The World Bank, at the behest of the government, ranked Indian states on the ease of doing business. The ranking was based on eight specified parameters which include setting up of business, allotment of land, labour reforms and procedure for environmental clearance.
While Gujarat topped the list, Department of Industrial Policy and Promotion (DIPP) Secretary Amitabh Kant said states shouldn't worry about the rankings as there continue to be huge opportunities to improve.
While the World Bank will increase the parameters from 98 to 300, Kant says states need to do away with the physical interfaces and allow people to get easy starting points.
Ranking low on the list were Mizoram, Jammu and Kashmir, Meghalaya, Nagaland and Arunachal Pradesh.
The report titled 'Assessment of State Implementation of Business Reforms' also took into account the 98-point action plan on ease of doing business which were finalised at a workshop of chief secretaries last year.
While India ranked 142, among 182 nations ranked in the World Bank's Doing Business study, Kant says it can rank in top 50 nations in the next three years.
Below is the verbatim transcript of Amitabh Kant’s interview with CNBC-TV18's Shereen BhanQ: Lot of movement has happened at the state level. The fact of the matter is that 16 states today in India fall within the zero to 25 bracket as far as implementing the 98 action points of the World Bank is a stressing state government is on.A: I personally think that is not important because there are many champions. So, there are equally 15 odd states which fall about 50 percent. So, if you look at the map which is there in the study report geographically almost about 50 percent is covered by the balance 15 states. So, if these 15 states really drive the reform if they become the champions, and you don't need more than 12-13 states to drive growth in India. You need at least 10-12 champions to drive.
Q: We actually don't have a single champion in that sense, nobody above 75 percent.A: it doesn't matter. The important thing is that you have five to six states around 70 percent, you have another about 10 states in around sixty percent. So, if you are able to make the 60 percent people to reach up to 75 percent and are able to make the 70 percent people reach 90 percent you are through with the game and I am pretty sure this is going to happen next year.Q: So do you still feel confident of being able to get to number 50 on the World Bank's ease of doing business index from 142 which is where we currently are?A: It will be a three-year period. It is a tough job.
Q: You had earlier said three years.
A: I have always maintained a three year period and that was the target set by the Prime Minister. A lot of work on this has been done. We will move up several notches up. At least we will not fall down. We have been falling down during the last five years. So, we will move up but a lot of work that has been done actual usage has to take place and the World Bank actually moves you up on actual usage. So, next year, yes and then you will have to have insolvency laws, you will have to have easy entry and exit. You will have to have better enforcement of contracts but moving up to 50 in three years is doable, is very doable.
Q: What were the surprising aspects as far as the study was concerned and I was just looking at some of the parameters where the scores have been actually high on things like online tax systems and so on and so forth where majority of about 28 to 29 states have actually done well on that parameter. Did that take you by surprise or were you anticipating that?
A: Actually one of the key things that this competition has driven is that states have moved forward to use technology to leapfrog and almost every state has actually gone in for it. There is a lot of more business process re-engineering required, there is changes required in enforcement of contracts, there are many other things that are required but absorption of technology has been the key. Some states like Jharkhand have done very well.
Q: Were you surprised to see Jharkhand at number three?
A: They have done an incredible job. Huge credit to the political leadership, huge credit to the two consecutive chief secretaries who have done a lot of hard work particularly not merely in bringing everything online but as the World Bank report says that everything in 100 percent success in labour reforms.
Q: Labour reforms and that is an aspect you are talking about and that really has to do with what state government's individually are doing. Rajasthan for instance has made some headway, Madhya Pradesh has made some headway, Gujarat is trying or attempting as far as labour is concerned. How confident do you feel as far as the labour reform aspect of it is concerned on the basis of what the study shows you?
A: We are on the right course, the right direction. The government is going ahead with all the right measures. We just need to make the states accelerate in a bigger way. Just create a huge sense of competition, not merely on use of doing business but across several schemes of the government. This competition, this competitive federalism which the PM is talking about is actually this is going to drive change and I personally see that in labour laws the urge to grow at rapid rates and create jobs is going to make them change labour laws.Q: Why perhaps no one is surprised about the fact that Gujarat has actually topped the rankings and come in at number one. The surprise is really where Jharkhand and Chhattisgarh coming in at number three and number four, states like Maharashtra and Karnataka one would have imagined that they would have been higher up. Are you surprised by where Maharashtra and Rajasthan will have come up?
A: No, I am not surprised at all because we were assessing everything against the 98 parameters laid down, it was like passing an examination. You need a huge political and administrative will to pass those 98 points. Now these states were able to crack that. Maharashtra has not been able to put several things on line. They have just not been able to put several things on line. It is a large state and they will be able to do this later. Similar with Karnataka. Tamil Nadu was able to do several things in July but it was a little too late.
Q: West Bengal coming in at number 11, does that surprise you? Is it a story that hasn't been given enough weight in terms of the measures that the government there has undertaken?
A: West Bengal did a lot of hard work and if they hadn't done that hard work they would have been ranked very badly but they just pulled themselves up and they cracked a number of things which made them jump up to come to the 11th position, otherwise they would have done pretty badly. So, West Bengal has done pretty well according to me.
Q: Punjab number one as far as the ease of setting up a business is concerned but on other parameters fallen short but at least in terms of ease of setting up business it ranks on top.
A: What the world bank study shows is that it is an end to end solution through the life cycle of a business, not merely starting business but entry, exit, labour, environment just about everything. You have to be excellent on all parameters. What the story of Gujarat really shows is that they have excelled just about in every single parameters and you need to do that across a businessman faces government touch points at various places. It is not that you enter and start construction that is important but through the life cycle of the business and that is where Punjab is very good, they have put up an outstanding single window clearance but through the lifecycle of the project they have to make similar changes.
Q: On the parameters as far as land acquisition is concerned and clearly some degree of work has already been done. In fact the surprising thing is that Tamil Nadu has already amended its 2013 land act and nobody even seems to know about that but what does the study show you in terms of the process of land acquisition and where that really holds us back if it does as far as the ease of doing business is concerned?
A: What the study shows is that this will spur them into changes. This will spur them into making radical changes not merely in land acquisition, not merely in labour laws but this will spur them to compete. This year we had 98 points, next year we are going to have 330 points, compete against 330 points, we are going to create a portal on which every single change can be monitored. So, every single change you will get to know whether you are moving up the ladder or you are going down the ladder and it will be a very dynamic portal. So, every state will be able to assess its performance against itself and that will be unique. So if you bring in a labour change you will move up, if you bring in a land law change you will move up. If you are able to bring a change in construction you will move up. So, that is the way the country must move forward.
Q: What is it that you would like states to address on a priority basis and of course the World Bank report has articulated as far as this action plan is concerned on the 98 parameters where the work needs to be done for the aspiring leaders, where the work needs to be done as far as the bottom of the pyramid so to speak is concerned or the laggards are concerned. What do you think will be the imperative for state governments in terms of the top three priority that you ought to look at, to be able to get us above the 70 percent mark?
A: First and foremost we must just do away with every single physical interface. No physical touching points. Allow everything to be online, every single approval must be given online, allow people to get easy starting points, easy construction, easy to get electricity at reasonable cost. What people want is simplicity and that is the way to move forward.
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