The government has begun the process of preparing the blueprint of a new set of reforms necessary to improve the ease of doing business, as announced by finance minister Nirmala Sitharaman in her budget speech on February 1. The next phase of reforms will specifically focus on strengthening production and easing supply chains, and have a dedicated segment focusing on 'ease of living'.
Officials said the Department for Promotion of Industries and Internal Trade (DPIIT) is planning to kick off nationwide stakeholder consultations on the issue by February-end. Subsequently, the existing government action plan to cut red tape and attract more foreign direct investment (FDI) will be revised, they added.
Before the Budget was unveiled, Moneycontrol had been the first one to report how the government was keen to infuse a fresh approach in the evaluation of ease of doing business, as the current parameters are based on the World Bank's now-discredited global index.
Improved production efficiency
Last week, Sitharaman officially called the new reforms the 'Ease of Doing Business 2.0' (EoDB 2.0) initiative in her budget speech. Sources said that while the DPIIT had overwhelmingly focussed on shorter approval timelines for industrial and civil projects and reduced compliances until now, the new avatar of the EoDB campaign is set to target improved production efficiency, in line with Make in India targets.
They added this would entail identifying necessary reforms aimed at making factory production faster, improving logistics, and strengthening value chains. EoDB 2.0 reforms would also carry forward the overall government endeavour to digitise manual processes and interventions and integrate central and state-level portals through information technology.
The new exercise seeks to decriminalise legal metrology further.
"The current government has continued to focus on the decriminalization of various provisions for corporates. But the same pace of reform has not been made for MSMEs (micro, small and medium enterprises). We have therefore prioritized reaching out to micro and small businesses to help understand what specific reforms and improvements in processes and procedures are required on the ground," a senior official said.
The government is also set to promote more self-attestation, self-certification, and self-regulation among businesses. "This is based on the Commerce and Industry Ministers' direction that compliance systems should be built on having faith in the integrity of the citizens. This is expected to be attempted in small steps," another official said.
This could include reduced background checks in factories for small things such as establishing how many employees are currently enrolled, more widespread usage of digital signatures for online forms and greater flexibility for moving foreign bank accounts to India, " he added.
A single point access for all citizen-centric services, which has remained one of the oldest unfulfilled promises of the EoSB campaign is also being eyed for a deadline of late-2022. Similarly, the need to standardize and remove overlapping compliances has also received special attention from various ministries.
Focus on states
According to the DPIIT's official estimates, as part of the Ease of Doing Business push, the Centre has till now removed over 25,000 compliances and repealed 1,486 Union laws which were considered to be obsolete. Of the latter, 1,428 Union laws were repealed in the first term of the current Bharatiya Janata Party (BJP)-led government. People with knowledge of the development said the government is looking to identify even more laws that can be dropped in its ongoing second term.
However, the performance of the states has been relatively dismal. The new reforms are guided by an active involvement of the states and hope to ensure more participation by them.
"Overall on ease of doing business, the states have a slower response rate to the reforms than the Centre would like. Also, there still exists extreme levels of disparity in their performances in reducing compliance and opening under investments," the second official mentioned above said.
Since 2016, the government has also ranked states based on the Business Reforms Action Plan (BRAP). The last edition of the BRAP in 2019 showed Andhra Pradesh, Uttar Pradesh and Telangana lead the rankings. The index is an effort to recognize the states that performed the best in removing red tape and incrementally bettering their business ecosystem.
BRAP 2020, results for which are yet to be released, contains a list of 301 reform action points spread over scores of parameters and at least 18 state government departments. As a result, officials say greater ambition is now required.
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