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Last updated: 05 Sep, 2017  

Ease.Of.Doing.Business.9.Thmb.jpg Ease of doing business: Claim vs. reality

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Bikky Khosla | 05 Sep, 2017
Where does India really stand when it comes to ease of doing business? Time and again, the Centre has claimed that a lot of measures have been taken to improve the business ecosystem in the country. Most of our ministers love to reiterate this claim and pat themselves on the back. But our business owners and entrepreneurs seem to hold a different view that the reality is far different from what the Government enjoys claiming, and now a survey report, 'Ease of Doing Business: An Enterprise Survey of Indian States', published by the NITI Aayog, the government's premier policy think-tank, shows that these concerns are probably not unfounded.

The report--jointly prepared by the NITI Aayog and IDFC Institute, a Mumbai-based think-tank--took no time to create a flutter. A day after its release, the Centre came out with clarification that the survey report, with the NITI Aayog's logo and India's national emblem on the cover, was meant to be a research document and its contents did not represent the views of the Government of India or the NITI Aayog. It added that the survey had been conducted between April 2015 and April 2016 and so it did not reflect the "tremendous progress in easing various processes related to doing business" achieved after the said period.

The report findings--which are based on an enterprise survey of over 3,200 companies in the formal manufacturing sector across all states--show that only 20 percent of companies surveyed use the single-window clearance system and 12 percent have not even heard of this facility. Similarly, the average number of days to incorporate a firm is 118 and it takes 63 days even in Tamil Nadu, the best performing state. Again, the average time required to get land allotted is 156 days and getting construction permits and no objection certificates requires, on an average, 112 days and 75 days respectively. The average number of days for completing all labour-related compliance is 74.

So, fresh questions are naturally being raised now over the progress achieved so far in terms of ease of doing business. In the last year's World Bank rankings India moved up to the 130th rank, and now the Government wants to secure at least the 90th rank in this year's rankings. There is no harm in setting the bar high as a higher ranking would improve our image as a business-friendly economy in the eyes of global investors, but the latest findings show that such mere make-overs are far from being enough. The World Bank index focuses on Delhi and Mumbai, but the real challenge facing the Centre is to address the ground realities, which are crippling businesses the length and breath of the country.

I invite your opinions.
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Ease of Doing Business
G Rama Mohanan Nair | Wed Oct 25 07:56:52 2017
What happened to my Comments? Under moderation or rejected altogether? I am an Industrial consultant with more than 30 years of standing in the profession.Started three MSMEs both in Govt. and Private sector.

Ease of doing Business
G Rama Mohanan Nair | Wed Oct 25 07:08:58 2017
The present problem is that departments like Local Administration, Revenue , Electricity board, Water authority, Pollution control board etc. assume the attitude that Promotion of Industries is not their baby.To make a change in this situation, officials from such departments should also be asked to participate in Industrial Promotion Meetings and Conferences. They should be told that Industry is for the upliftment of the nation as a whole.They too have an obligation for that.Top priority should be given to this aspect in the present and future policy formulation exercises.They should also be given some yearly targets to bring about so many Industries within their jurisdiction.

Ease of Doing Business
Tortured Soul | Mon Sep 11 10:18:22 2017
The ease of doing business is a nebulous concept and is meant to confuse the international community. The main game starts once the business is in place with ease or without. The Business will face extraordinary set of compliance issues once it is operational. The industry is tax collector for the government. It works more for collecting taxes, depositing them and meeting compliance requirement than in actual business. Whereas we have not heard of any Govt. revenue official ever getting penalized for lapses, the industry gets constantly penalized for lapses of second parties (read suppliers). The Govt. does not go after the defaulters. It goes after the law abiding industries and collects, interest and penalties. The defaulter sometimes, in the meanwhile, also pays interest and penalties generating added windfall for the government. The more the delay from the government in initiating the action the more is the interest income (more windfall). Does anyone know of such lovely awards for procrastination and deliberate delays? There are more rewards awaiting in terms of bribes / hush money. There are more agencies waiting in the wings like Municipal Corporation etc. In a city like Mumbai at least 3 licenses / permits are required to run a manufacturing business. Pay the regular fees, pay one time cash Premiums (euphemism for blatant bribe) at renewals and also pay haftas as per demand for looking the other way, whether you have any compliance defaults or otherwise. Easy Busy!

