Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

[op-ed snap] Unease of doing businessop-ed snap


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Mains Paper 3: Economy | Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

Once you are done reading this op-ed, you will be able to attempt the below.

What are the reasons for India’s low position in World Bank’s “Doing business” ranking? How India should improve to better its rank?

From UPSC perspective, the following things are important:

Prelims level:  World Bank’s Ease of Doing Business Ranking

Mains level: Prepare Ease of doing business in India- problems, government Initiatives, challenges and way forward


News

Context

  1. Last year, World Bank’s Ease of Doing Business Ranking placed India at a lowly 130 out of 150 countries

Niti Aayog Survey finding

  1. Survey by the Niti Aayog and the Mumbai-based think tank, IDFC Institute, reveals that the despite Centre and state government’s efforts to ease the system of permits and clearances, most entrepreneurs still feel hobbled by the country’s regulatory environment.
  2. Most firms do not use the single-window systems for business and regulatory clearances.

Problems

  1. Centre claims that a firm can be incorporated in less than a week
  2. But the survey shows that even in the best performing state, Tamil Nadu, the process takes more than 60 days — on average it takes nearly four months to set up a business in India. 
  3. It is sign of a persistent problem with governance in India: The difficulty of cutting the red tape of the lower bureaucracy. 
  4. The World Bank’s report, last year, highlighted that delays in issuing construction permits affected the ease of doing business in India. 
  5. The report finds that entrepreneurs in these employment-intensive sectors are more likely to face problems and securing construction and other permits, compared to the capital-intensive ones.

The survey should serve as a wake-up call to government and a reminder that over two decades after economic reforms the Indian state is still flailing when it comes to easing the path for entrepreneurs.

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