‘World Bank ranking should’ve been higher’
‘World Bank ranking should’ve been higher’
Finance minister Arun Jaitley on Sunday hinted that the Narendra Modi government may effect more reforms in the FDI regime by removing various conditions attached with it. “Having opened most sectors for foreign direct investment, the time has come to examine whether some conditionalities on which FDI investment is permitted have become anachronic. We need to cut down on the number of permissions required so that the time lag between the decision to invest and actual investment can be shortened significantly,” Mr Jaitley said in a post on a social media website.
The finance minister noted that states must realise local laws which enable availability of land, environmental permissions, sanction of building plans needed a relook. “Once an industrial zone or new township has been cleared for environmental sanction, should individual structures require separate environmental approval Many countries have switched to an architect’s certificate as a substitute for building plans being sanctioned,” said Mr Jaitley. He said when an organisation compulsorily needs a completion certificate for a building, the permission required for start of construction should be replaced by a regulatory mechanism. Mr Jaitley said these additional changes will further improve India’s ranking in the ease of doing business.
Not fully satisfied with the 12-position jump in India’s ranking in the “ease of doing business index”, Mr Jaitley said the World Bank had not factored in all steps taken by the government to improve the business environment and that the ranking should have been “significantly higher”.
He noted that quicker decision-making, faster policy changes, eliminating corruption at the top and smoother clearances had played a significant role. “FIPB clearances and environmental approvals are being routinely granted. Investors no longer queue up before the mantralayas in Delhi lobbying for policy changes or approvals,” said Mr Jaitley.
Mr Jaitley said to adjudicate quickly on investment issues, a commercial division was being set up in all high courts. “This would improve the enforceability of contracts where India’s ranking is relatively poor,” he said.
The finance minister said that ease of opening business must also be accompanied by an ease in exiting. “For this, the framework of the bankruptcy law is being readied. Dispute resolutions with regard to public projects requires a quicker settlement mechanism. The same is being worked out,” said Mr Jaitley.
He said that much has been done to ensure that the award of natural resources and public contracts are completely transparent. To empower public servants to take simpler and bolder decisions, many corrections were required in some obsolete provisions of the Prevention of Corruption Act, said Mr Jaitley. “The same have already been introduced in Parliament. At a time when world growth is moving slowly, India aspires to grow faster. To add a percentage or two in our present growth rate, the ease of doing business coupled with a simpler direct and indirect taxation system, a higher investment in infrastructure and irrigation will play a significant role,” the minister said. He said a low oil and commodity regime was helping the government in this direction.
On the World Bank’s ease of doing business index, Mr Jaitley said that even though the push-up numerically was modest, it marked the reversal of an adverse trend. “Considering the number of steps taken in the last 17 months, India’s position should have moved significantly higher. I understand that all steps have not been factored in since the World Bank criteria has a cutoff date and it also waits for announcements to translate into action before they can be factored in,” said the finance minister.
Mr Jaitley said an equally encouraging factor was that the states had also altered their work culture. “Investment is the starting point of all economic activity. An investment-friendly state will be a natural destination. This realisation has donned upon the states. Competitive federalism can be seen. The Gujarat model of Global Investors Meet has been replicated in Tamil Nadu, Madhya Pradesh, West Bengal and in Punjab,” the finance minister added.