  Re: Ease of Doing Business
Raman Krishnan | Wed Sep 13 03:13:48 2017
Absolute reality. This reality scares away the new entrepreneurs with enthusiasm and potential. Trust the beginner and leave him free for 5 years to concentrate on essential matters and stabilize.

  Re: Ease of Doing Business
Bhagawath Prasad | Wed Oct 4 03:29:27 2017
it's true ,those are tax compliant are easy targets for tax officers to raise demand notices and complete their tax revenue targets , its; difficult for them to catch those they are not tax compliant ,they send arrest warrants for directors , if SME delays , sales tax , PF and professional taxes , freeze bank accounts of tax payers , how will they freeze non-tax payers bank accounts , simply because they have no records , ease of doing business is a layer of lies.

VELLAIMBI IYER | Sun Sep 10 08:10:54 2017
In India, we have a perfect legal and Govt. procedures formed by British and subsequently adopted by 65 years of Govt. led by Congress Party and the same burocracy, red tappissm, high handedness and pro - rich policy, and AAM AADMI was not taken seriously. Hence the current policy of EASE OF DOING BUSINESS AND MAKE IN INDIA POLICY will take a little longer time to percolate from top Secretary level to down below Panchayat level. I clearly notice a vast change in Govt. Functioning,quick disposal of files, granting interview by IAS OFFICERS AND IPS OFFICERS AND EVEN MINISTERS to those who seek with some Representations, and they listen and implement such of those possible steps needed. Even these very Ministers and IAS/IPS AND HIGH LEVEL OFFICERS STARTED WORKING more than 10 hours a day, and maintain punctuality in working top to bottom. Do or die situation is prevailing in Govt. And this needs to be appreciated. People are afraid of doing any act contrary to Laws of the Land and Income Tax rules. Sense of duty is slowly bring drilled into the minds of people. Survival of the fittest is slowly setting in and it is good for the progress of India. Every body including rich and poor, Officers holding highest position in Govt. Or Private Sector, including Chairmen , directors, Executives, Staff have to work hard just to retain their position, and to go a step up and forward, these people will have to really put in double the work they do now. Even in Education field, same position.

Ground realities are opposite
Bhagawath Prasad | Sat Sep 9 07:03:58 2017
Headlines from governments are very thrilling but ground realities are opposite , Recently my company has started new unit in Gurugram , t crores investment fully ready for commissioning was sitting idle for 4 months for want of power connection , EB will keep tossing several forms on weekly basis , unknown regulations pops out everyday , finally when it was connected after long waiting period, transformer was kept right below live tree , everyday one branch falls on it and disconnects the power with burst , when complained to get tree branches to be cut ( remember not tree , branches falling on transformer )they say it's not our job , forest department need to do , when you go to forest department , they say cutting branches are jaileble offence.No you know how transformers function, how tree branches get cut.Similar experience you get to se when you apply for FIRE NOC,anyway,GST classification issue has been sword on our neck,look at the problem of GST regime classification issue, some supplies were under VAT now being put in both HSN high tax code and SAC as well,if opt for HSN you may come under excise attack for past years , suppose we choose to be under SAC codes ,it means that under VAT regime , we were not paying service tax , thereby we may get slapped by service tax notices.It clearly indicates that doing business is not an easy task , one need to have super-natural patience and tenacity.

CEO's Note.
Harishkumar Trivedi | Thu Sep 7 11:27:11 2017
My entire view mentioned by Mr. UPENDRA PATEL . I totally agree with the view of Mr. UPENDRA PATEL . Now , it is necessary, we teach from CHINA & SINGAPORE state that how they help their new and intelligent entrepreneurs.

