Improving India’s regulatory framework for business is a key prerequisite for increasing investment in India and thereby creating jobs. However, the country fares poorly in ensuring business facilitators: It ranks 142 among 189 nations, according to World Bank’s “Doing Business 2015”study. Keeping in view the imperative to improve its business –friendly stance, the Government of India has embarked on an ambitious agenda to improve India’s Doing Business rank to 50 by 2017; but, this effort will only address a small subset of the regulatory burden on investors. A majority of the regulatory burden imposed on business is due to the plethora of laws, rules, regulations and procedures enforced by the States.

With a view to improve investment environment in 32 states with a great diversity in                  facilitations in doing business, chief Secretaries of States participating in the “Make in India” workshop in December last year finalized a 98-point Action Plan on “Ease of Doing Business” and subsequently it was decided that an evaluation will be conducted to assess progress by states covering January-June 2015. The present report by World Bank assisted by DIPP, government of India, captures the findings of the evaluation of this unique exercise, the first of its kind in the country and ranks States in terms of their implementation of the 98-point action plan.

The 98 points covered in the action plan are divided into eight following areas. The report assesses implementation status of reform measures across these areas.

  • Setting up business: This covers availability of information on relevant information and establishment of an effective single window system.
  • Allotment of Land and Obtaining Construction Permits: This covers land allotment, construction permits, property registration and other policy enablers. Each of these requires several other requisite approvals. Thus, Construction permit would entail approval of building plan, NOC from traffic& coordination department. NOC for felling trees,
  • Complying with environment procedures: This requires clearances under water and air (prevention and control of pollution) Acts, hazardous waste and municipal solid waste rules, etc
  • Complying with labour regulations: This requires compliance with Factories Act; Contract Labour Act, s; Shops & Establishment as also specific renewals under various legislations
  • Obtaining infrastructure related utilities which include electricity connection, NOC from sewerage department, fire department, etc.
  • Registering and complying with tax procedures: This includes registration under VAT, profession tax, entry tax, central sales tax, luxury tax etc. Tax
  • Carrying out inspections: This includes inspections under legislation like for VAT, equal remuneration, factories act, minimum wages, payment of bonus, gratuity, shop & establishment, contract labour, water & air pollution, etc.
  • Enforcing contracts, which includes establishing electronic courts

Major findings
In terms of meeting the criteria of 98 points program on ease of doing business, Gujarat ranks 1st among the states, followed closely Andhra Pradesh. At aggregate level, the study classifies states in to following groups in terms of progress achieved in this action plan, It has also laid down for individual states initiatives already implemented along with future areas of improvement.

  • Leaders: States with an overall implementation status of 75% and above. This assessment revealed that no States had attained this status.
  • Aspiring Leaders: States with an overall implementation status between 50% and 75%. 7 States were found to be within this group: Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Odisha and Rajasthan.
  • Acceleration Required: States with an overall implementation status between 25% and 50%. 9 States were found to be within this group: Delhi, Haryana, Karnataka, Maharashtra, Punjab, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal
  • Jump Start Needed: States with an overall implementation status between 0% and 25%. 16
  • States were found to be within this group: Andaman and Nicobar, Arunachal Pradesh, Assam, Bihar, Chandigarh, Goa, Himachal Pradesh, Jammu and Kashmir, Kerala, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Tripura and Uttarakhand.

world-bankGenerally, States have made good progress in terms of tax reforms. General tax reform includes mandating e-registration for VAT and CST; allowing online payment and returns filing of various State taxes; providing e-filing support through service centers and help lines; and risk-based tax compliance inspections. Construction Permits and land allotment procedures take up the fourth and fifth spots respectively.

Areas in which states need to reform include electronic courts, tree felling inspections, minimum wages, building plan inspections, land availability, etc.

No State has been able to demonstrate a fully comprehensive list of all licenses, NOCs and registrations required by a business to set up and operate, as a result of which no State allows entrepreneurs to filter the list by industry or number of employees to get a truly comprehensive sense of what his or her entire regulatory burden will entail. Similarly, no State has focused on integrating data at sub-registrar, municipality and land records offices comprehensively to provide a sense of conclusive title on each property. Mutation is also not integrated with registration in most States. On the inspections front, no State allows for all compliance inspections to be solely based on complaints with approval from the Head of Department. This implies that there is still a lot of scope for improvement in how inspections are administered in all States.

The study provides a good benchmark for initiating work towards enabling/ facilitating ease of doing business. Sustained and time bound efforts would need to be undertaken to make this a long-term success”. The study also provides platform for “competitive federalism” approach to business reform.

Methodology
Data for the assessment was collected through a structured questionnaire that was completed by each State and UT Government. The responses were validated through a series of in-depth workshops with State Government representatives, and the collection of supporting evidence on each of the parameters of the questionnaire. The evidence collected consists of rules, notifications, circulars, website screenshots and a variety of other documents provided by the State Government or found online to prove conclusively that the State meets the requirements of the assessment. Following the completion of the data collection and State visits, the data was evaluated in detail jointly to ensure that the same yardstick was applied to measure progress for all States.

The overall implementation status (which reflects the percentage of factors enabling ease of doing business, implemented in the State/UT) for the State was computed as: (Number of questions across all areas for which the response is “Yes”) / [(Total number of questions across all areas) – (Number of questions across all areas for which the response is “Not applicable”)] * 100%.


