Opinion

Changing mindsets

Hardayal Singh | Updated on November 22, 2018

Red tape often hinders ease of business

One bright spot on the current economic landscape is the significant improvement that India has shown in the World Bank’s annual Ease of Doing Business (EDB) rankings for 2019, whichnow stands at 77. This performance makes India one of the 10 fastest reformers in the world for the second year in a row. But still public governance in India suffers from glaring weaknesses.

That governments take these World Bank reports seriously is obvious from their impact: between 2006 and 2018 the international average cost and time taken to start a business has steadily declined from 76 per cent of a country’s per capita income and 47 days to 23 per cent of such income and 23 days. Foreign investors study these rankings seriously before investing.

India has improved its position under seven of the 11 parameters under which the Bank measures performance. Between 2014 and 2018, India has rationalised processes for obtaining construction permits (improvement of 132 places) and electricity connections (113 places), paying taxes (35 places), trading across borders (46 places) and protecting rights of minority shareholders (current position: 7). But it still lags far behind countries at the top of the rankings. Its overall score out of 100 is 67.23.

The States — currently led by Telengana and Andhra Pradesh — now regularly compete with one another to improve their annual rankings in NITI Aayog’s domestic table.

Niti Aayog now plans to take the country into the top 50 rankings by next year. But policy makers should also look at administrative reform more holistically; and address other serious malaises afflicting public administration.

The jump in rankings were due to simplification of processes, often aided by digitalisation and online solutions. But how much impact they will make in a country where one fourth of the population is still illiterate, and computer literacy is extremely limited? As the latter improves, perhaps these reforms will, have the desired impact, and begin to facilitate micro and small enterprises in rural and semi-urban areas.

A serious problem obstructing reforms, relates to the anti-business mindset of bureaucrats. The administrative machinery people deal with is opaque; governed by complex rules; and mired in red tape, corruption and rent seeking. So when citizens want to buy or sell property, pay taxes or start a business, they end up incurring inordinately high compliance costs.

Computerising property records and putting them on the net is a solution worth considering. But, despite the Centre’s best efforts, India’s rank for registration of property has, due to bureaucratic resistance, slipped from 121 to 166 between 2015 and 2019. Starting a business or paying taxes (where India’s current rank stands at 137 and 121) are equally painful chiefly because of bureaucratic hurdles.

Perhaps both the Centre and State Governments should focus much more sharply on changing old attitudes stemming from mistrust of the citizen and the bureaucrats’ desire to exercise minute control.

Fortunately, India has a training infrastructure in public management which could be used effectively to convey an important message: the modern state is an ‘enabler’ more than a ‘controller’, a ‘referee’ who provides a level playing field, more than a ‘player’. Officials need to reorient their thinking accordingly.

The writer was Chief Commissioner of Income-tax and Additional Secretary to the Central Vigilance Commission

Published on November 22, 2018

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