More than 8 months, still waiting for refund
Ramanandan | Thu Sep 7 11:17:26 2017
We paid an amount of Rs.11 lakhs towards a permit to the Additional Collector. From the month of May, even though they acknowledged the payment has been erroneously collected, even after 09 visits, the amount has not been refunded. How can the ease of doing business be said 'Successful'

Ease if doing business
Chetan Kamdar | Wed Sep 6 14:02:56 2017
100 % agree with same. It has not percolate to the bottom level. GST again with so many number of returns keeping people including entrepreneur busy instead of looking at the progress of business.

Ease of doing business
Anil Chandhok | Wed Sep 6 09:33:46 2017
These surveys are mainly from the large industries. If you were to survey MSME and especially the SME the picture would be very dismal. The British colonists have been replaced by the super efficient government inspectors and their bureaucracy. If you take this survey after GST implementation and especially just wait for e-way bill to start, then the true picture of the havoc will be visible. Nobody in the government has operated an private industry or business, more especially a SME sector business. They have no clue about the impact of even a simple rule on SME. In SME the owner has to work alone managing his customers, suppliers, employees, production, logistics, laws etc. How much more can this mule be burdened before he breaks down? Instead of making the laws really simple and easy for SME sector, the same complex laws are applied for all businesses, never mind their size or complexity. SME sector is the largest employer in India. Government only pays lip service to this sector. How can the entrepreneurs be encouraged to set up industry, when instead of focussing on manufacturing, product innovation, marketing, exports, they have to spend all their time and energy on meeting ridiculous government diktats? Very sorry state of affairs. Educated people who have gone to US and other developed countries have become millionaires in a short while. In India, it is better to become a government employee. The short cut to becoming a millionaire with least effort or risk.

Ease of Doing Business
Ajay Gupta | Wed Sep 6 08:17:29 2017
Unless the govt stops thinking that all businessmen are crooks, nothing will change. There are a few black sheep, but to paint all in the same color is regressive. Also, until the hunger for bribe of bureaucrats is not reined in, nothing will change. The power they wield in penalizing even for typographical mistakes is immense and they use it for their personal advantage. There has to a measure of checks on them and if they are found to be wrongly harassing an assese, they also need to be penalized. Only then will their efforts be directed to catch the wrong doers and the honest businessman will not suffer due to which he will work harder and revenue of the country and the govt will increase. Also tax Appeals should be looked into quickly & resolved. Cheque bouncing cases need to be summarily solved with penal action against the issuer to bring up confidence in doing business. This will result in honest business with weeding out of the dishonest. All these will have positive result on the country. Today a wrong doer is in advantage thus good people do not come forward. Judicial reforms is another aspect which needs to be looked into.

Ease of doing business: Claim vs. reality
Maj. Prakash Kapade - Retd Indian Army | Wed Sep 6 06:30:11 2017
The ease of doing business if you ask me in reality it has become difficult. Demonetisation affected some of our customers as their primary business was in retail or cash sector, this affected our business from these customers. Alignment with GST took time for us and our customers,this delayed the purchase orders from our customers and in turn the payment. Also GST is going to impact our cash flow as we are service industry and we were paying service tax @15% now we pay GST @ 18%. Service tax had better option that we could every quarterly pay our taxes and that offered a better cash flow, now we need to pay our taxes as soon as we raise our GST invoice, MSME's will be very severely affected by this change, govt shall roll back this asap otherwise economy will further worsen also if they make GST @15% for service sector will be great as services are seeing constant rise in service tax since BJP govt has come to power. Another shocker we have got is mergers of banks which has again hit us hard, our bankers were State Bank of Hyderabad which merged with SBI, the merger affected branch locations and transaction codes like IFSC for which we have to inform all our customers to change data in their vendor master, this has impacted our payment cycle and delay in receivables. Too many things done at a time has taken tolls on MSME sector and extra tax burden if going to affect them. Going forward Govt shall do sample survey seeking MSME owners opinions and then implement new things.

Ease of doing business: Claim Vs reality..
Rajaa R K | Wed Sep 6 06:17:32 2017
Congratulations to you sir, for bringing these facts out . I see that whether it's the chief economic advisor, or the chief statistician all are defending the Government after doing their job of identifying the indefensible facts...

