It’s not easy to do business in India: Niti-IDFC survey

The big push by the central and state governments to ease the regulatory environment notwithstanding, the perception of most business enterprises is that precious little has changed, a new survey said.

The national survey of the organised manufacturing sector was conducted jointly by the Niti Aayog and IDFC Institute Enterprise Survey, a Mumbai-based think tank to monitor the business environment in the country. It surveyed 3,276 enterprises, including 141 early stage firms across 23 categories.

Not only do the survey results serve as a wake-up call to the government and that the legacy of red tape is far more difficult to undo than what was thought so far it also shows the experience of easing the regulatory environment has not been uniform across the country.

The results released on Monday showed a majority of respondents on most of the parameters such as setting up a business, land and construction, environment, labour, water and sanitation, taxes, access to finance claiming that things have remained the same compared to a year ago while on legal matters, they reported things to have worsened than a year ago. Only getting electricity connection has become easier when compared to the previous year, according to a majority of the respondents. The survey was conducted during 2016.

To be sure though little over a third of the respondents did say that there was an improvement in the ease of doing business and about a fifth said procedures had deteriorated.

While 38% of the enterprises said that the regulatory environment for setting up a business had improved, the same proportion claimed nothing had changed and 21% said it had worsened. A large proportion (44%) of the enterprises said that the regulatory framework for getting environment clearances had stayed the same while only 17% said it had worsened. Around, 36% of the enterprises said that legal processes for resolving disputes had worsened while only 25% said it has improved. About 46% of enterprises said that access to finance had stayed the same while 36% said it had improved.

The World Bank in its last year’s Doing Business survey report had a possible explanation. “The experience of implementing reforms based on doing business data has demonstrated to the government the significance of establishing clear stakeholder feedback mechanisms to close the gaps between policy formulation and implementation.”

India’s ranking in the World Bank’s annual Doing Business survey improved by just one notch to 130 in its 2017 report from a revised rank of 131 last year. India is targeting a 40 notch jump in the ranking in the upcoming survey which is expected to be released in October. According to an output-outcome framework document prepared by the government, India wants to reach the 90th rank in 2017-18 and 30th by 2020, Mint reported on 21 March.

The Survey also found that a substantial chunk of the enterprises surveyed were not aware of many of the improvements undertaken both by the union and state governments.

On average, only about 20% of manufacturing startups recently set up, were using single window facilities introduced by state governments for setting up a business.