States to come under DIPP watch on ease of doing business

To make India more investor-friendly and trigger competition among states, the Department of Industrial Policy and Promotion (DIPP) is planning to issue a report card of sorts for each state on the ease of doing business.

In line with the World Bank's annual 'Doing Business' report, the DIPP has already sent a detailed a questionnaire to all state governments, based on a 98-point matrix, divided into nine broad parameters.

"Come July or August, there will be a report card for each state government on ease of doing business … This will be done only for internal assessment. Initially, the plan was to recognise the strengths and weaknesses of states. But now, we plan to make it public, with a ranking of states," a senior DIPP official told Business Standard.

This would be an annual exercise, for which the government had also roped in NITI Aayog, to bring "greater transparency and accuracy" in evaluating states, the official said.

The DIPP has asked states to respond to its questionnaire by this month-end or early next month. Based on the responses, the department is planning to devise an evaluation mechanism. This is because all states do not have a uniform policy or regulatory mechanisms.

The chief ministers and officials of some state governments were taking the matter "very seriously" and were in constant touch with the DIPP "to seek help", the official said. "This will trigger healthy competition among states, as each will strive to better the others."

Some broad categories on which the 98-point matrix has been based are similar to the World Bank report, including those relating to ease of starting a business, securing permits and licences, availability of land, taxation structure, labour compliances, infrastructure and environmental clearances.

Recently, DIPP Secretary Amitabh Kant had said the Centre would "name and shame" states that didn't comply with the central government's directives on easing of procedures for doing business and relaxing regulations.

The government is tracking the progress of seven to eight regions, including Gujarat, Maharashtra, Delhi, Tamil Nadu and Karnataka, in terms of their ease-of-doing-business plans.

Chandrajit Banerjee, director-general of the Confederation of Indian Industry, said, "We strongly support this initiative of annual assessment of all states, along with the progress made by each in the area of ease of doing business. This will inculcate healthy competition among states, irrespective of the inherent advantages, and help the overall business environment."

India was ranked 142nd among 189 countries in the World Bank's latest Ease of Doing Business report, two slots below its rank for the previous year.

Prime Minister Narendra Modi has set a target of ensuring India ranks among the top 50 countries in the report.

For April-February 2014-15, foreign direct investment equity inflow into India was $28.81 billion, about 39 per cent more than in the year-ago period.