Gujarat has topped the list of states in rapidly implementing business reforms, a study conducted by the World Bank and the government’s Department of Industrial Policy and Promotion (DIPP) has shown.
Key states such as Maharashtra, Karnataka and Tamil Nadu have been slow in making progress and even lag less-developed states such as Jharkhand and Chhattisgarh.
The first-ever such study which covers the country in an in-depth manner, ‘Assessment of State Implementation of Business Reforms’, took stock of reforms implemented by the states from the beginning of January this year to the end of June. It worked out its findings on the progress made on a 98-point action plan that had been agreed upon between various states, union territories and the DIPP towards the end of last year.
The report provides deep insights into regulatory practices across states and highlights how states are implementing reforms. “On an average, only 32% of the proposed reforms have been implemented across the country. The implementation of reforms regarding inspection and enforcement of contracts, which necessitate medium term actions, stands at less than 20%,” the report said.
Other partners in the study, which saw states faring poorly in areas such as setting up electronic courts, included KPMG and industry chambers CII and FICCI. The study comes at a time when PM Narendra Modi is attempting to attract investment and create jobs through initiatives such as Make in India. The PM has often referred to the need to make significant progress on various parameters of the ease of doing business.
India ranks 142 among 189 nations in the World Bank’s Doing Business report and investors complain about the slow pace of decision making and red tape on approvals. “Thus the need of the day is reform, and the reforms must be led by the government both at central and state levels,” said Onno Ruhl, World Bank’s country director in India.
Seven out of the top 10 states in terms of implementing business reforms have the BJP in office (supporting the TDP as an ally in Andhra Pradesh). The non-BJP states that cracked the top 10 category included Odisha (ruled by the BJD, ranked 7), Karnataka (Congress, ranked 9) and Uttar Pradesh (Samajwadi Party, ranked 10).
The study assessed the states on various key parameters such as ease of setting up business; allotment of land and obtaining construction permit; complying with environment procedures; complying with labour regulations; obtaining infra-related utilities; registering and complying with tax procedures; carrying out inspections and enforcing contracts.
The assessment shows that none of the states could achieve distinction or cross the 75% mark (dubbed as ‘leaders category’ in the survey) in the overall assessment on business reforms. The top seven states emerged in the ‘aspiring leaders’ category and these were Gujarat (71%), AP (70%), Jharkhand (63%), Chhattisgarh (62%), MP (62%), Rajasthan (61%) and Odisha (52%).
“What this report does very well is to provide a roadmap for states serious about improving their business environment and creating jobs,” Ruhl said. “But it’s also important that the civil servants facilitate business, and make it easy for businesses. This requires a change in mindset.”
The report found that except for the top seven states, all the other regions need to speed up reforms. Nine states, including Delhi, Haryana, Karnataka, Maharashtra, Tamil Nadu, Punjab and West Bengal, were placed in the category where acceleration is required in reforms implementation. A total of 16 states were placed in the bottom category which need to “jump start” reforms implementation and these included Arunachal Pradesh, Assam, Bihar, Kerala, Uttarakhand, Nagaland and Andaman and Nicobar.