The unease in ease of doing business

The Asian Age.  | Udai S Mehta, Ankit Pingle and Sidharth Narayan

India, All India

A recent report by Niti Aayog also stated that regulatory reforms have failed to cut the red-tapism, the major cause of dis-ease of EoDB in India.

Prime Minister Narendra Modi speaks at the launch of Sahaj Bijli Har Ghar Yojana or ‘Saubhagya’, to supply electricity to poor households, in New Delhi. (Photo: PTI)

When Prime Minister Narendra Modi made the clarion call of minimum government, maximum governance, investors were shown a dream of ease of doing business (EoDB), where the procedures will be simplified and obsolete and archaic laws would be abolished in India. The simplification and rationalisation of existing rules with introduction of information technology was to make governance transparent and effective. While several positive factors such as a large and growing domestic market, demographic dividend, availability of a large pool of skilled manpower and promise of cutting red tape, have brought global investors to India, in terms of cutting red tape or EoDB, India still has a long way to go.

Departments are still working in silos, businesses still struggle for approvals and permissions, rules keep changing on whims and many chronic problems are swept under the rug. The state machinery might have smoothened a few gears by implementing EoDB reforms as recommended by the World Bank and department of industrial planning and promotion (DIPP), but corruption does not appear to have reduced.

Despite reforms, in 2016-17, India stood at 79th place out of 176 countries in terms of corruption, as per the Corruption Perception Survey, and ranks at 130th place in terms of World Bank’s Doing Business rankings.

A recent report by Niti Aayog also stated that regulatory reforms have failed to cut the red-tapism, the major cause of dis-ease of EoDB in India. Like the human body, an economy is a complex system, composed of many sub-systems, each of which performs a function to enable the entire system to remain healthy and to grow. Therefore, it is essential to understand the inter-linkages amongst the sub-systems before one fixes the parts. This requires a “whole of government” approach to EoDB, even if one ministry and/or department is assigned the responsibility to implement it.

However, where there is a will there is a way, is not a mere cliché when it comes to executing EoDB reforms. Nothing is impossible for the bureaucracy, which has a proven track record of seamlessly transforming passport services on an e-platform and thus, eliminating corruption, managing massive crowds during Maha Kumbh mela to near perfection, and launching record number of satellites in space at lowest cost. All it took was political will. If mammoth projects like these — and many others — are possible, what prevents EoDB in achieving similar success? Every state politician and bureaucrat must take the Prime Minister’s pledge: Na khaunga, na khane dunga (Shall not take bribes or allow others to do so). There is an urgent need to address these chronic problems lest the lion of “Make in India” goes extinct.

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It is time to ask some uncomfortable questions: why does our government needs to be convinced to focus on EoDB reforms, when it should come as a normal practice? Why does red tapism still exists, when it has proved to foster and facilitate corruption? Instead of streamlining cumbersome processes, and reducing barriers, the government is focusing on short-term tweaks. It needs to address these on priority, before coming up with other measures and steps must be taken to ensure bottom-up reforms for improving overall business environment of the country.

India’s bureaucracy is driven by the attitudes of chalta hai and mera kya fayda hoga? It is not just money they seek. Such an attitude is also driven by lethargy, unprofessionalism, favoritism towards the same caste, creed and culture, inefficiencies, indifference, etc. Job security and lack of accountability are greatest sins of our administrative set up.

Solution for these may come in form of incentives, rewards and recognitions to bureaucrats for timely approvals and dispute resolutions. Rules regarding official commitments and adherence to task-based timelines should be enacted, similar to service level agreements (SLAs) past which officials have to provide explanation, or face penalty. Another possible solution would be to introduce administrative reforms regarding promotion of bureaucrats, that is, based on performance and not tenure timelines, as done in armed forces. Further, the debate for lateral entry into the civil services has been going on for a while. But just as we move ahead, it is important to note that it is equally crucial to have an institutionalised system of lateral exit and weeding out of non-performing bureaucrats.

An important pillar of democracy, that is, the judiciary is already facing flack for its inability to convict the corrupt. Significant strengthening of the judiciary, while also framing laws to safeguard the interests of applicants will enable it to become an important grievance redressal platform for those who suffer on account of corruption and red tapism.

It is imperative for the government to implement the Prime Minister’s mantra of “minimum government, maximum governance”. Unless our government and bureaucracy rises over and above their personal vested interests, the voices of stakeholders like businesses, think tanks, etc, regarding EoDB reforms would continue to fall on deaf ears. It has to focus on transparent processes, proactive disclosures and a goal-oriented foresight for laying down the reforms that will actually enable EoDB in its true sense.

The authors work for CUTS International

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