State of business

The Business Reforms Action Plan (BRAP) report released a few days ago by the Centre, is a useful exercise for many reasons. This time, it is a report card on the implementation of 301 reform points in 15 regulatory areas spelt out in 2020. BRAP is a more decentralised avatar of the World Bank’s now-discontinued Ease of Doing Business report — the latter would do its country rankings on the basis of surveys in a clutch of major cities in countries, using 10 broad parameters, to arrive at its conclusions. As Commerce and Industries Minister Piyush Goyal observed on the occasion of the release, “Rather than ease of doing business being limited to a few areas, few cities and few businesses, we are seeing it being reflected across the country...” An exercise that began in an effort to boost ‘Make in India’ across 25 sectors, BRAP seems to have yielded some results. According to an August 2020 reference note on ‘Ease of Doing Business’, prepared by the Lok Sabha Secretariat, the performance of States has so far been monitored with respect to single window clearance systems, tax reforms, construction permits, environment and labour reforms, inspection reforms and judicial proceedings. Andhra Pradesh, Telangana, Jharkhand, Punjab and Chhattisgarh find a mention for the steps taken under some of these heads. In this time’s report, Andhra Pradesh, Gujarat, Telangana, Haryana, Karnataka, Punjab and Tamil Nadu emerged as the ‘top achievers’. Himachal Pradesh, Madhya Pradesh, Maharashtra, Odisha, Uttarakhand and Uttar Pradesh figure in the second rung of ‘achievers’. This report has done well to eschew rankings, which gives rise to allegations of political bias. It is hard to ascribe such motives to this BRAP report.

The report says it is based on ‘100 per cent feedback in multilingual format’. This time, the assessment areas include access to information, besides single window clearance, labour, environment, sectoral reforms and others. However, the weightage given to different factors, and the basis behind it, is not clear. Such a criticism has been voiced with respect to other indices, such as the NITI Aayog’s State Energy and Climate index. In order to ensure that cooperative federalism works in practice, it is important that these indices are drawn up with care and clarity. There is always scope for improvement, and a process of wide-ranging consultations towards this end will help. The imperfections of such indices are, however, a global problem, with the World Bank’s EoDB coming under a cloud. The BRAP can evolve as a worthy substitute, addressing concerns of all businesses, rural and urban, small and large.

However, it is not the only factor determining the attractiveness of a State as an investment destination. After 1991, the southern and western States have surged ahead as premier centres for industrial and services activity, with the northern and eastern States far behind — notwithstanding efforts across India to cut out red tape through application of technology. Surely, a broader institutional environment too plays a role here — in terms of day to day governance capacity, infrastructure, logistics, law and order, education and health systems, and above all, a climate of civic responsibility. A BRAP and institutional approach together can bridge the gap between States in terms of their business attractiveness.

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