Still a long wait for manufacturers in India
Niti Aayog’s report on ease of doing business reveals many lacunae
The business of India remains to make it hard to do business. A Niti Aayog and IDFC institute survey of formal Indian manufacturing firms has found that as of 2016, despite the reforms by the NDA government, factory-owners do not feel things had changed too much. Only a minority of the businessmen believed things had gotten worse, but the survey’s findings are a sign of how deeply entrenched is the anti-business environment. This should not be a complete surprise. The Modi government was able to lift India only one point, from 131 to 130, in the broader World Bank’s 2017 Doing Business survey of countries. The Niti Aayog survey looked at the sector of the economy most entangled in India’s socialist legacy: White economy manufacturing. It showed a third of businessmen believed things had remained the same, a smaller number said things had improved and about a fifth felt things had gotten worse. The government scored best when it came to the basics: Power, water and setting up a business. Land, labour, regulations and taxes was where it was felt the government’s actions had done little.
Labour restrictions were cited as the worst problem for labour-intensive industries. Getting electricity was still the primary source of migraine for power-intensive industries. The most positive finding was that new companies gave the overall business environment a bigger thumbs up than older firms. Surprisingly, only 20% of manufacturing start-ups were using the new single window clearance system.
While there is much that is positive about the changes being attempted, knowledge about them is being disseminated in the ways of a previous generations. The State has spent much of the past 70 years making manufacturing in India as difficult as possible. Turning this around was always going to be difficult. The Centre should do well to embrace the findings, draw suitable lessons and begin to redress the lacunae that have been pointed out.