No company will be willing to commit investments when they have little avenue to get the contracts enforced.

The World Bank report on ‘Ease of Doing Business’ based on data collected from 190 nations has given India reasons to rejoice. Its rank moved up from 130 in 2016 to 100; that's perhaps the highest leap for a nation in one year. Experts analyse what brought in that change and what more needs to be done.

I was a member of the Committee for Reforming the Regulatory Environment for Doing Business in India, formed in 2013 and headed by former SEBI chairman M. Damodaran. When we sat to address the issues that we needed to work on and improve, we realised that we cannot aim at number 1 because that will require minimal procedures. Given the size of our population, the disparities among states and our low rank in Transparency International index, we cannot do away with regulatory mechanism or bring it to the minimal level. At the same time, we realised that we can take this rank as indicative of where we are and directionally whether we are in the right group or not.

And the latest report supports our conviction: earlier we were bracketed in the group of sub-Saharan nations and now we have made it to the top 100. That’s a phenomenal achievement.

We discussed many things in the committee and I was clear in my mind that we needed to do: 1. Minimise the touch points, 2. Speed up the process 3. Bring in certainty and all these with the help of technology and 4. Promote deemed approval status.  

And all these can be achieved only by introducing technology at every level. Technology minimises interface, allows people to transact business from wherever they are, and is an effective tool to ensure maximum possible level of transparency. We have also noticed that technology brought down corruption and moved things faster.

We submitted the report in 2013 and Mr Narendra Modi picked it up when he became the prime minister. And here we are in to top 100 group.

In the World Bank report, India has scored very well in certain areas like protecting minority shareholder interests (Rank: 4), while did extremely poor in areas such as enforcing contracts (rank: 164), starting a business (rank: 156), registering property (154) and tra-ding across borders (146). These are no accidents: there is a pattern to it. And if we address them pointedly, then we can make it to the next level: below 50.

The Companies Act, 2013 is world class legislation and it helped India score well in protecting minority shareholders right. At the same time, we need to go a long way wherever we need change in infrastructure, judicial system and interface with the state government. The ranking shows this.

We rank poor in enforcing contracts, and this is very important factor in business decisions. No company will be willing to commit investments when they have little avenue to get the contracts enforced. This is basically because we have little reforms in the judicial system. Our courts are clogged and it takes a long time to seek resolution in disputes. This can be addressed only by strengthening the judicial infrastructure and the alternative dispute resolution mechanisms. We need more courts, benches, special courts and fast track courts. There needs to be better system for mediation and conciliation.

Trading across the border is another sour point. We need our ports to be efficient which calls for e-enabling documents and high level of digitisation. Technology can help a lot in this regard. The other elements — getting electricity and construction permits are in the domain of the state governments. Unless we kick in the deemed approval system with proper checks and balances, we can hardly make a progress on this front.  

We are up there in some areas and are moving up in some others; we must now enlist the support of all stakeholders to improve the rest. Given the work we have done, the progress we have made and the energy which we show towards improving it further, I am confident that we will rank among the top nations soon.

As told to K.J. Jacob