RAJESH MAKHARIA | Wed Sep 6 05:48:43 2017
This Government is disruption happy...Demonetization without printing currency,GST without proper technological backbone,BIS mark implementation at the whim and fancies of DIPP, deregistration of 2 Lac companies and declaring the directors defaulters, applying bankruptcy code on industrial houses, RERA, forcing banks to merge themselves with loss making ones,the list goes on....none of the above measures have helped businesses..SME sector is the hardest hit..the businessmen is now devoting his 80% time in Income Tax, Sales Tax, GST, PAN-Aadhar related compliance with no productive result.

Ease Of Doing Business
Siddarth | Wed Sep 6 05:33:57 2017
It is the biggest eyewash by government. The amount of trust that was invested in this government have proven to be the biggest mistake of people of this country. Government politics is moving around blame game and ground reality is below ZERO

Ease of doing business is an Eyewash
Upendra Patel | Wed Sep 6 05:14:31 2017
This is an eyewash government is projecting. In reality there is no ease of doing business. Small business owner has to still comply with Municipality norms, ESIC, PF, GST, TDS and list goes on. There is discretionary taxation at all levels by local bodies. You pay double tax or higher price for Rental premise, business owned vehicles, electricity etc. Worst is TDS to be deducted by business for vendor. Why should the person receiving payment worry about tax payment of supplier. If you miss to file return in time, you pay penalty. A delay in job which you do on behalf of government, attracts steep penalty! Recently, we ended up paying penalty on filling bill of entry because the system was not working! So, your work gets delayed and you pay penalty for no fault of yours. There may be several such rules. Unless government changes mindset of their employees, it is not going to change.

  Re: Ease of doing business is an Eyewash
Bhagawath Prasad | Sat Sep 9 07:04:06 2017
I agree with you whatever you said, everything is on headlines , ground realities are totally different.

A month to open current account
Harinder | Wed Sep 6 05:10:20 2017
It took me a month to open current account for my firm with ICICI bank. Forget about getting things done in government departments. Whether we like it or not most of Indians are lazy, dishonest people. Indian will remain a backward and underdeveloped country.

Reality of start ups
Sunil Bhure | Wed Sep 6 05:03:23 2017
True picture of start ups in India, I have already faced these issues and let go my tofu business i.e.

Ease of Doing Business
Ashok Saigal | Wed Sep 6 04:44:46 2017
As you have said, the reality is different from the claim. For instance according to The Secy (DIPP), Mr Ramesh, the Statewise progress is measured by a statement by the state that it has issued necessary instructions and notifications for Ease of Doing Business. However there is no monitoring of whether the steps have been operationalised, and no survey of the intended beneficiaries to get feedback on its working. In Haryana on-line Factory License applications remain "under process" for months after uploading all required data. On line payments made towards the fees are not acknowledged and continue to show as "Due". A physical visit is required to sort these out. This defeats the purpose and intent and nullifies the statistics gathered.

Ease of doing business.
Umesh Mehta. | Wed Sep 6 03:29:47 2017
This is the most important issue facing the nation as the economy mostly depends on it. Namo should have given charge of this issue to Goyal and given him the target of being in the top 10, not 90. Even now, its not too late. Sadly, Namo will fail and we must blame our national luck that even the best performing PM that India has had so far, could not deliver completely.

  Re: Ease of doing business.
Colin Downey | Wed Sep 13 07:41:13 2017
I think laziness is in the DNA of most people living in India. I honestly think they are content in working in such an environment.Indian will remain a backward and underdeveloped country. Aren't people ashamed that even Bangladesh is much more advanced in some respects... TOO MUCH TALK OF BULLET TRAIN ETC. GIVE PEOPLE CLEAN SAFE ENVIRONMENT. IMPOSE HEAVY PENALTIES FOR LAW BREAKING, SPARE NO ONE. SACK EVERY CORRUPT PERSON, SELL THEIR ASSETS. ITS SHAMEFUL

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