New Delhi: The Planning Commission recently completed a state-level assessment on the ease of doing business—a parameter by which India ranks poorly in global surveys because of a maze of regulations and concerns over contract enforcement. In the latest World Bank and International Finance Corporation’s 2013 Ease of Doing Business survey, India slipped to the 134th ranking. Much of the work towards fixing this has to be done by the state governments, Planning Commission member Arun Maira said in an interview. Edited excerpts:

Why did the Planning Commission initiate the business regulatory assessment survey?

The number one constraint for anyone to run an enterprise in this country is the business regulatory environment. Any survey done finds this as the biggest issue. We are looking at the business regulations from the perspective of manufacturing enterprises. We found that almost three quarters are state regulations, so it is in the hands of the states to look into improving their business environment.

Regulations made by the centre too create two kinds of problems for enterprises—there is the need for coordination among central ministries and between the centre and the federal levels of government. We want to bring the focus on policy convergence as well so that concerns of different government departments, such as in the matter of local content and local sourcing requirements, can be resolved.

India will become a more competitive manufacturing nation only if we improve faster than other countries who are also improving all the time...if we grow our manufacturing industries much faster, we can create the millions of additional jobs that we must generate in the next few years.

Are you ranking states on their business friendliness?

We didn’t want to rank the states or give awards, but we have put states in three levels of compliances required so states can look for the knowledge that they can use to improve their business environment.

What we are doing is starting a four-step learning and improvement cycle. Step one is to generate awareness and motivation in the states... States will see that on some aspects other states are better than they are.

Step two is to provide the states with the best practices of other states. The industry associations—CII (Confederation of Indian Industry), Ficci (Federation of Indian Chambers of Commerce and Industry), FISME (Federation of Indian Micro and Small & Medium Enterprises)—will compile the best practices.

Step three is the process within the state to tune up its regulations, applying best practice, if appropriate. This requires the relevant stakeholders to participate to ensure the regulation serves its intended purposes efficiently. For example, labour regulations cannot be changed unilaterally without the participation of unions. Good tools are now available internationally for fixing regulations.

Step four is the assessment in the following year. This regulatory assessment framework will be the Planning Commission’s frame to assess states every year. Assessing the process of improving the environment will be key.

We, in the Planning Commission, will create a portal that will bring together best practices on labour management, environment management and other issues.

The assessment puts Haryana in the top one-third with respect to labour regulations. How do you reconcile this with some of the recent labour troubles that have affected enterprises and workers in Haryana?

The business regulatory impact assessment begins with the perspective of manufacturing industries, though it is supplemented by information from the state governments. However, changes in business regulations cannot be considered only from an industry perspective. Therefore, as I mentioned before, the perspectives of other stakeholders must be taken into account while making any changes in the regulations.

We have a process underway bringing the unions and industry associations into a dialogue to find solutions to the vexatious issue of fairness to employees while having sufficient flexibility for employers in employment of contract labour. As you know this has been the main issue beneath the problems in Haryana that you refer to, and it is a major issue all over the country too.

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