The finance minister said the World Bank has not factored in all the steps taken by the government to improve business environment
New Delhi: Not fully satisfied with the 12-position jump in India’s ranking on the Ease of Doing Business Index, finance minister Arun Jaitley on Sunday said the World Bank has not factored in all the steps taken by the government to improve business environment and ranking should have been “significantly higher".
He also stated that there was a need to further cut down on the number of permissions required so that the time-lag between the decision to invest and the actual investment can be shortened significantly. “States must realise that local laws which enable availability of land, environmental permissions, sanction of building plans need a relook," he said in a Facebook post titled “The Ease of Doing Business". Jaitley also posed a question if individual structures require separate approval once an industrial zone or new township has been cleared for environmental sanctions.
“The World Bank has upped India’s ranking in the Ease of Doing Business by 12 positions. Last month the World Economic Forum had similarly upgraded India. Even though the push up numerically is modest, it marks the reversal of an adverse trend. Considering the number of steps taken in the last 17 months, India’s position should have moved significantly higher. I understand that all steps have not been factored in since the World Bank criteria has a cut-off date and it also waits for announcements to translate into action before they can be factored," he said. The minister said that to adjudicate quickly upon investment related matters, a commercial division is being constituted in all high courts. This would improve the enforceability of contracts where India’s ranking is relatively poor. “The obsolete Specific Relief Act which provides for damages as the normal remedy rather than enforcement, needs to be relooked," Jaitley said.
A World Bank report on Tuesday ranked India at 130 out of 189 country on the ease of doing business, up 12 places from 142nd rank last year. In the World Economic Forum’s Global Competitiveness Report in September, India’s ranking moved up 16 positions to 55th on a global index of the world’s most competitive economies. Jaitley attributed the jump in India’s ranking to quicker decision making, faster policy changes, eliminating corruption at the top and smoother clearances. While the Foreign Investment Promotion Board (FIPB) clearances and the environmental approvals are being routinely granted, investors no longer queue up before the ministries in Delhi lobbying for policy changes or approvals, he said.
Highlighting that the present government has opened most sectors to foreign direct investment, he said, “time has come to examine whether some of the conditionalities on which FDI investment is permitted, have become anachronic". “We need to cut down on the number of permissions required so that the timelag between the decision to invest and the actual investment can be shortened significantly," he said. He said many countries have switched to an architect’s certificate as a substitute for building plans being sanctioned. “When you compulsorily need a completion certificate for a building, the permission required for start of construction should be replaced by a regulatory mechanism. These additional changes will further improve India’s ranking for ease of doing business," he said.
Saying that an ease of opening business must also be accompanied by an ease in exiting, he said the framework of the Bankruptcy Law is being readied. “Dispute resolutions with regard to public projects require a quicker settlement mechanism. The same is being worked out," he said.
Jaitley said it was encouraging that states have also altered their work culture. Investment is the starting point of all economic activity. An investment-friendly state will be a natural destination. Stating that competitive federalism can be seen among states, he said the Gujarat model of global investors meet has been replicated in Tamil Nadu, Madhya Pradesh, West Bengal and in Punjab. Rajasthan, this month, would be wooing global investors. Telangana and Andhra Pradesh have been reaching out to investors globally.
He said three states with a significant tribal population—Chhattisgarh, Jharkhand and Odisha—figure in the top six states in the World Bank Ease of Doing Business rankings. “The work culture is changing in most states," he said. Talking of initiatives taken, he said the government last week issued two important ordinances—The Arbitration Law has been changed to make arbitrations cheaper, faster and free from judicial intervention and to adjudicate quickly upon investment related matters, a commercial division is being constituted in all high courts. “This would improve the enforceability of contracts where India’s ranking is relatively poor," he said.
The minister said much has been done to ensure that award of natural resources and public contracts are completely transparent. “To empower public servants to take simpler and bolder decision, many corrections are required in some obsolete provisions of Prevention of Corruption Act. The same have already been introduced in Parliament," he said.
India, he said, aspires to grow faster at a time when the world growth is moving slowly. “To add a percentage or two in our present growth rate, the ease of doing business coupled with a simpler direct and indirect taxation system, a higher investment in infrastructure and irrigation will play a significant role. A low oil and commodity regime is helping us in this direction."
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!