We have heard PM Modi claim multiple times that doing business in India has become easier than ever since his government has taken control of the country. But, how easy is easy in his dictionary?
According to a survey done by Niti Aayog and Mumbai-based IDFC Institute, on an average, it takes about 118 days to set up a business from scratch in India. The survey was conducted of Indian enterprises on ease of doing business in the country.
What made people wonder the most about the findings of the Niti-IDFC survey was the deep contrast it showed to the World Bank report on ease of doing business in India. As against 118 days that the Niti-IDFC survey predicted takes to set up a business in India, the World Bank report on ease of doing business showed that it took just a mere 26 days to set up a business in India in 2016.
So, why this 92 days difference? Well, there’s a good explanation for it.
While World Bank for its survey only took into account Indian cities Delhi and Mumbai, the Niti-IDFC survey was pan-India, excluding the states of Arunachal Pradesh, Mizoram, Andaman and Nicobar, and Lakshadweep.
The World Bank determines a country’s ease of doing business ranking on the basis of 10 main parameters that assess the country in areas such as ease of starting a business, getting electricity, construction permits and carrying out trade across borders. For the 2016 report, the DIPP treated the World Bank team when they visited the country with a detailed presentation of initiatives and efforts made by both the central and state governments of India during the period of last one year (Read Here).
The Niti-IDFC survey report not only offers a wider coverage when compared to its World Bank counterpart, but it also includes interviews of firms in the country rather than just taking the point of view of experts and officials. For the report, while Niti Aayog and the IDFC institute focused their attention on organised manufacturing sector in India and, covered 3,000 firms across 23 sectors, the World Bank report took into account both manufacturing and services.
Not only did the report have contrasting numbers to show when it came to setting up a business in India, it also showed a sharp variance on a couple of different parameters as well. For instance, while World Bank report showed that getting construction permits in the country can take up to 164 days, the Niti-IDFC report showed that on an average the construction permits took 156 days to come around.
Even the Niti-IDFC report showed inter-state differences when it came to ease of doing business. While the national average of doing business in the country is 118 days, Tamil Nadu, the best-performing state on the survey report, managed to do the same in 63 days. Similarly, while environmental approval took 91 days nationally, it took just 25 days in Chhattisgarh.
Explaining the huge gap between states, Niti Aayog’s outgoing Vice-Chairman Arvind Panagariya said that the huge gap is a result of different initiatives state governments have done to improve the ease of doing business in their states and what the enterprises know of these improvements being done by them.
He further added that when the survey set out to find out how many enterprises were aware about the single-window clearance, they were shocked to see the results. Among the startups — which were set up in the last three years — only 20 per cent were aware of the existence of single-window facility. Among the experts, only 41 per cent had knowledge of the existence of such a facility.