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3 COMMENTS

  1. SELF CERTIFICATION FOR BUILDERS ?

    In Hindustan Times ( Oct 29 ) , Moushumi Das Gupta writes :
    Govt to streamline rules for Construction Projects
    Currently , a builder requires as many as 34 kinds of permits from two dozen Ministries, before starting construction
    This process takes up to 3 years
    Now, Central Govt has initiated a process to streamline the approvals required to ensure that builders get all the construction permits within 60 days
    Eg:
    * Built up Area…………. Environment Ministry
    * Height Restriction…… .Civil Aviation Ministry
    Cabinet Secretary has directed all the Ministries to come out with notifications by end Dec 2015
    The Centre has decided to empower Municipalities to grant all construction related approvals , based on these notifications
    One would be able to get all approvals from under one roof , which in this case , would be the Municipal Corporation’s office
    Although a very laudable initiative , I believe there is tremendous scope to further streamline and digitize this approval process, in the nature of
    E-Delivery of Services to Construction Industry
    Here is how :
    * All builders / developers must register on Municipal Web sites and obtain
    unique BUILDER REGISTRATION NUMBER
    * Builders must fill in online, on web site of concerned Municipality, a form :
    BUILDING PERMIT APPLICATION
    * Building Permit Application Form will have a STANDARD FORMAT , into
    which applicant will need to submit exhaustive details re the project
    This will include detailed Floor Plans and Structural Drawings , along with
    names / contact details of Architects / Structural Engineers etc
    The FORM will require slab-casting dates for each slab and the final
    completion date when builder will apply for Occupation Certificate

    * The Form will have a section called
    SELF CERTIFICATION / DECLARATION
    Builder would be required to tick YES / NO against each item as shown :
    Does your proposed Building / Structure / Project , satisfy the criteria /
    notifications / regulations , issued by the concerned Ministries in respect
    of :
    # Built-up Area……….. ( YES ) / ( NO )
    # Height Restriction
    # Fire Fighting
    # Water Harvesting
    # Roof-top Solar Power
    # Effluent Treatment
    # Garbage Disposal
    # Earthquake Resistant Structural Design…………..etc

    Clicking on each item will reveal the relevant ” Notification / Regulation ” issued by the concerned Ministry
    To make the process absolutely fool-proof , the form will insist on an ” Electronic Signature ” of the applicant

    DECLARATION / UNDERTAKING :
    ” I declare that I have read each and every notification / regulation , listed in respect of items mentioned above
    I further declare that I explicitly agree to abide by these regulations
    I am aware that Occupation Certificate will not be granted if my completed project is found to be in violation of any of these notifications / regulations
    I will not allow any person / entity to occupy any part of this premises , until and unless , Municipality issues to me , the Occupation Certificate
    If Municipality finds any violations , I agree to rectify the same before applying for a fresh Occupation Certificate
    If Municipality is not in a position to issue Occupation Certificate due to any
    violations which simply cannot be rectified , then I will demolish the said building / project / structure on my own and before such demolition , refund with interest , payments collected from the buyers
    The plot of land is free from any encumbrances / litigation
    I am not in default of any loans taken from any bank / individuals
    I will not accept any payment in cash , nor make cash payments
    I absolve the Municipal Corporation of any liability arising out of non completion of my project
    I agree that my Building Permit Application and my Registration Application details , be made accessible to public on your web site , along with full details of my past / current projects and full details of my balance sheet / bank borrowings ”

    GRANT OF APPROVALS BY MINISTRIES :

    As soon as the builder submits the online BUILDING PERMIT APPLICATION , it automatically and instantly , appears on the web sites of ALL the concerned Ministries
    The concerned officer of each Ministry , makes APPROVED / REJECTED entries in the application form , from the backend
    If rejected , he will provide the reasons
    Ministry officers are required to carry out this entry , within 24 hours
    As soon as an officer of any Ministry makes entry and SUBMITS , the application forms on web sites of ALL Ministries and web site of the concerned Municipality , get updated simultaneously and instantly , making for MIRROR IMAGES at all times
    As soon as any entry is made , a copy gets emailed to the applicant builder
    Any ” editing ” of the application form by the builder , will start the entire process , all over
    Applicant builder will be obliged to display the latest emailed form at the site
    The database so created on web sites of ALL Ministries – and concerned Municipality – will be searchable State-wise / City-wise

    CHANGES IN RELEVANT LAWS :

    To speed up any litigation between the parties concerned ( Builder / Buyers / Central & State Govts / Municipality / Bankers etc ) , existing laws may be changed

    IMPORTANT :

    Every application must be in the open domain and visible to anyone , online and transparently
    There should be provision for any visitor of the web site to report any abuse / violation of regulations or any objection to the proposed construction

    ADVANTAGES :

    If such SELF CERTIFICATION process is implemented , it should be possible for India to beat Singapore , where getting 11 approval takes only 26 days !
    It would be ZERO days in our case !
    Now couple this with abolition of Corporate Income Tax for Construction Industry for the next 10 years and witness a MIRACLE
    Then only it would become possible for achieving the following targets set by different States / Centre , under HOUSING FOR ALL:

    * Maharashtra……….. 5 lakh ( By 2020 )
    * Gujarat………………. 50 lakh ( 2013 – 2018 )
    * Centre……………….. 220 lakh ( by 2022 )

    Also imagine :

    * Employment it would generate
    * FDI it would bring in
    * Our rank in EASE OF DOING BUSINESS

    Need of the hour is :

    * Come out of ” Analysis Paralysis ”
    * Get rid of historical baggage
    * Break free from the legacy of the past
    * Think ” Out of Box ”
    * Take risk without worrying about possible failure
    * Make Course-Corrections , as you learn what mistakes got made

    ————————————————————————————-

    hemen parekh
    05 Nov 2015
    B2BmessageBlaster

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