May 2020. Cumulative amount of FDI equity inflows received by India between April 2000 and June 2020 amounted to US$ 476.56 billion.
India’s FDI performance can be attributed to the relaxation of the FDI norms and various other reform measures introduced by the central and state governments to further improve ease of doing business measures at the state level.
Industry has greatly benefitted from the reform measures that have brought about simplification and modernization along with harmonization of business processes.
It is important to ensure that going forward, the momentum of implementation of business reforms continues across states/UTs. Comprehensive efforts and the continued partnership between the central and state governments will help in facilitating a conducive business environment, along with promoting industrial growth and creating employment.