The Indian economy achieved its fastest quarterly expansion in April-June at 13.5%, recovering swiftly despite macroeconomic headwinds. India currently accounts for ~7% of the world’s GDP, making it the third-largest economy in purchasing power parity (PPP). In terms of the market exchange rate, India’s GDP is expected to reach US$ 5 trillion by 2027.
By then, India’s GDP, in purchasing power parity terms is expected to exceed US$ 16 trillion. Moreover, in the latest series of events, India surged past the United Kingdom to become the fifth largest economy in the world, as per International Monetary Fund (IMF). India’s economic growth chart is expected to be the fastest in the current fiscal year, given the economy’s strong fundamentals.
Indian economy recovered quickly from pandemic-induced losses, which is an impeccable achievement for the industrial sector as well as the economy. The Economic Survey 2021-22 points out that Indian macroeconomic indicators are well placed to take on the challenges of 2022-23.
The growth of the Indian economy can be attributed to several factors. However, Industry initiatives remain paramount in shaping the Indian growth story, and there are several growth drivers endemic to India that helped boost industry sentiments. Ease of Doing Business (EoDB) is one of the key determinants that has drawn the Government’s attention and has played a critical role in the growth of MSMEs in the region.
India’s EoDB, according to a World Bank report, improved from 142 in 2014 to 63 in 2020 among 190 world economies. Meanwhile, as per the Government’s Business Reforms Action Plan 2020, which assesses states and UTs based on implementing various reform parameters to improve the business environment, Haryana and Punjab in the Northern Region were announced as the top achievers in June this year.
The action plan has 301 reform points that addresses 15 corporate regulations, including information access, single-window systems, labour &environment regulations, and land administration & property transfer. To broaden the scope of the reform agenda, 118 new reforms were included to augment the reform process further, while sectoral reforms with 72 action points across nine sectors such as trade license, healthcare, legal metrology, cinema halls, hospitality, fire NOC, telecom, movie shooting, and tourism were introduced for the first time.
The Government of India, along with states and UTs, has been working to reduce the compliance burden on businesses to improve EoDB by simplifying, rationalising, digitizing, and decriminalising government-to-business interfaces. States, union territories, and central ministries/departments have streamlined regulatory regime to decriminalise or simplify more than 33,000 compliances.
Till September last year, 22,000 compliances were reduced, about 13,000 compliances were simplified while over 1,200 processes were digitised, as per Department for Promotion of Industry and Internal Trade (DPIIT), Government’s nodal agency for promoting industrial growth. In addition, 103 offences were decriminalised, and 327 redundant provisions/laws were removed.
To further ease processes, Government of India has introduced the online portals of SPICe+ and AGILE PRO for incorporating new companies. The creation of the Online Building Permission System (OBPS) has helped improve India’s ranking in obtaining construction permits from 184 in 2014 to 27 in 2019.
Similarly, India’s ranking on the parameter of getting electricity has improved from 137 in 2014 to 22 in 2019. It now takes 53 days and 4 procedures for a business to get an electricity connection in India. Among 190 economies, India ranks 13th in protecting minority investors and 25th in getting credit. In a short span of 5 years, the results of India’s efforts to promote MSMEs have borne tangible results on the global scale.
This year, Union Finance Minister Smt Nirmala Sitharaman launched the electronic bill (e-Bill) processing system as part of the EoDB and Digital India eco-system. The e-Bill system will be a further step to enhance transparency, efficiency, and a faceless- paperless payment system.
Now, suppliers and contractors will be able to submit online claims that can be tracked in real-time. The Commerce and Industry ministry is also planning to hire consultants to study the business environment and compliances and suggest steps to promote EoDB in the country.
Additionally, National Logistics Policy is a key priority area for the Government as it will bring down logistics costs and the Gati Shakti programme will help in holistic planning for integrated infrastructure projects.
The Government’s vision of ‘trust-based governance’ to ensure ‘minimum government and maximum governance’ for enhancing the efficiency of capital and human resources is well appreciated. This vision will be further accomplished to its optimum if fundamental steps are taken in the direction of easing the industry operations.
India’s low ranking in parameters of registering a property, starting a business, with banking sector risks, and easing tax regimes need to be streamlined further. Moreover, the progress in EoDB facilities and compliance reduction is mostly concentrated in Tier I cities such as Delhi and Mumbai. The need of the hour is to focus on Tier II and Tier III cities across the country to bring in investments and development in potential destinations.
Furthermore, as we embark on our journey towards making India a developed nation, it is essential for us to reflect on where we see India in the next 25 years. As articulated by the Hon’ble Prime Minister of India, Narendra Modi, the next 25 years of Amrut Kaal will define India’s growth story. CII has estimated that in 2047, India will be a US$ 35-45 Trillion economy, taking the country into the league of developed nations.
To actualise this estimate, EoDB will be the critical aspect that will unlock the country’s potential by harnessing its ‘Indian Advantage’. Our demographic dividend, youth power, Industry 4.0, cloud & AI, exports, etc. combined can yield great results, if small businesses are allowed to operate with ease and talent can be nurtured to gain expertise in respective domains.
EoDB is a key priority for the CII Northern Region, where the agenda for 2022-23 is to identify new areas of business reforms, create awareness, and provide feedback on reforms already implemented. CII, a developmental institution and representative of the industry’s voice, endeavors to facilitate an effective Single Window System for all regulatory approvals and renewals while focusing on timely delivery of benefits to the industry.
I look forward to this bright phase of the Indian development story and hope that the industry and Government can collectively achieve the vision of robust economic growth by improving EoDB to compete globally and attract FDIs.
This article was contributed by Anshuman Magazine, Chairman, CII, Northern Region and Chairman & CEO, India, Southeast Asia, Middle East, and Africa – CBRE and was first published in CII Northern Insights, September 2022 issue.