‘Ease of biz’ wake-up call: Will PM act fast

There is an outcry against the World Bank placing India near the bottom in the Doing Business index, but some of these objections may be misplaced. One of the Bank’s main complaints was that India is slack in handling tax refunds, tax appeals, etc. India’s tax system is complex, with multiple taxes like sales tax, GST, VAT, despite talk of simplifying the system. If the implementation is further vitiated by hurdles, life gets difficult for taxpayers, India Inc and particularly small and medium enterprises. Many SMEs say it is very expensive for them to hire chartered accountants and auditors and spend time on compliances rather than tend to their businesses. This post-filing of taxes World Bank index is a recent criteria to rank countries. It may be a double bonanza for Corporate India, shopkeepers and retailers if Prime Minister Narendra Modi looks into this and other failings, and gets the system modified. He is said to have sought an explanation, so there’s something to look forward to as he’s a man of action and will surely do what must be done.

A lot of action is needed on the corruption front. Since Mr Modi is Prime Minister of the entire country, it would be good if he looks into corruption in the states. There may be some protests about “interference” by the states, but this is part of the reform process. The states and those officials indulging in corruption are sabotaging the Prime Minister’s fight against corruption and his efforts to make it easier to do business in India to attract foreign and domestic investment. This was one of his key election promises. Corruption may have been controlled to some extent in the Central ministries in New Delhi, but by and large it is still rampant at the state level and particularly in local self-governing bodies and municipalities. India ranks low in the ease of starting a business and dealing with construction permits. This is where states and local bodies play a role. Corruption slows down processes and permissions that then impede the ease of doing business. It is the states that must give permissions, from starting a business and putting up factories to giving land, etc.

It is interesting that one of the parameters is protecting minority investors, where India dropped from 10th to 13th position. The Securities and Exchange Board of India and the stock exchanges are yet to comment on this. For long, Indian investors have been taken for a ride despite Sebi’s rules and regulations. Hopefully Sebi will take this seriously and look into where India is failing its small investors, who have in two or three major scams lost crores of rupees. Perhaps the Prime Minister could call for an explanation from Sebi and the stock exchanges as well.